Designer (1)

What is a Title Deed? A Super-Simple Guide to Title Deeds

by with No Comment Construction Finance

Buying or selling a property can be an exciting yet daunting experience, especially when you encounter terms like “title deed.” But fear not, as we delve into the world of real estate jargon to demystify what a title deed is and why it’s crucial in property transactions.

What Exactly is a Title Deed?

In simple terms, a title deed is a legal document that outlines ownership rights to a property. It serves as proof that someone legally owns a piece of land or a building. Think of it as the official certificate declaring ownership.

When you purchase a property, your name is added to the title deed, officially making you the rightful owner. This process is typically facilitated through a legal document known as a sale deed. It’s like receiving a certificate of ownership for your new home.

Types of Title Deeds:

 

  1. Sale Deed: This is perhaps the most common type of title deed encountered in real estate transactions. It’s created when a property is sold to a buyer. The sale deed outlines the terms of the sale and legally transfers ownership from the seller to the buyer.

 

  1. Gift Deed: As the name suggests, a gift deed is used when someone transfers ownership of a property to another person as a gift, without any monetary exchange. This could be a parent gifting a house to their child, for example.

 

  1. Mortgage Deed: When you take out a loan to purchase a property, you might need to sign a mortgage deed. This document pledges the property as collateral for the loan. If you fail to repay the loan, the lender can seize the property through foreclosure.

 

  1. Warranty Deed: This type of deed provides a guarantee from the seller that they have the legal right to sell the property. It assures the buyer that the property is free from any undisclosed liens or encumbrances.

Why are Title Deeds Important?

Title deeds play a crucial role in real estate transactions for several reasons:

 

  • Proof of Ownership: A title deed serves as concrete evidence of ownership. It confirms that you have the legal right to possess and use the property.

 

  • Property Transactions: When buying or selling a property, the transfer of ownership is documented through a title deed. This ensures a smooth and legally binding transaction.

 

  • Legal Protection: Having a clear title deed protects you from potential disputes over ownership. It establishes your rights as the property owner and safeguards against any competing claims.

 

  •  Access to Financing: Lenders often require a clear title deed as collateral when providing mortgage loans. It assures them that the property can be used to secure the loan.

 

  • Succession Planning: Title deeds can also facilitate estate planning and inheritance. By transferring ownership through a gift deed, for example, individuals can pass on property to their heirs.

 

Understanding title deeds is essential for anyone involved in real estate transactions. Whether you’re buying, selling, or simply interested in property ownership, knowing the ins and outs of title deeds can help navigate the complexities of the real estate market with confidence. So, the next time you embark on a property journey, remember the importance of the humble title deed in securing your piece of the real estate pie.

WHAT TO CHECK IN SANCTION LETTER

What to Check in Your Construction Finance Sanction Letter?

by with No Comment Construction Finance

In addition to the interest rate and loan amount, there are many other important factors to examine in a sanction letter before putting pen to paper on the documents.

Minimum Selling Price (MSP):

This represents the rate at which the builder must sell their upcoming inventory. It’s crucial to verify whether this rate is realistic and feasible based on the project’s location. The lender will determine NOCs (No Objection Certificates) based on this rate, underscoring the importance of its achievability.

Sales and Collection Milestones

When your construction Finance gets sanctiones, it comes in parts called tranches. To get each tranche, you need to hit certain milestone set by the lender. Make sure you’re okay with these milestone, if you want any changes you can communicate with the lender.

Construction Milestone

Just like hitting milestones for sales and collection is important to get money for your project, you’ll also have specific construction milestones to reach. Make sure these line up with your construction schedule. Similar to sales and collection, hitting these construction milestones is crucial for getting the funds you need. Check if they match your project’s timeline to avoid any delays or issues.

Drawdown

As you’re aware, construction finance is distributed in portions called tranches. The lender will share a drawdown table with you, so go through the amounts and ensure they match your funding needs. Lenders structure these drawdown tranches based on your requirements, such as construction, approvals, rentals, and more. Think of it as a roadmap outlining how they’ll release the funds for your project.

Interest Rate

Yeah, we know you know this one, but seriously, double-check that interest rate and try to negotiate a bit. It makes a big difference.

Sweep Capitalization

Sweep capitalization is where excess funds from one account are automatically moved or into another account to reduce interest costs and repayment of the loan. So mostly the sweep ration starts from 20%, but you can communicate with the lender accordingly.

Repayment and Moratorium

Repayment is the process of returning borrowed funds through sweep payments, while a moratorium is a temporary suspension of those repayments for the purpose of construction/project completion. Moratoriums provide borrowers with financial relief during challenging times but may affect the overall cost of the loan due to the continued accrual of interest. So, don’t forget the repayment and morat structure.

