A home loan for an under construction flat reaches the builder in stages, not in one go. You pay your own share first, often 20% to 25% of the cost. The bank then pays the builder as each of 8 to 15 stages finishes. Until handover, you pay interest only on the amount paid out, called pre-EMI. Tax benefits start only after completion, as of September 2026.
How a home loan for an under construction flat works
With a finished flat, the bank pays the seller 100% of the loan on the day of the sale deed. An under construction flat works in a different way. The bank sanctions the full loan but pays it in 8 to 15 parts, called tranches.
Each tranche matches 1 stage in the builder’s construction-linked plan. Stages include the foundation, each slab and the finishing. When the builder completes a stage, it sends you a demand letter. You pass it to your bank within the time your RERA agreement allows. The bank then pays its share straight to the builder.
Reserve Bank of India (RBI) rules require banks to link these payments to the stage of work. A bank should not pay 100% of the loan to the builder up front. This protects you more than an upfront payment would if the project slows down.
Your own share comes first. The Reserve Bank caps how much of a home’s cost a bank can lend. This cap is the loan-to-value (LTV) ratio, and it has 3 slabs.
| Loan amount | Maximum LTV (RBI cap) | Your share at least |
|---|---|---|
| Up to ₹30 lakh | 90% | 10% |
| Above ₹30 lakh to ₹75 lakh | 80% | 20% |
| Above ₹75 lakh | 75% | 25% |
So on a ₹1 crore flat, as an example, the bank can lend up to ₹75 lakh. You pay at least ₹25 lakh yourself, and your share often covers the first 2 or 3 stages. Stamp duty, registration and GST come on top. Our stamp duty Bangalore 2026 and GST on under construction flats guides work out those costs.
Pre-EMI vs full EMI
During the 3 to 4 years of construction, you choose how to repay. There are 2 main options, and some banks offer a third mix called tranche EMI.
Pre-EMI. You pay only interest on the amount paid out so far. In month 1, that may be interest on 20% of the loan. By the last stage, it is interest on 100% of the loan. Your full EMI starts only after the last tranche or at handover.
Full EMI. You pay a normal EMI on the amount paid out from day 1, including some principal. The loan ends sooner than with pre-EMI, and the total interest is lower. But the early monthly outgo is higher than with pre-EMI.
Here is an example with round, made-up numbers. Assume an ₹80 lakh loan at 8.5% a year for 20 years. Your rate and terms will differ.
| Stage | Amount paid out | Pre-EMI (interest only) |
|---|---|---|
| Early stage | ₹16 lakh | about ₹11,300 a month |
| Mid stage | ₹32 lakh | about ₹22,700 a month |
| Late stage | ₹56 lakh | about ₹39,700 a month |
| Fully paid out | ₹80 lakh | about ₹56,700 a month |
| Full EMI on ₹80 lakh | ₹80 lakh | about ₹69,400 a month |
Pre-EMI suits you if you pay rent in Bengaluru while you wait. It keeps the monthly cost lower than full EMI. But pre-EMI does not cut your loan by even ₹1. If handover slips by 12 months, you pay 12 months of interest with no progress on the principal.
Full EMI suits you if your income can carry it. In the example above, it costs about ₹13,000 a month more than full pre-EMI. In return, you start cutting the loan early and pay less interest overall. Many buyers pick pre-EMI in the first 1 or 2 years and then switch to full EMI once the tranches grow.
Tax benefits: old regime vs new regime
The Income-tax Act, 2025, replaced the 1961 Act from 1 April 2026. It gave the home loan deductions new section numbers but kept the limits. Guides from ICICI Home Finance and Bajaj Housing Finance both confirm this.
| Benefit | Old section (1961 Act) | New section (2025 Act) | Old regime limit | New regime |
|---|---|---|---|---|
| Interest on a self-occupied home | 24(b) | 22 | ₹2 lakh a year | Not allowed |
| Principal, stamp duty, registration | 80C | 123 | ₹1.5 lakh a year, shared with other savings | Not allowed |
| Interest on a let-out home | 24(b) | 22 | No cap on interest; loss set-off limits apply | Allowed, but loss cannot reduce other income |
Interest before completion. You cannot claim interest in the 3 to 4 years of construction. Instead, you add up all interest paid before the year of completion. You then claim it in 5 equal parts, starting with the year the home is complete. Each part counts within the ₹2 lakh yearly limit for a self-occupied home. For example, ₹3 lakh of pre-completion interest gives ₹60,000 a year for 5 years.
