Construction Finance

Construction loans are released in phases according to construction milestones, which generally include land acquisition, foundation laying, plinth construction, slab installation, finishing touches, and final completion. Each phase undergoes verification prior to the disbursement of funds, thereby ensuring the appropriate use of financial resources.

Generally, lenders provide financing for 60-70% of the overall project expenses. The remaining 30-40% must be sourced from the developer's own capital or through pre-sales. The specific percentage is contingent upon the project's feasibility and the developer's history.

Approval of the building plan from the local authority is required, along with a commencement certificate, environmental clearances (if applicable), and all necessary statutory permissions. Furthermore, RERA registration is compulsory for projects that consist of more than 8 units or exceed 500 square meters.

Throughout the construction phase, it is common to pay solely the interest on the amount that has been disbursed (interest servicing). After the project reaches completion and the units are sold, the principal amount is repaid using the proceeds from the sales, along with any accrued interest.

The duration of construction finance generally spans from 2 to 5 years, contingent upon the size of the project and the timeline for its completion. This duration encompasses the construction phase as well as extra time allocated for the sale of units and their handover to purchasers.