These are some important things that you need to check after getting your CF Sanction letter.

Real Estate Approvals for Society Redevelopment Made Easy || What are the government approvals under Redevelopment project?

by with No Comment Construction FinanceReal Estate Terms

List of Permissions from Government

Mumbai, India’s thriving financial centre, is always changing. As the population of the city increases, so does the demand for homes and better infrastructure. In order to meet the rising demand for housing and commercial space, older structures have been renovated. It’s not as easy as it may seem to start a renovation project in Mumbai. For the project to comply with rules and standards, numerous approvals and permissions are needed. In this article, we’ll provide a straightforward breakdown of the essential approvals required for a successful rehabilitation project in Mumbai.

Development Agreement

Drafting a Development Agreement is the next step after obtaining the NOC. The terms and conditions of the redevelopment project are described in this agreement, along with the developer’s and the society’s obligations. It also outlines the society members’ pay scale and geographic distribution.

Permanent Alternate Accommodation Agreement (PAAA)

A Permanent Alternate Accommodation Agreement (PAAA) is used in certain redevelopment projects in Mumbai where residents must abandon their current dwellings while work is being done. This agreement lays out how the displaced residents will be housed until the new construction is finished in a suitable alternative. It’s important to have this document in place to make sure that existing residents’ needs and rights are met during the redevelopment process.

The PAAA details any costs or rewards that may be related to the temporary housing, as well as its terms, conditions, and time frame. This contract is crucial to preserving a seamless transition for inhabitants and guaranteeing their welfare throughout the renovation process.

Approved Plans

Building Proposal Approval

You must submit a building proposal to the Municipal Corporation of Greater Mumbai (MCGM) after coming to an agreement with the society. This proposal comprises building specifics, architectural blueprints, and other pertinent paperwork. The plan is examined by the MCGM to make sure that it conforms with building and zoning laws. You can start the project after it has been approved.

Concession Plan

A Concession Plan may be required if your redevelopment project involves any concessions, such as additional Floor Space Index (FSI). This plan outlines the concessions requested and must be approved by the relevant authorities.

Environmental Clearance (If Applicable)

A Maharashtra Pollution Control Board (MPCB) Environmental Clearance may be required if the rehabilitation project has an impact on the environment. Your project won’t have a negative impact on the environment or natural resources thanks to this approval.

Fire Department NOC

Each and every building project must prioritise safety. Building designs are reviewed by the Mumbai Fire Department to make sure they adhere to fire safety regulations. A critical step to guarantee the safety of the future residents is to get a No Objection Certificate (NOC) from the Fire Department.

List of NOCs required

  • NOC from the fire department
  • NOC from the pollution control board
  • NOC from the water supply board
  • NOC from the electricity board
  • NOC from the municipal corporation
  • NOC from the state government

 

IOD (Intimation of Disapproval)

You must first acquire an Intimation of Disapproval (IOD) from the MCGM before starting construction. This document certifies that the suggested construction plans adhere to the rules and specifications.

Completion Certificate

A Completion Certificate from the MCGM is necessary to complete the project. The construction’s adherence to the approved building plans and standards is attested to by this certificate.

Occupation Certificate (OC)

Once the construction is complete, you must obtain an Occupation Certificate (OC) from the MCGM. This certificate confirms that the building is safe for occupation and complies with all the necessary regulations. It is essential for securing utilities and services for the property.

SWAMIH FUND CRITERIA

SWAMIH Fund Criteria Made Simple: Is Your Project a Fit for SWAMIH Fund Financing

by with No Comment Construction Finance

Do you know about the SWAMIH Fund? It’s a specialized fund established by the Indian government to resurrect housing projects that have come to a grinding halt. These projects, which were frequently referred to as “stalled,” “stuck,” or “stressed,” were in danger of never being completed. To ensure that these projects may ultimately resume, the government of India established this fund with an enormous 25,000 crore rupees.

There is a caveat, though: not every initiative is eligible for this support. For a project to qualify for the SWAMIH Fund, it must adhere to a number of tight guidelines or requirements. In order to comprehend how the fund functions and how it might aid in reviving them, let’s glance more closely at these criteria.

SWAMIH FUND CRITERIA
  1. 30% Project Cost Incurred

First things first, a project must have already spent at least 30% of its entire cost in order to be eligible for SWAMIH Fund sponsorship. This implies that before a project may receive assistance from the fund, a considerable sum of money and effort must have already been invested in it. This restriction makes sure that the fund will only support initiatives that have made a genuine attempt to get started.

