Buying a dream home is a once-in-a-lifetime decision for most people, and many prefer purchasing an under-construction property for its affordability, customisation options, and appreciation potential. Understanding home loans for under-construction property is essential to make the right financial decision. With SSB Group premium residential project, The Green Arc, you get modern living spaces backed by trust, transparency, and timely possession.

1.Documents Required for Home Loan for an Under-Construction Property

Applying for a home loan requires proper documentation to ensure quick approval. Having all necessary papers ready helps avoid delays.

Document Category

Documents Needed

Identity Proof

PAN Card, Aadhaar Card, Passport, Voter ID

Address Proof

Aadhaar Card, Passport, Utility Bills (Electricity/Water), Rent Agreement

Income Proof (Salaried)

Salary slips (last 3–6 months), Form 16, IT returns for the last 2–3 years

Income Proof (Self-Employed)

GST Registration, Business License, Balance Sheet, Profit & Loss Statement, IT returns

Property Documents

Allotment Letter, Builder-Buyer Agreement, Approved Construction Plan, Construction Schedule

Bank Statements

Last 6 months (salary or business account)

Photographs

Recent passport-sized photos

SSB Group’s The Green Arc team assists buyers in preparing and verifying all documents, making the loan process smooth.

2.Home Loan Benefits for Under-Construction Property

Taking a home loan for an under-construction property offers several advantages:

  • Lower Initial Cost – Properties under construction are generally priced lower than ready-to-move options.
  • Stage-Wise Payment – Payments are made in line with the construction stages, reducing the initial financial burden.
  • Higher Appreciation Potential – Property value can increase significantly by the time possession is given.
  • Modern Amenities – Under-construction projects like The Green Arc come with advanced facilities such as landscaped gardens, clubhouses, and smart security.
  • Tax Benefits – Eligible for deductions under the Income Tax Act (explained below).

3. Home Loan for Under Construction Property in India – Rules to Know

  • Loan-to-Value (LTV) Ratio: Banks finance 75–90% of the property value.
  • Tenure: Up to 30 years, depending on eligibility.
  • RERA Compliance: Choose only RERA-approved projects (The Green Arc is RERA-registered).
  • Eligibility Factors: Credit score, income, age, and repayment capacity.

4. Home Loan Interest for Under Construction Property

Interest rates vary but depend on:

  • Your credit score.
  • Loan amount and tenure.
  • Bank’s base rate or repo-linked lending rate.

5. Home Loan Deduction for Under Construction Property

Home loan deductions are governed by Section 24(b) and Section 80C of the Income Tax Act.

  • Section 24(b): Interest paid before possession is called pre-construction interest. You can claim this after possession in five equal annual instalments, in addition to the regular interest deduction.
  • Section 80C: You can claim a deduction of up to ₹1.5 lakh on the principal repayment amount, but only after possession.

Example:
 If you pay ₹3,00,000 as interest before possession, you can claim ₹60,000 each year for the next 5 years after you get the keys.

6. Tax Benefit on Home Loan for Under-Construction Property

Key points:

  • No tax deduction for principal or interest before possession.
  • Pre-construction interest can be claimed later.

Section 80C and 24(b) benefits start after you get possession.

7. Home Loan Disbursement for Under-Construction Property

The bank does not release the entire loan amount at once. Disbursement is linked to the construction progress:

  1. Initial Disbursement – Paid after the builder-buyer agreement is signed.
  2. Stage-Wise Disbursement – Released in instalments as each phase of construction completes.
  3. Final Disbursement – Paid upon completion and possession of the property.

SSB Group coordinates with banks to ensure The Green Arc buyers get timely disbursements, keeping construction on track.

8. Home Loan Disbursement Process for Under-Construction Property

Here’s the step-by-step process:

  1. Application & Sanction – Submit your documents, get a credit assessment, and receive a loan sanction.
  2. Builder’s Demand Letter – The builder requests payment as per the construction stage.
  3. Bank Verification – The bank inspects progress (through site visits or reports).

Payment Release – Funds are transferred directly to the builder’s account.

9. Home Loan EMI for Under Construction Property

During construction, buyers often pay Pre-EMI instead of full EMI.

  • Pre-EMI = Interest on the disbursed loan amount.
  • Full EMI = Principal + Interest (starts after full loan disbursement).

Example:
 If ₹15 lakh of a ₹40 lakh loan is disbursed first, Pre-EMI will be calculated only on ₹15 lakh until the next stage.

10. Is Pre-EMI Mandatory for Under-Construction Property?

Yes, if your loan is disbursed in stages. You pay Pre-EMI until full disbursement.

11. When to Take a Home Loan for an Under-Construction Property

Best times:

  • Right after booking, to lock in interest rates.
  • Align loan disbursement with the builder’s demand schedule to save interest.

12. How to Calculate a Home Loan for an Under-Construction Property?

  • Formula: EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]

    Where:
    P = Loan Amount
    R = Monthly Interest Rate (Annual Rate ÷ 12)
    N = Tenure in Months

Example:
 Loan: ₹40 lakh
Rate: 8% p.a. → 0.00667 per month
Tenure: 240 months

EMI ≈ ₹33,450

13 Home Loan for Under Under-Construction Flat

Opting for an under-construction flat at The Green Arc means:

  • Better prices compared to ready possession.
  • Higher returns on investment.
  • Opportunity to choose preferred floor, view, and layout.

