When do you start paying the principal portion of your housing loan?
To this question, there are two answers.
1. Immediately when the bank releases the loan in lump sum to the vendor.
2. When the house is completed (for under-construction houses)
If you bought a house second hand, the house has already completed in construction. Hence, the bank shall wait for the documents to be completed before they release the loan. Upon releasing the loan, the instalment and payment of principal and interest starts.
If it is an under-construction house, the bank releases the loan base on stages of progress. During this time, the loan is not fully dispersed. Therefore, only the interest of those loans which had been dispersed are being charged during this time. If your house is in construction period for 3 years, the various stages of progress would have the bank releasing the loan in stages. You need to pay the interest on the loan that has been released based on those stages. When the total loan is fully released upon completion, you start paying the interest and principal sum.
When is the house “completed”?
The moment the Occupation Permit (OP) or Certificate of Completion and Compliance (CCC) is issued marks the completion of the house.