  1. 90% FSI for Residential Use

The project’s space is the focus of the second criterion. Residential uses must use at least 90% of the available Floor Space Index (FSI). The majority of the space allotted for FSI should be used for residences. This makes sure that the fund only supports initiatives that aim to address the housing crisis.

  1. Total Receivables vs. Balance Cost

It’s a little challenging, but this is crucial. The amount of money a project anticipates to earn (“Total Receivables”) should exceed the amount still needed to finish the project (“Balance Cost”). Simply said, the project should generate more money from investors and buyers than it will cost to complete everything. This requirement helps ensure that the project can be successfully completed with the assistance of the SWAMIH Fund.

  1. Unit Size Less than 200 Sq. Meters

The size of the housing units is the fourth requirement. Each unit inside the project must be smaller than 200 square metres in order to qualify for the money. This is done to promote the building of cheap, reasonably sized homes for individuals.

  1. Affordable Housing

The SWAMIH Fund also gives initiatives that provide affordable housing priority. The price cap is 1 crore in some areas, such as Mumbai, where each unit must be priced at less than 2 crores. This indicates that the fund is intended to support initiatives that seek to build homes that are affordable for a large number of individuals, particularly those with middle- and lower-income levels.

The SWAMIH Fund acts as the government’s helping hand in rescuing housing developments that were in limbo. These five requirements must be met by projects in order to qualify for this assistance, guaranteeing that the fund will be used to build much-needed and affordable homes in India. So, when you hear about the SWAMIH Fund in the future, you’ll know that it’s all about giving housing projects a second chance and enhancing home accessibility for individuals all around the nation.

Development Agreement Clauses | What is a Development Agreement in Real Estate?

by with No Comment Construction Finance

Development Agreement Clauses

In the world of real estate, Joint Development Agreements (JDAs) have emerged as a powerful tool for property development. If you’re a landowner or a member of a society in India, considering ways to develop your land without the burden of hefty investments and bureaucratic hassles, JDAs might just be the game-changer you’ve been looking for.

 

Understanding Joint Development Agreements

In simple words, if you own land or a portion of a property in India and real estate builders are interested in acquiring construction rights to develop and sell a building project on your land, offering you a share of the profits or certain units as compensation, it’s essential to formalize this arrangement by entering into a development agreement with the builder. This agreement signifies your consent to grant the builder the development/construction rights.

Joint Development Agreement (JDA) is basically an agreement made between a builder and landowner/society in case of development of a plot or a redevelopment project. Here, the Landowner/Society contributed the plot area and the Developer takes full responsibility of constructing the building project in your land, approvals from government, cost of project, marketing expenses everything.

This arrangement allows landowners to leverage their property for development without the need for substantial upfront investments. In essence, you provide the land, and the developer brings their expertise and resources to the table.

Development Agreement safeguards both developer and the landowner from different types of terms, conditions, rights, privileges etc.

Development Agreement must be registered with the sub-registrar.

Major Clauses of Agreement:

What is a Development Agreement (1)

 

  1. Party Details

   – Land Owners

   – Developers/Builders

 

  1. Property Details

   – Ownership Details (Title Deed Details)

   – Property Description

   – Property History & Amalgamation

 

  1. Offer & Acceptance Between Land Owner & Developer/Builders
  1. Common Clauses

   – Duties of Land Owner & Developer/Builders

   – Rights of Land Owner & Developer/Builders

   – Obligations of Land Owner & Developer/Builders

   – Restrictions of Land Owner & Developer/Builders

   – Miscellaneous Provisions

 

  1. The Property Schedule

   – Detailed Attributes of the Property

   – Master Plan/Master Sketch of the Project

   – Map of Demarcated Portions (if applicable)

 

  1. Schedule of Land Owners Allocation
  2. Schedule of Developer/Builders Allocation
  3. Schedule of Materials Used in Construction
  4. The Payment Schedule

This structured breakdown ensures clarity and ease of reference within the Joint Development Agreement.

What the Developer Offers

When entering into a JDA, the developer commits to certain terms of compensation. This can take various forms, such as:

  1. Lump Sum Consideration: The landowner receives a fixed, one-time payment from the developer, it can be in crores.
  2. Percentage of Sales Revenue: The landowner gets a portion of the profits generated from the project’s sales.
  3. Percentage of the Newly Constructed Project: The landowner is given ownership of a specific units of the newly developed property, which can then be sold, rented or leased.

The specific terms and conditions are negotiated and agreed upon by both parties, ensuring a fair deal for all involved.

