Construction loan and agreement with contractor

 

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How to Apply for a construction loan?

Before Applying for a Construction loan we need the following documents 

1) Sale Deed.

2) Tax Receipts. 

3) Construction drawing.

4) An application for the Loan. 

5)  Mortgage  things 

Sale Deed:- Sale Deed is the document that shows the purchasing of the land or the property. It has all the information which clears the owner from which property is purchased and now who is the current owner. Property address with survey number of city. The sale Deed also clears the additional information that the property location comes in, like a commercial, industrial or residential. Also If it's under any loan 

Tax Receipts:- Every Property has to be clear with corporation tax of the current month, land tax, water bills, Electrical bills, and corporation tax of land. 

Construction drawing:- If we are planning for a construction loan it's very important to submit the proposed plan with current construction ( if any ). Drawing should be as per development control regulatory ( DCR), These vary as per city Usually, it is a rule of construction that should clear from all sides the provision of sewer and water tanks Nowadays, it's very important to show the rainwater harvesting system also. Drawing should be such a way to show plot area, and construction area, as per Floor space index ( FSI ).

An Application for Loan:- An Application should be made in the Name of the Bank or any private company from which load is applied. The application should be in such a way that it should clear the Applicant's name ( owner of the property ), Address of the property and Applicant, Plot size and proposed construction area, Purpose of Construction, and the amount for which Loan to be applied.

Mortgage:- If we are mortgaging any properties, We have to attach the valuation paper of that properties. 

All these documents are to be collected and the proper file should be made. 

What Should we check before Applying for a Construction loan?

Following are the major points to be checked before applying for the loan 

1) Percentage of Interest. 

2) Type of Agencies ( Bank or Private company ). It should have a good reputation.

3) late fee charges.

4) Criteria of Loan Amount to be received.

5) If a loan is flexible ( can the loan be shifted to other banks ).

6) Benefits of early payments.

You can check Few Construction loan Services 

News:-

In India construction loan is 7 % to 9 %, depending upon the banks. The Indian government is eager to give reasonable loans for making houses, However, in the scheme of PMAY government is helping with the amount of Rs. 2.5 lakhs.

Contractor profit is considered 15 % to 20 % and construction workers can earn $12 to $ 20 per hour

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The agreement is very important before starting any work.  Construction activities are always very long and many things changes during this time, if proper documents are not made between two parties disputes may occur. And if any party feels wrong they can go to arbitration, Work Contract / Agreements play a vital role.

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Most Agreements are the same, they change with the mode of work, mode of payments, and way of measurement.

Advantages of Agreement

1) Rates are open, and no hidden cost is involved.

 2) Support legal documents of work done.

3) Scope of work is clear for the contractor.

4) Budget Preparation can be done.

But Before Agreements with a contractor following this should be done 

1) Capacity of the contractor.

2) Check the work done previously by the contractor.

3) Machinery available.

4) Manpower available.

5) Financial capacity of the contractor.

I have Added different Agreements as per the scope of work.

The capacity of the contractor can be judged with the ongoing projects if the contractor can work simultaneity.

One can visit and review the previous projects that the contractor has completed and at what duration, If the previous project is up to that mark with the quality and time. If possible one can that review the project person about the working of the contractor.

Most of the time the contractor agrees to have all the machinery or he can avail of the machine which will be required. but at the time of construction needs, it is observed that the contractor is hiring the machinery and it is not available at that movement, which can delay the project. Hence it is very important that the contractor should own the machine and not hire it at the time of construction

The availability of manpower to any contractor is not fixed. and genuinely it is not controlled by the contractor. but still, if the wages and the timely payment are given to the labor. it will be considered that it will carry manpower at construction time.

The financial capacity of the contractor can be judged by their work turnover and the tax he had paid for the last 4 to 5 years. it is obvious that if he is paying high taxes his turnover is more and having good financial capacity.

Contractors and owners agree on the basic principles of cooperation. All disputes are settled by arbitration associations before the case can be brought. A dispute may arise from the quality of services provided by the contractor, as well as from the fact that the contractor is not fulfilling the terms of the contract. The contractor may demand the owner to pay for the work performed, or the owner may provide the contractor with the work for a specified amount.

Before you start to build a new house on your plot, you should be aware of all the terms and rules that the Construction Law of the Russian Federation prescribes. It's very important to know them in advance, because the contractor and the owner, who do not know the rules, can easily get into a conflict. If you know the rules, you will be able to avoid problems and solve disputes. This article is intended for those who want to build their own house, as well as for those who already have a house and want to make it better or repair parts of it.