Buying a flat in a project that is still being built is common across Thane district — from Thane city to Kalyan, Ambernath and Badlapur. It usually costs less than a ready home, and payments are spread over the construction period. But the loan works differently from a loan for a ready flat, and the risks sit in different places. Here is what to check, how disbursement and EMIs work, and how GST and tax treat an under-construction purchase.

Check the project before you check your loan eligibility

Most problems with under-construction home loans start with the project, not the borrower. Before you pay a booking amount, check:

  • MahaRERA registration. Under Section 3 of the Real Estate (Regulation and Development) Act, 2016 (RERA), a project must be registered before it is advertised or sold, unless it is small — land of up to 500 square metres or up to eight apartments across all phases. Search the project on MahaRERA's website using its registration number. The project page shows the promoter, the registration certificate, any extension certificates and the reported construction progress.
  • The promised completion date. Compare the date on the MahaRERA registration with what the sales team tells you. An extension certificate on the project page means the original date has already moved.
  • Complaints. MahaRERA publishes project-wise and promoter-wise complaint reports, so you can see whether earlier buyers have filed complaints.
  • Whether your lender has approved the project. Many banks and housing finance companies (HFCs) pre-approve projects after checking the paperwork, building plans and legal position. Kotak Mahindra Bank, for example, calls this an Approved Project Finance (APF) number. A pre-approved project usually means faster processing. If your preferred lender hasn't approved the project, ask why — it may only be pending paperwork, or the lender may have found a problem.

Lenders run their own legal and technical checks on every file, so a project being approved does not guarantee your loan. The lender decides based on both the project and your profile. For how lenders look at the developer's side, see how lenders assess construction finance and the MahaRERA 70% account.

RERA rules that protect you as a buyer

RERA and the Maharashtra RERA Rules, 2017 give buyers several protections that matter when you are borrowing:

  • 10% cap before agreement. Under Section 13, a promoter cannot accept more than 10% of the cost of the flat as an advance or application fee without first signing a written agreement for sale and registering it. Your lender will need the registered agreement in any case before it releases money.
  • Carpet area. Section 2(k) defines carpet area as the net usable floor area of the flat. It excludes external walls, service shafts and exclusive balconies or terraces, but includes internal partition walls. Prices and agreements should be stated in these terms, so compare flats on carpet area, not "super built-up" area.
  • Stage-linked payment schedule. The model agreement for sale in the Maharashtra Rules, 2017 links payments to construction milestones. For example, it caps payments at 45% of the price on completion of the plinth and 70% on completion of the slabs, with the balance due at possession after the occupancy or completion certificate.
  • Interest for delay. Under Section 18, if the promoter fails to hand over possession by the date in the agreement, you can withdraw and get a refund with interest. If you stay in the project, the promoter has to pay you interest for every month of delay until possession. In Maharashtra the rate is SBI's highest marginal cost of lending rate (MCLR) plus 2%, under Rule 18 of the state rules. The same rate applies the other way if you pay late, under Section 19(7).
  • Five-year defect liability. Under Section 14(3), structural and workmanship defects reported within five years of possession must be fixed by the promoter free of charge within 30 days.

Delay interest helps, but it is paid by the builder, not your bank. Your EMIs or pre-EMIs to the lender continue regardless of delays.

How a home loan is disbursed for an under-construction flat

You pay your own contribution first (the part of the price the loan doesn't cover). After that, the lender releases the loan in tranches as construction progresses. HDFC Bank's FAQs, for example, say it disburses based on construction progress as assessed by the bank, which may not match the developer's demand schedule.

This isn't just lender preference. In September 2013 RBI told banks that housing loans to individuals must be closely linked to the stages of construction, with no upfront disbursal for incomplete, under-construction or greenfield projects. In November 2025 the National Housing Bank gave the same instruction to all HFCs and asked them to follow RBI's directions strictly.

In practice, each time the builder raises a demand:

  1. You forward the builder's demand letter (often with an architect's certificate) to the lender.
  2. The lender may inspect the site or rely on its technical team's report.
  3. The lender pays its share directly to the builder's designated account, and you pay any balance.

If the lender's assessment of progress is behind the builder's demand, you may have to pay the gap yourself or wait.

Pre-EMI or full EMI: which should you choose?