What is a Development Agreement

Benefits of Joint Development Agreements for the Landowner/Society

Now, let’s delve into why JDAs have become increasingly popular in the real estate sector:

  1. No Initial Land Investment: Perhaps the most significant advantage for landowners is that they don’t need to invest heavily in their land. The developer takes on the financial burden of construction, approvals, and marketing.
  2. Partial Stamp Duty Savings: JDAs often lead to reduced stamp duty expenses as the agreement typically involves the transfer of development rights, which can be subject to lower stamp duty rates.
  3. Accelerated Property Development: With the developer handling the financial aspects, property development can progress at a faster pace, leading to quicker returns.
  4. Fair Compensation: Landowners receive a fair and negotiated compensation for their land, ensuring they benefit from the development. In case of Redevelopment, the tenants will get a bigger portion then their existing flat. For Eg: If the tenants have a 1BHK flat in their building, they will be allotted 20% more area or a 2 BHK flat.

In a real estate landscape where opportunity often comes hand-in-hand with complexity and risk, Joint Development Agreements stand as a beacon of innovation. They empower landowners to make the most of their properties without the usual financial strain and administrative hurdles.

Before entering into a JDA, it’s crucial to consult legal and financial experts to ensure the agreement aligns with your interests and goals. With the right partnership and a well-structured JDA, you can unlock the full potential of your land and contribute to the ever-evolving urban landscape.

If you want a Development Agreement Draft/ Mortgage Clause – Contact us on admin@realestatefinance.in

5 Simple Ways for Builders to Fund Their Building Projects

by with No Comment Construction FinanceInventory Funding

Are you a builder with big dreams but a not-so-big wallet? Don’t worry; you’re not alone. Building projects require money, and sometimes, that money can be hard to come by.
But fear not, because in this article, we’re going to talk about five simple ways builders like you can get the funds you need to bring your construction dreams to life.

1. Project Finance

One of the most common ways builders get money for their projects is through Construction Finance loans. It’s a bit like borrowing money from a bank, and you’ll need a solid plan and good credit. But if your project is sound, banks are often willing to lend you the funds you need.

To know more about Project Finance, Click here

2. Private Investors

Think of private investors as your project’s fairy godmothers and godfathers. These are individuals or companies who believe in your project and are willing to invest their money in it. They might want a share of the profits in return, but it’s a way to get the funds you need without going through a bank.

3. Government Subsidies

Governments often offer grants and subsidies for specific types of building projects. These can be a bit tricky to find and apply for, but they can provide a significant financial boost to your project, especially if it aligns with government goals like affordable housing or sustainability.

4. Sales Proceeds

If you have funds already set aside for your project, here’s a straightforward plan: once you’ve gotten all the necessary approvals, you can start selling the flats you plan to build. The funds you get from these sales can then be used to construct the slabs you need. It’s a smart way to finance your project without relying on outside sources, keeping everything self-sufficient and on track..

5. Partnership/ JV

Sometimes, teaming up with experienced developers or investors can be a great idea. It’s like a partnership where everyone wins. You not only get the money you need but also valuable knowledge and connections in the property business. This collaboration isn’t just about funds; it’s about combining skills and resources. It can make your project more likely to succeed and spread out the risks. In simple terms, it’s a smart move that benefits everyone involved.

Why SWAMIH Fund is the Best Solution for Stuck Projects

by with No Comment Construction Finance

"Payable When Able" Feature, is the Best Option for Builders

Building homes and real estate projects can be a rewarding endeavor, but it often comes with financial challenges. This is where the Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH) Fund steps in as a game-changer for builders. In this blog, we’ll explore why the SWAMIH Fund, with its unique “Payable When Able” feature, is the best option for builders.

  1. Government Backing:

SWAMIH Fund carries the powerful backing of the Indian government. This backing not only infuses confidence but also signifies a commitment to supporting the housing sector. Builders can trust that the fund is well-structured and sustainable.

  1. Financial Assistance:

Builders often face financial constraints during the construction phase. SWAMIH Fund provides crucial financial support to complete stalled or delayed projects. What makes it even more builder-friendly is the “Payable When Able” feature. This means that builders can repay the funds when their projects start generating revenue, reducing immediate financial burden.

  1. Focus on Affordable Housing:

SWAMIH Fund primarily targets affordable and mid-income housing projects. This aligns with the government’s vision of ‘Housing for All by 2022.’ For builders, this means a ready market and a higher likelihood of selling units, as demand for affordable housing remains consistently high.

  1. Timely Completion:

Delayed projects can lead to cost overruns and a loss of trust among buyers. The SWAMIH Fund’s objective is to ensure the timely completion of projects. Builders can rely on this support to meet deadlines and deliver quality housing to buyers.

  1. Reduced NPA Risk:

Unfinished projects often turn into non-performing assets (NPAs) for builders. The SWAMIH Fund’s intervention helps reduce the NPA risk associated with stalled projects, keeping builders’ financial health intact.