Comparison Table – Under Construction vs Ready-to-Move Home Loans

Feature

Under Construction

Ready-to-Move

Price

Lower

Higher

Payment

Stage-wise

Lump sum/full EMI

Possession

Future date

Immediate

Customisation

High

Low

Tax Benefits Start

After possession

Immediately
  1. Can I Take a Home Loan on an Under-Construction Property in Green Arc?

Yes, provided the project is:

  • RERA-approved
  • The builder has bank tie-ups
  • Meets bank eligibility norms

The Green Arc meets all these requirements.

15. Process Of Buying A Flat From Builder 

Understand  the process of buying a flat from builder is essential before applying for a home loan for an under-construction property. It generally involves shortlisting a RERA-approved project, verifying the builder’s credentials, reviewing the builder-buyer agreement, arranging for the down payment, and securing a home loan.

Final Thoughts

Choosing a home loan for an under-construction property can be a strategic move, especially for impactful projects like SSB Group’s The Green Arc. With proper documentation, a clear understanding of pre-EMIs, and awareness of the tax savings waiting post-possession, you’ll navigate the process with confidence. By knowing the process of buying a flat from a builder, including verification, agreement review, and timely loan arrangements, you can ensure a smooth and secure home-buying experience from booking to possession.

FAQ’S

1. What is a Home Loan for an Under-Construction Property?

A home loan for an under-construction property is a loan where the bank or financial institution releases the sanctioned amount in stages, based on the construction progress, instead of paying the builder the full amount upfront. This helps buyers manage payments in line with project milestones.

2. What are the documents required for a home loan for an under-construction property?

You need the following documents:

  • Identity Proof: PAN, Aadhaar, Passport, or Voter ID.
  • Address Proof: Aadhaar, Passport, Utility Bills, or Rent Agreement.
  • Income Proof: Salary slips, Form 16, IT returns for salaried individuals; GST registration, business documents, and financial statements for self-employed.
  • Property Papers: Allotment letter, builder-buyer agreement, approved construction plan.
  • Bank Statements: Last 6 months.
  • Photographs: Passport-sized.

3. What are the home loan benefits for an under-construction property?

  • Lower launch prices compared to ready-to-move homes.
  • Stage-wise payments ease financial pressure.
  • Potential for higher returns due to price appreciation before possession.
  • Modern amenities in new projects.
  • Customisation flexibility for interiors and layouts.

4. What is the home loan deduction for an under-construction property?

Under Section 24(b) of the Income Tax Act, interest paid during the construction phase (pre-construction interest) can be claimed in 5 equal annual instalments after possession. Under Section 80C, principal repayment benefits are available only after possession.

5. How Does Home Loan Disbursement for an Under-Construction Property Work?

The loan is released in phases based on the builder’s construction schedule:

  1. Initial disbursement after agreement signing.
  2. Stage-wise disbursement after each milestone.
  3. Final disbursement on project completion.

6. What is the home loan disbursement process for an under-construction property?

  1. Submit the application and documents.
  2. The bank verifies eligibility and issues a sanction letter.
  3. The builder raises a demand letter for payment.
  4. The bank inspects construction progress.
  5. Disbursement made directly to the builder’s account.

7. What is the home loan EMI for an under-construction property?

During construction, most banks offer pre-EMI, which means you pay only the interest on the amount disbursed so far. Full EMI (principal + interest) starts after the entire loan is disbursed.

8. What is a home loan for an under-construction flat?

It’s the same as a home loan for an under-construction property, but applies specifically to flats or apartments still being built, where payments are linked to the construction progress.

9. How Does a Home Loan for an Under-Construction Property Work in India?

In India, banks finance up to 75–90% of the property value, disbursing funds in stages. Buyers can claim tax benefits only after possession, and the project must be RERA-approved to ensure security and timely delivery.

10. What is the home loan interest for an under-construction property?

Interest rates depend on your credit score, loan amount, tenure, and the bank’s lending policy. Rates are generally similar to regular home loans, but you only pay interest on the disbursed portion until possession.

11. What is the tax benefit on a home loan for an under-construction property?

  • Section 24(b): Pre-construction interest claimed in 5 equal instalments after possession.
  • Section 80C: Principal repayment deduction of up to ₹1.5 lakh annually, post-possession.

12. When Should I Take a Home Loan for an Under-Construction Property?

The best time is soon after booking your property to lock in favourable interest rates and align your loan disbursement schedule with the builder’s payment demands, reducing unnecessary interest costs.

13. How to Calculate a Home Loan for Under-Construction Property?

Use the EMI formula:

EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]

Where:

  • P = Loan amount
  • R = Monthly interest rate (annual ÷ 12)
  • N = Number of monthly instalments

14. Is Pre-EMI Mandatory for Under-Construction Property?

Yes, if you choose stage-wise disbursement. You pay Pre-EMI until the full loan amount is disbursed, after which regular EMIs begin.

15. Can I Take a Home Loan on an Under-Construction Property?

Yes, provided the project is RERA-approved, the builder has necessary approvals, and you meet the bank’s eligibility criteria.