Until the loan is fully disbursed, you have two broad options:

Pre-EMI Full EMI from the first disbursement
What you pay Interest only, on the amount disbursed so far Interest plus principal on the amount disbursed
Monthly outgo during construction Lower Higher
Loan reduction during construction None Principal starts reducing
When regular EMIs start After full disbursement Already running; the EMI goes up with each tranche

HDFC Bank's FAQs describe pre-EMI interest as payable monthly from each disbursement until EMIs begin. The bank also offers a "tranche-based EMI", where you choose how much to pay during construction and anything above the interest goes towards principal. Other lenders have their own versions.

Pre-EMI keeps cash flow light, especially if you're also paying rent. But if the project is delayed, you can pay interest for years without reducing the loan at all. If you can afford it, starting full EMIs early or paying something extra limits that risk.

Subvention schemes: read the fine print

Under a subvention (or "no EMI till possession", "20:80") scheme, the builder agrees to pay the interest or pre-EMI during construction, and the buyer pays only a small amount upfront. It sounds attractive, but the loan is in your name. If the builder stops paying, the lender will look to you for repayment, and missed payments show on your credit report.

Regulators have repeatedly flagged this:

  • RBI's 2013 circular named 80:20 and 75:25 schemes. It noted the risks when builders service interest on borrowers' behalf and loans are released upfront, and told banks to make customers fully aware of the risks.
  • In July 2025 the Supreme Court allowed the CBI to register 22 cases over an alleged builder–bank nexus in subvention schemes in the NCR. Homebuyers there were left paying EMIs on flats they hadn't received after loans were disbursed to builders.
  • NHB's November 2025 advisory to HFCs, which repeats the stage-linked disbursement rule, came in response to a Karnataka High Court order and was specifically about subvention schemes.

If you consider a subvention offer, ask the lender and builder in writing: is disbursement linked to construction stages, who pays what and until when, and what happens to your liability if the builder defaults or possession is delayed?

GST on an under-construction flat

Since 1 April 2019, GST on residential flats sold before completion is:

  • 5% on the total price (net of a deemed land value), without input tax credit, for regular flats.
  • 1% for an affordable residential apartment: carpet area up to 60 sq m in metropolitan cities (or 90 sq m elsewhere), and a price of no more than ₹45 lakh. The entire Mumbai Metropolitan Region counts as metropolitan for this test.

There is no GST if the entire price is paid after the completion certificate is issued or the flat is first occupied, whichever is earlier. Such a sale is outside the definition of a taxable construction service under Schedule II of the CGST Act. This is one reason ready flats with an OC can work out cheaper on tax. Stamp duty and registration are separate costs — see the full cost of buying a home in Thane and Badlapur.

Tax on pre-construction interest: what changed in 2026

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. The deduction for home loan interest, earlier in section 24(b), is now in section 22 of the new Act. The rules themselves carry over:

  • Interest you pay before the tax year in which the flat is acquired or completed (pre-EMIs, for example) is deductible in five equal instalments, starting from the year of completion.
  • For a self-occupied home, total interest deduction is capped at ₹2 lakh a year. This applies only if construction is completed within five years from the end of the tax year in which the loan was taken, and you get a certificate from the lender. Otherwise the cap is ₹30,000.
  • Under the default new tax regime (section 202 of the 2025 Act), no interest deduction is allowed on a self-occupied home. For a let-out flat, interest remains deductible under either regime, subject to the loss set-off rules.

So a long construction delay doesn't just postpone possession — it can also cut your tax benefit. Check your position with your tax adviser.

A quick checklist before you sign

  • Project registered on MahaRERA, with the completion date and progress checked
  • Project approved by your lender, or the lender's legal and technical clearance confirmed
  • Registered agreement for sale, with no more than 10% paid before it
  • Payment schedule linked to construction stages
  • Decision on pre-EMI or full EMI, and a buffer for possible delay
  • Any subvention terms read carefully and confirmed in writing
  • GST and stamp duty included in your budget

How Biz Corp Solutions helps

We help homebuyers in Badlapur, Thane and across Maharashtra compare lenders for under-construction purchases. We check which banks and HFCs have approved your project, prepare the file and track each disbursement with the lender, keeping you updated at every stage. The lender makes the final credit decision. Learn more about our home loan service, or read our guide to home loans for self-employed borrowers.