Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
13 DECEMBER, 2021
Geeta and Vedika wanted to buy a house in Mumbai. When Geeta applied for a home loan, her application was processed within a week. But it took several weeks for Vedika to get approval and buy her dream home. When Vedika raised this issue with the lender, she was told that Geeta's house is included in the list of the bank-approved housing projects and so, her application was processed faster. Unfortunately, Vedika was unaware of such concepts and had to wait for approval and disbursal.
As a homebuyer, it would help if you are aware about bank-approved housing projects. Learn more below.
What are Bank Approved Housing Projects?
Projects that have been approved and verified by banks are called bank-approved projects. Banks carry out extensive due diligence on such projects to ensure that their title and legality is uncompromised. Banks also inspect the construction, blueprint and building plan to ensure that it follows all the necessary compliances and permissions. Usually, the builders request the banks to inspect and approve the projects to make them more marketable for buyers.
When you buy a house from a bank approved housing project, you can be assured that it has no legal complications and has all the legal clearances. In addition, you can be assured that there is no issue with the builder’s right on the property. If you buy a house in such properties, you can avail a home loan with the same bank. It reduces the duration of the verification process and makes the approval faster.
Benefits of Buying a Home in a Bank Approved Housing Projects
When you buy a house in such projects, you need not worry about getting cheated or making a wrong deal. You can be assured that the builder is trustworthy and will not cheat you. Moreover, you will not face any issues in the project’s legal, technical or financial matter. Similarly, as the banks are involved in such projects, the builder is bound to fulfil all the promises made in the agreement.
If you take the home loan with the same bank, you get approval much faster. The technical verification is already done, and the bank has no doubts about the legality and sustainability of the project. Once you submit the documents required for home loan with the application, all the bank needs to do is review the progress of the construction and release the money accordingly. Often banks also lend money to the builder to ensure that the project is completed timely.
While it is usually beneficial to buy a house from a bank’s approved housing projects, you must note that the bank does not take responsibility for project delays. Therefore, if you do not get possession of the house on time, you could have to pay the rent and EMI at the same time. These houses could also be priced more than the market rate. Therefore, ensure to consider all the relevant factors before investing in such housing projects.
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