LIC Housing Finance

Builders & Developers Construction Project Loan


Loan sanctioned to construct or develop a new real estate project including both residential as well as commercial is known as Loan for New Construction. An individual or a firm or company engaged in the business of real estate development or construction (Builder) can avail this loan.
Banks or other lending institutions prefer a builder having some reputation and background of quality construction to grant this loan. Lenders expect the builder to be in business for at least 2-4 years. The previous FINANCIAL statements and the cash flow statements are the key documents based on which the lenders decide the limit to what the loan is to be sanctioned. The maximum limit of loan to be sanctioned may vary from lender to lender depending upon internal policies. Besides the FINANCIAL statements the lending institutions also insist upon the original sale deed of the plot or land and subsequent documents, the profitability of the project, the monthly or quarterly cash flow (projected) detailed plan, layouts and estimates from chartered engineers or architects, approvals from the authorities like Municipal Corporation etc.
Builder has an option of repayment either in 3-5installments or lump sum after selling the developed premises. In addition builder may choose either floating or fixed rate of interest on the loan sanctioned. The rate of interest is determined by the prime lending rate practiced by the banks or lending institutions.
Real Estate is India’s rapidly developing business segment and multiple financial institutions including banking and non banking are offering Loans for New Construction

1. Construction Finance Loan
Object : Loans to Builders/Developers for developing and constructing Residential / Commercial Premises.
Loan term : Minimum-6 Months
Maximum-5 years
Security & Title : Mortgage of the land over which the building is proposed along with super structure. Personal Guarantee of the Partners / Promoters Corporate Guarantee (if required)
Disbursement of loan : Instalments depending on the progress of work in the project, its FUNDING requirements and availability of sufficient security cover.
Repayment of loan : Through Escrow Account.
2. Term Loan
Object : To Builders/Developers for business purpose.
Loan term : Minimum - 6 Months
Maximum – 3 years
Security & Title : Mortgage of the Security of adequate Value acceptable to LICHFL as may be deemed necessary. The Receivables from various ongoing Projects to be assigned in favour of LICHFL. Personal Guarantee of the Promoters of the Company. Any other security as may be considered necessary by LICHFL
Disbursement of loan : In single tranche or in Instalments based on the requirement of the Applicant Company as agreed mutually.
Repayment of loan : Through Escrow Account.

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