CHEQUE BOOK

HT Estates - - NEWS - Harsh Roongta

I have been work­ing in a pri­vate com­pany for the past 11 years. I wish to con­struct a house on a plot. I plan to with­draw money from my Em­ploy­ees’ Prov­i­dent Fund (EPF) to fund the con­struc­tion of the house. What are the rules re­gard­ing with­drawal from EPF or is there any other op­tion?

—AB The prov­i­dent fund (PF) is meant to be your re­tire­ment fund and hence should not be touched ex­cept in an emer­gency. In any case, PF with­drawals are avail­able only af­ter five years and for spec­i­fied pur­poses like ac­quir­ing a dwelling site or a house or con­struc­tion of a house.

Spe­cific forms are re­quired for mak­ing this with­drawal and the terms and con­di­tions for the same are avail­able at http:// www.epfindia.com/forms/F ORMS_Lat­est/Form31.PDF

Along with the ap­pli­ca­tion form for with­drawal from your EPF, you will need to sub­mit the orig­i­nal ti­tle deed for ver­i­fi­ca­tion, non-en­cum­brance cer­tifi­cate, es­ti­mated cost of con­struc­tion and ap­proved plan.

It is a bet­ter idea to take out a con­struc­tion loan for con­struct­ing a dwelling unit on a piece of land al­ready owned by you. You will have to sub­mit an es­ti­mate of the to­tal cost of con­struc­tion, duly cer­ti­fied by an ar­chi­tect/civil engineer.

The con­struc­tion loan will be re­leased in parts, based on the progress of the con­struc­tion. How­ever, you will have to bring in your con­tri­bu­tion in full be­fore the lender dis­burses the loan. The lender may also in­sist on send­ing its own tech­ni­cal per­son­nel to as­sess the progress of con­struc­tion or may de­cide to rely on cer­tifi­cates/pho­to­graphs sub­mit­ted by you.

Some len­ders are not com­fort­able fund­ing self­con­structed prop­er­ties and hence, your choices will be limited. You can ap­proach the State Bank of In­dia, Axis Bank, HDFC Ltd, ICICI Bank, etc, to ap­ply for a con­struc­tion loan.

As a thumb rule, if you are be­low 40 years, you should be el­i­gi­ble for around four times your net an­nual in­come as a loan of 20 years’ ten­ure. If the loan amount is be­low R30 lakh, the rate of in­ter­est will be in the range

of 10% to 10.25% per an­num. I opted for a con­struc­tion-linked plan (CLP) and re­ceived a de­mand from builder in June 2012. The project was not ap­proved by any bank till Novem­ber 2012. Adding to this, the builder-buyer agree­ment was signed among us in March 2013. Now the builder is charg­ing in­ter­est on late pay­ment since June 2012. I tried to set­tle with the builder but they are not agree­ing to the same. Should I go ahead and send a le­gal no­tice to the builder? I also know some more res­i­dents who are go­ing through the same prob­lem. Will it help if to­gether we all go to the builder or we file a case to­gether?

—BS Clearly there is an is­sue with the project and the de­vel­oper if no large bank is will­ing to fund the project. Th­ese kinds of is­sues arise when you do not do nec­es­sary due dili­gence be­fore fi­nal­is­ing the pur­chase. You should never buy in an un­der-con­struc­tion project un­less it has been preap­proved by at least a cou­ple of large len­ders. Even then, please re­mem­ber that pre-ap­proval does not mean that there is no risk of de­lay.

It is al­ways bet­ter to buy a ready-to-move flat even though it is more ex­pen­sive be­cause that avoids all con­struc­tion de­lay risk.

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