The construction contract is registered according to the legal provisions with a stamp and a registration fee of 2 percent on the value of the contract it had. Registration fees are 2% (1%, stamp duty 1%) construction costs. „Sign up under building land to get a home loan,” a bank employee told one of my clients. My client was confused. It was under the idea that property under construction could only be registered at the time of possession. Too late, banks insist that borrowers register before owning real estate when you use a home loan. Although it is mandatory to register construction real estate under subsidy schemes, it is at the discretion of the bank. From the buyer`s point of view, it is a mixed bag. Depending on the case-to-case basis, it may be advantageous to register under construction real estate. We will discuss this in a later part of the contribution. Also, if you use real estate credit, then borrowers have no choice but to impose the bank`s instructions. As a borrower, if you are not comfortable registering under construction property, then you should discuss the same before calling home loan. Once you sign on the points line, then there is not much to do.
Review The new rule does not apply to construction contracts executed before October 1. (b) Authorization of home loans: they must not register on construction real estate before authorizing home loans. In a small number of cases, a buyer was registered from his own fund under construction and the home loan was refused after registration. A bank may insist on registering before authorizing construction real estate loans. You shouldn`t fall into this trap. Once the home loan is refused by one bank, it is almost impossible to use the mortgage of another bank. Gross NPA of a bank is now the biggest concern of every bank. A bank`s performance is judged by NPas in difficult times.
A bank faces maximum defaults while borrowing loans for real estate under construction. The reason is that the uncertainty is high in relation to the resale of real estate. A buyer buys with certain assumptions such as the completion period, increased revenues, clear securities, etc. If something goes wrong, the buyer stops the EMI home loan. In the event of a re-verification, a bank can annex the physical property and put the property up for auction. While for real estate under construction, there is no such option and the bank`s money remains blocked. Have you ever heard of an auction of real estate under construction?