  1. Boosting Investor Confidence:

With the backing of SWAMIH Fund, builders gain credibility in the eyes of potential investors and buyers. This can attract more investment and customers, further facilitating project completion.

  1. Expert Management:

SBICAP Ventures, a seasoned participant in the real estate sector, is in charge of managing the fund. Their knowledge guarantees that the financial aid is effectively managed and applied.

  1. Reviving the Real Estate Sector:

The SWAMIH Fund helps to revive the real estate industry by giving stalled projects a lifeline. Thus, the environment for builders becomes healthier and more energetic.

 

  1. Payable When Able:

The SWAMIH Fund’s “Payable When Able” option stands out as a very strong point and is unquestionably helpful to builders. Due to this special feature, developers can pay back the loan after their projects are finished and they begin to make money. Because it lessens the immediate financial burden on builders, this is a game-changer. Builders can concentrate on the project’s successful completion throughout the construction period rather than worrying about loan repayments. It is a very builder-friendly financing solution since if the project is lucrative, they can easily pay back the loan.

 

  1. Support for Project Viability:

Along with offering financial support, the SWAMIH Fund also carefully evaluates projects. As a result, developers get helpful advice and assistance in guaranteeing the feasibility and success of their projects. The fund’s knowledge can aid developers in making wise choices, increasing the likelihood that a project will be profitable.

 

Therefore, SWAMIH FUND is a fantastic choice if your project has stopped. If your project relates to affordable housing, you can arrange it using SWAMIH FUND measurements.

Comment below if you want to learn more about Swamih Funds or its measures.

Banks and NBFC providing Construction Finance for builders in Mumbai

Banks and NBFC providing Construction Finance for builders in Mumbai

Shiva Shrivastava On August 16, 2023 Construction Finance

Are you a builder with ambitious construction projects in mind for the vibrant city of Mumbai? Navigating the financial aspects of construction can be a challenging endeavor, but fortunately, there are several banks and Non

Read More
How to obtain a Construction Finance in Mumbai?  Understand Construction Finance Process in 12 Steps!

How to obtain a Construction Finance in Mumbai?  Understand Construction Finance Process in 12 Steps!

Shiva Shrivastava On August 16, 2023 Construction Finance

Construction Loan Process explained in 12 Steps​ Are you you considering to secure a Construction Loan for your building project, and you are unsure of how to secure the funding you'll need? We are aware

Read More
Can’t get Construction Finance in Mumbai? Here’s what you’re doing wrong.

Can’t get Construction Finance in Mumbai? Here’s what you’re doing wrong.

Shiva Shrivastava On August 17, 2023 Construction Finance

Do you need construction financing for your upcoming building project? It's critical to comprehend the obstacles that could cause your proposal to be denied before you apply. Getting loans or other types of financing to

Read More
Why SWAMIH Fund is the Best Solution for Stuck Projects

Why SWAMIH Fund is the Best Solution for Stuck Projects

Shiva Shrivastava On August 22, 2023 Construction Finance

"Payable When Able" Feature, is the Best Option for Builders Building homes and real estate projects can be a rewarding endeavor, but it often comes with financial challenges. This is where the Special Window for

Read More

Can’t get Construction Finance in Mumbai? Here’s what you’re doing wrong.

by with No Comment Construction Finance

Do you need construction financing for your upcoming building project? It’s critical to comprehend the obstacles that could cause your proposal to be denied before you apply.

Getting loans or other types of financing to pay for a construction project is the process of construction finance. Lenders will need to be persuaded that the project is viable and that the borrower has the ability to repay the loan, therefore it can be a difficult and complicated procedure.

 

  • Lack of experience. Lenders can be wary of funding a project from an inexperienced developer. They’ll want to know if you have a proven track record of finishing tasks on schedule and on budget. If you’re a novice developer, you could need to work with another developer who has more experience, or you might need to acquire a loan from a government organisation or another lender who is more ready to take risks.
  • Poor financials. The ability to repay the loan and a solid financial history are also things that lenders will look for. This entails having a strong CIBIL score, a track record of paying your bills on time, and sufficient cash flow to cover the project’s expenses. If your finances are weak, you might be required to put up more collateral or apply for a loan with a higher interest rate.
  • Unrealistic budget. Lenders might be afraid that you won’t be able to finish the project on time or under budget if your budget is too high. This is why it’s critical to develop a realistic budget that accounts for all project expenditures, including labour, supplies, and unanticipated charges.
Creatives for RSF
  • No Objection Certificate (NOC). Most lender will want an NOC from the society/ landowner, the draft will be provided by the lender itself.

