Prepayment before home loan disbursement
4 months ago
Hi, I'm a salaried employee working in IT sector. Planning to buy a under construction new flat from builder valuation of around 28 lakhs. Upfront while booking i had to pay 20% as down-payment and planned to arrange rest of the money via home loan.
Now as per agreement, I have to pay 5% of remaining amount (after down-payment) at the time of roof casting of each floor and 25% at the time of brick work of said flat.
I've applied for Home loan in HDFC Bank and SBI. Pre-sanction letter has been generated but legal evaluation step is pending in both cases. As per bank, It'll take another 1 month time. But builder is constantly asking for money as roof casting of ground floor has been completed and roof casting of 1st floor is scheduled to be done in next 10 days. He is also pressuring me to take hime loan from his partner bank so that he can get the disbursement in 1 week but rate of interest is higher in his partner bank. I'm not in position to deny as i do owe him money as per the agreement done.
Under such circumstances, only solution I can offer is to pay 1st 5-10% money from my contingency fund. But I'm confused if that'll cause any issue. Because in the agreement I've signed It was written that 20% paid by cheque and rest of the money to be paid by Home loan. Will it be an issue afterwards or do I need to execute the agreement again if I make extra 10% payment from my end contrary to the agreement (as now it'll become 30% down-payment and 70% home loan). What may be the consequences.
Can anyone please advise? Thanks in advance.
Before buying a property through a home loan you need to review the status of title and encumbrance status of the under-construction property including the approved building plan, joint development agreement, POA and your CIBIL record based on which a Bank sanctioned home loan to the applicant and the terms and conditions of the draft Agreement to sale usually made out by the Builder protecting their interest. Both these steps are crucial before agreeing with the Builder, because your initial funding from your own pocket may be at stake if any deviation or dereliction in these documents is detected after payment of advance which are commonly forfeited on cancellation of delay in time-bound payments as per sale agreement. So, before the payment of the booking money to the Builder for under under-construction flat you first need to ensure yourself about the sanction of a home loan by the Bank. It is safe and secured once a property is bought through a Bank loan, all the documents related to the property and terms of agreement of sale are verified and scrutinized by the Bank before sanctioning a loan to the applicant. If the housing project is approved by RERA, then a Builder cannot take advance or earnest money of more than 10% of the total cost of the project. So, at the moment, you need to follow the terms and conditions of the AOS executed between you and the Builder. For any unethical and arbitrary threat of cancellation of AOS from the Builder for delay in stagewise payment owing to delay in sanction of loan by Bank, reach out to an Advocate for serving a legal notice and filing a civil suit for specific performance praying an injunction.
Making additional payments beyond what is stipulated in the agreement can have legal and financial implications. It's crucial to adhere to the terms mentioned in your agreement with the builder. If the agreement specifies that a certain percentage is to be paid by cheque and the rest through a home loan, deviating from this agreement might lead to complications.
Before making any additional payments, consider the following steps:
1. Communicate with the builder: Discuss your situation with the builder, explaining the delay in the home loan process. Builders may sometimes offer flexibility, understanding the challenges buyers face.
2. Legal consultation: Seek legal advice to understand the consequences of deviating from the agreement. A lawyer can guide you on the potential risks and how to mitigate them.
3. Loan disbursement timeline: Speak with your chosen banks to expedite the legal evaluation step. If possible, provide all necessary documents promptly to facilitate a quicker loan approval process.
Remember that verbal agreements might not have the same legal standing as written ones. If modifications to the agreement are necessary, it's advisable to get them documented and mutually agreed upon by both parties. Always consult with professionals to ensure you make informed decisions aligned with the legal framework.
Thankyou
You must be very careful while giving money to your builder because most of the builders are cheating the genuine customers. They are constructing the houses on your amounts.
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