The 5-year condition. If construction is not complete within 5 years from the end of the financial year you took the loan, the self-occupied limit falls to ₹30,000. That is one more reason to check the RERA completion date before you sign.
Principal. You can claim principal under Section 123 only once you start repaying it. With pre-EMI, there is no principal to claim until full EMI starts. Stamp duty and registration can count in the year you pay them, within the same ₹1.5 lakh limit.
Your choice of regime matters. For many salaried buyers, the new regime’s lower slab rates beat the home loan deductions. For others with interest bills near ₹2 lakh a year, the old regime may win. A chartered accountant can run both regimes for your income and compare the 2 results.
Check the project and the lender approval
Banks lend on an under construction flat only after a legal and technical check of the project. Many banks in Bengaluru keep a list of approved projects so buyers get faster sanctions.
The developer’s website shows Adarsh Welkin Park as funded by ICICI Bank and funded by and mortgaged with Tata Capital Housing Finance. A project loan and mortgage like this is common for large Bengaluru projects. It means the builder’s lender holds a charge on the project land until it releases it. Ask how the builder will get a no-objection letter for your unit from Tata Capital Housing Finance. Your own bank will ask for it too.
You are free to borrow from any lender that approves the project, not only these 2. Ask for the list of approved lenders along with the cost sheet, and check the answers on our FAQ. Before you apply, run a Karnataka RERA check on the phase you are buying in. Both phases have separate RERA numbers and dates.
Documents you will need
Banks ask for 3 sets of papers: about you, about your income and about the property. Lists vary by lender, so treat this table as a starting point.
| Type | Salaried | Self-employed |
|---|---|---|
| Identity and address | PAN, Aadhaar, passport or voter ID | Same, plus business address proof |
| Income | Last 3 salary slips, Form 16 for 2 years | Income tax returns for 2 to 3 years, with profit and loss and balance sheet |
| Bank statements | Last 6 months of the salary account | Last 12 months of personal and business accounts |
| Property | Allotment letter, agreement for sale, cost sheet, payment receipts | Same |
| Builder papers | RERA certificate, lender’s no-objection letter, demand letter for each stage | Same |
Keep a folder of every demand letter and receipt. Your bank needs 1 demand letter for each of the 8 to 15 tranches. You will also need the receipts for tax claims and for any RERA complaint later.
Mistakes to avoid
A few common slips cost buyers money. Each is easy to avoid with a little planning.
- Not planning your own share. The first 20% to 25% comes from you, plus stamp duty, registration and GST.
- Ignoring the pre-EMI period. A delay of 12 months adds 12 months of interest with no principal repaid.
- Choosing a lender that has not approved the project. This slows the first tranche and can delay your payments to the builder.
- Not checking the RERA completion date. The 5-year tax condition runs from your loan year, not the builder’s promise.
- Paying demand letters late. Builders often charge interest on late payments under the RERA agreement for sale.
For price lines to plug into your loan budget, see the price section on the Adarsh Welkin Park homepage. For more buyer guides, visit the blog.
This article is general information as of September 2026, not tax, legal or financial advice. Loan terms and tax rules change, so confirm your case with your lender and a chartered accountant.
Get the cost sheet and the approved lender list from our relationship manager
Considering Adarsh Welkin Park?
Get the official brochure, floor plans and latest price sheet from our relationship manager.
Frequently asked questions
The bank sanctions the full loan but pays the builder in parts, called tranches, as each stage of work is done. You pay your own share first, often 20% to 25% of the cost, and interest only on the amount paid out.
Pre-EMI is interest only on the amount the bank has paid out so far. Full EMI covers interest and principal from the start, so the loan ends sooner but the early outgo is higher.
Not during construction. Under the old regime, the interest you pay before completion is added up and claimed in 5 equal parts from the year the home is complete, within the ₹2 lakh yearly limit for a self-occupied home.
Not for a self-occupied home. As of September 2026, the ₹2 lakh interest deduction and the ₹1.5 lakh principal deduction apply only under the old regime.
The developer's website shows the project as funded by ICICI Bank and funded by and mortgaged with Tata Capital Housing Finance. Ask for the full list of lenders that have approved the project before you apply.
Published by IamHere Realty, authorised channel partner for Adarsh Welkin Park. Project details are from the developer’s official material; verify every detail with the sales team before you decide.