The NOC will have these points:

The society does not object to the developer mortgaging the project land and unsold units to LENDER. The society will not allow the developer to transfer or exchange any units without LENDER’s consent. LENDER will have first charge on the security and can enforce it in case of default.

(To get a draft of NOC for reference, Message us)

 

  • High Cost of Construction. One of the biggest challenges is the high cost of construction in Mumbai. Land prices are sky-high, and labour costs are also relatively high. This can make it difficult for developers to secure financing for their projects.

 

  • Land Acquisition and Title Issues. Uncertainty regarding the land’s ownership and the existence of any liens or other encumbrances is indicated by an ambiguous title report. Lenders want to be certain that they are making a loan on a property that is trouble-free. If you are thinking about building something, you should do your research and confirm that the land is legally yours.

 

  • Lengthy Approval Process. The lengthy approval process for construction projects in Mumbai is also a challenge. There are a number of government agencies that need to be involved in the approval process, and this can take several months or even years. This can delay the start of construction and make it more difficult for developers to secure financing.

 

  • Lack of Collateral. The lack of collateral is also a challenge for developers in Mumbai. Most construction projects are financed with a combination of debt and equity. However, it can be difficult for developers to secure equity financing, as they often do not have the assets to back up their loans.

So, what are the solutions?

If you are considering applying for construction financing, it’s important to be aware of these challenges and to take steps to mitigate them. By doing your research and preparing a strong proposal, you can increase your chances of getting approved for the financing you need.

Here are some additional tips for avoiding rejection of your construction finance proposal:

  • Work with a financial advisor who specializes in construction finance. They can help you assess your chances of approval and put together a strong proposal.
  • Be prepared to provide collateral. Lenders will want to have some security in case the project goes over budget or does not complete.
  • Build relationships with lenders. Get to know the lenders in your area and let them know about your project. This will make it more likely that they will consider financing your project.
  • Make an accurate project feasibility report, COPMOF and Sales MIS as they will required during the initial process

By following these tips, you can increase your chances of getting your construction finance proposal approved.

Securing construction finance in Mumbai can be challenging, but it is not impossible. By understanding the challenges and by working with a financial advisor, developers can increase their chances of securing the financing they need to complete their projects.

I hope this blog post is helpful. Please let me know if you have any other questions.

 

What is a Title Deed? A Super-Simple Guide to Title Deeds

What is a Title Deed? A Super-Simple Guide to Title Deeds

What to Check in Your Construction Finance Sanction Letter?

What to Check in Your Construction Finance Sanction Letter?

Real Estate Approvals for Society Redevelopment Made Easy || What are the government approvals under Redevelopment project?

Real Estate Approvals for Society Redevelopment Made Easy || What are the government approvals under Redevelopment project?

SWAMIH Fund Criteria Made Simple: Is Your Project a Fit for SWAMIH Fund Financing

SWAMIH Fund Criteria Made Simple: Is Your Project a Fit for SWAMIH Fund Financing

Development Agreement Clauses | What is a Development Agreement in Real Estate?

Development Agreement Clauses | What is a Development Agreement in Real Estate?

How to obtain a Construction Finance in Mumbai?  Understand Construction Finance Process in 12 Steps!

by with No Comment Construction Finance

Construction Loan Process explained in 12 Steps​

Are you you considering to secure a Construction Loan for your building project, and you are unsure of how to secure the funding you’ll need? We are aware that navigating the construction finance industry can be challenging.

However, do not worry! We’re here to simplify down the process of construction financing into 12 understandable and doable steps in our extensive blog post.

You’ll have a clear knowledge of the steps you need to take to raise the money you need for your building project by the time you finish reading this article.

Now let’s get into the specifics.

Step 1: Evaluating the Proposal

Before you dive into the financial side of things, it’s crucial to thoroughly assess your project proposal. 

This involves scrutinizing various aspects of your plan against specific criteria. While this step might sound a bit technical, you can make things simpler by getting
assistance from a consulting or advisory firm. They can help you determine if
your project is viable and ready for the next steps.

Step 2: Identifying the Perfect Lenders

Each lender has its own preferences and criteria for funding projects.  Some Financer might fund an early-stage project whereas others will fund post obtaining necessary approvals from government.

Your goal here is to find the lender that best aligns with your project’s requirements and goals. This process might involve some research, but it’s a crucial step in ensuring a successful financing journey.

Step 3: Sharing Project Details

Once you’ve found a potential lender match, it’s time to provide them with the details of your project. Each lender typically has their own set of formats they require you to complete. And this process could be tiring as their will be a whole bunch of details that will be requested by the lender.

If you’d like to simplify things even further, consider hiring a professional advisory that can handle this step on your behalf.

Step 4: Making a Sales Presentation and Site Visit

After your initial submission of project details, the process takes a more interactive turn. You’ll have a meeting with the lender’s Sales Team who will visit your office. This meeting serves as a platform to discuss your project in detail and to address any questions or concerns.

Following this, a site visit is scheduled. The purpose of this visit is to provide the team with an in-depth understanding of the physical site where your project will take shape, make sure you have a few labours working at the site.

Step 5: Delving into Credit Evaluation

With the Sales Team meeting successfully completed, your project is now evaluated by the lender’s Credit Team. They analyze the feasibility and risk associated with your project. This step is crucial as it helps the lender understand the potential financial risks and rewards involved. Some lenders will prefer to have a meeting with the promoter while others might not. So, If a credit meeting is scheduled then make sure all the promoters are available as it makes an impression.

Step 6: Receiving In-Principle Approval

If your project passes the Credit Team’s evaluation, you’re on the right track. The lender will issue an in-principle approval, which is essentially a preliminary green light. This document outlines key project information and highlights the terms and conditions of the loan. The in-principle will include all the details like security, escrow account, interest rate etc

Step 7: Undertaking Due Diligence

A third party legal and technical agency is appointed to carry out the due diligence process. This agency performs due diligence, a thorough process that ensures all aspects of your project are carefully examined. Make sure you have the soft copies of all the legal documents and technical documents as it will be required.

This stage can take anywhere from 10 to 20 days and is designed to minimize risks and ensure transparency.

Step 8: Committee Review

Once a satisfactory due diligence report is received, your project is presented to a committee for approval. During this phase, the committee delves into the project’s cash flows and sales milestones, discussing its financial viability in detail.

Step 9: Receiving the Final Sanction Letter

With the committee’s approval secured, the lender issues a final sanction letter to you, the developer. This is a significant step as it signifies that your project has gained substantial financial support. If you find any terms in the letter that you’d like to discuss or adjust, now is the best time to negotiate.

Step 10: Signing the Essential Documents

At this point, you’ll be faced with several important documents that need to be signed. These documents formalize the agreement between you and the lender. It’s essential to involve all project promoters as signatures will be required

Step 11: Registering the Mortgage Deed

A mortgage deed that is signed during the previous step needs to be registered with the sub-registrar. A person from the Lenders team will be accompanying you throughout the process.

This deed lists the developer units that will be used as collateral for the loan.

Step 12: Fund Disbursement and Getting Started

As the mortgage deed is officially registered, the disbursement process kicks into gear. The initial portion of funds, known as the first tranche, is typically deposited into your bank account within a few days. This marks the beginning of your construction journey!

Depending on the profitability of the project, the speed of the lender, and the size of the ticket, the entire process will take 45 days or longer.

It may seem challenging to obtain the construction loan you need for your building project, but by breaking it down into these 12 parts, it becomes easier.

You can also seek the assistance of project funding advisory or consulting organisations, who can make these procedures simpler for you because they have the necessary professional knowledge and solid relationships with lenders.

Hiring a professional agency would be a huge help if you are having trouble acquiring construction financing for your project owing to some feasibility concerns or anything else.

Every step is crucial, and things go easily when you have the right support and knowledge.

You’re all set to confidently start your construction finance experience after reading this straightforward instruction!

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Banks and NBFC providing Construction Finance for builders in Mumbai

by with 6 Comments Construction Finance

Are you a builder with ambitious construction projects in mind for the vibrant city of Mumbai? Navigating the financial aspects of construction can be a challenging endeavor, but fortunately, there are several banks and Non Banking Financial Companies (NBFCs) that specialize in providing construction finance in Mumbai. In this article, we’ll delve into the key parameters of each institution, helping you make an informed decision that best aligns with your construction needs.

Here is a list of banks and NBFCs that provide construction finance in Mumbai, as mentioned in the provided information:

State Bank of India (SBI): 


SBI, a reputable public sector bank, offers construction finance options for builders in Mumbai. Its extensive network and established credibility make it a viable choice for supporting your construction projects. However, it’s worth noting that securing a Construction Loan from SBI can be demanding. The bank typically asks for a substantial security cover, which might not be feasible for most builders.

  • Preferred: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 15,00,000
  • Security: High
  • Processing Time: 60 90 days
 
HDFC Bank:

As a prominent private sector bank, HDFC Bank offers construction finance with flexible terms and competitive interest rates. Builders can benefit from HDFC Bank’s expertise and resources to fund their residential and commercial projects.

  • Preferred: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 15,00,000
  • Security: High
  • Processing Time: 60 90 days
 
 ICICI Bank:

ICICI Bank’s construction finance solutions cater to the specific requirements of builders. With a strong presence in the financial sector, ICICI Bank provides loans for both residential and commercial construction projects.

  • Preferred: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 7,00,000
  • Security: High
  • Processing Time: 40 60 days
 

Shriram Housing Finance:

Shriram Housing Finance is an expert in housing finance options, such as building financing for Mumbai-based builders. Because of its focus on the needs of the consumer, builders are guaranteed the funding they require to complete their projects.

  • Preferred: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 30 40 days
 

PNB Housing Finance:

PNB Housing Finance offers a variety of building financing alternatives to help support builders. Its services cover several phases of development, making it a trustworthy partner for Mumbai builders.

  • Preferred: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 30 40 days
 
 

Tata Capital

The construction finance services offered by Tata Capital are intended to help builders negotiate the challenges of construction projects. Whether you’re buying a home, a business, or some land, Tata Capital has options that are suited to your requirements.

  • Preferred: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 30 40 days
 

Capri Global Capital Ltd.

For small to medium-sized projects in Mumbai, Capri Global Capital Limited specialises on providing construction financing. It distinguishes itself by specialising on residential and commercial assets, including affordable housing.

  • Preferred: Initial Approvals Required
  • Approval Stage: Early Stage
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: No security/ Depends
  • Processing Time: 25 30 days

 

Sumitomo Mitsui Finance Group (Former Fullerton)

SMFG (Fullerton India) provides builders with a wide choice of construction finance options that address everything from land purchase to project completion. The assistance of Fullerton India is available to builders at every stage of the building process.

  • Preferred: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: No security/ Depends
  • Processing Time: 25 30 days
 

 

AU Small Finance BanK

AU Small Finance Bank offers loans for the purchase of land as well as residential and commercial properties because it is aware of the particular requirements of construction projects. Its specialised strategy guarantees that builders get the support they require.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 7,00,000
  • Security: High
  • Processing Time: 60 90 days

 

DCB Bank

Both residential and commercial properties are eligible for construction financing from DCB Bank. Builders have access to a range of services that are specifically suited to their needs, from site acquisition to project completion.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Early Stage
  • Minimum Sq. ft Constructed by Developer: 7,00,000
  • Security: Medium
  • Processing Time: 60 90 days

Anand Rathi

Anand Rathi, a well-known provider of financial services, provides Mumbai builders with development financing. They assist builders in obtaining the required money using their knowledge of the banking sector.

  • Preferred Stage: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 4,00,000
  • Security: High
  • Processing Time: 40 60 days

 

Aditya Birla Capital

The construction finance options provided by Aditya Birla Capital are tailored to the particular needs of builders. Builders can rely on Aditya Birla Capital for their funding needs thanks to its reputable reputation in the financial industry.

  • Preferred Stage: All approvals should be in place
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 4,00,000
  • Security: No security/ Depends
  • Processing Time: 30 40 days

 

 IIFL (India Infoline Finance Limited)

 IIFL offers builders specialised financing options for construction projects. Builders are assured of receiving the necessary support for their projects thanks to its competence in the financial sector.

  • Preferred Stage: All approvals should be in place
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 30 40 days

 

 Hero FinCorp

Hero Fincorp is an expert in house finance solutions and provides builders with the tools they need to confidently take on construction projects.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Early Stage
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 40 60 days

 

Bajaj Finserv

Through its construction finance solutions, Bajaj offers financial assistance to builders, enabling them to follow their aspirations in the building industry.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Early Stage
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 40 60 days

 

Piramal Housing Finance:

Piramal Housing Finance provides builders with comprehensive financial solutions for their construction projects, facilitating a smooth execution process.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 30 40 days

 

Yes Bank

Yes Bank’s construction finance options meet the various needs of builders and give them the ability to start their construction projects.

  • Preferred Stage: Initial Approvals Required IOD, CC
  • Approval Stage: Plinth Level
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: High
  • Processing Time: 60 90 days
 

Swamih Funds

By providing construction finance options, Swamih Funds support builders’ efforts and stimulate the real estate market.


  • Preferred Stage: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: High
  • Processing Time: 60 90 days

Motilal Oswal

Builders can achieve their construction goals with the financial support of Motilal Oswal’s construction finance services.


  • Preferred Stage: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 5,00,000
  • Security: Depends
  • Processing Time: 40 60 days

Kotak Mahindra Bank

The construction finance options offered by Kotak Mahindra Bank are created to address the changing needs of contractors and assist them at every stage of their projects.


  • Preferred Stage: All approvals should be in place
  • Approval Stage: Slab Casted
  • Minimum Sq. ft Constructed by Developer: 12,00,000
  • Security: High
  • Processing Time: 60 90 days