Home Loan for an Under-Construction Flat in Hyderabad: Process, Pre-EMI, GST vs Ready-to-Move

By Vijay Arjun V (B.Pharm, PGDM), authorised LIC HFL DSA since 2002 and DME (Direct Marketing Executive) appointed by LIC HFL. LIC HFL terms checked on lichousing.com on 29 October 2026; Telangana charges from the Registration & Stamps Department orders.

Under-construction or ready-to-move: the key differences

Affordable housing for GST means carpet area up to 60 sq m in metro cities such as Hyderabad and a price up to ₹45 lakh. Resale flats and flats bought after the OC is issued carry no GST.

How does pre-EMI work on an under-construction flat?

LIC HFL releases the loan in instalments linked to construction stages. Until the full loan is released, you pay only interest on the amount released (pre-EMI). Once the last instalment is released, the regular EMI starts. You can also choose to start full EMI earlier, which reduces total interest.

Budget for pre-EMI plus your current rent until possession. Model your own figures with the EMI calculator.

Home loan process for an under-construction flat

1. Check the project: RERA registration, building permission and, ideally, LIC HFL approval. Never pay for a pre-launch flat.
2. Book with no more than 10% of the price until the agreement for sale is registered.
3. Apply and get sanction: LIC HFL assesses your income and checks the project’s title and approvals.
4. Sign the tripartite agreement between you, the builder and LIC HFL; see what a tripartite agreement is.
5. Pay your own share first. The loan is released after your contribution for the stage is paid.
6. Stage-wise releases: for each construction stage, the builder raises a demand letter, you send it to LIC HFL with proof of your payment, and LIC HFL releases its share to the builder, usually after checking progress.
7. Pre-EMI, then full EMI: you pay interest on the amount released until the last release, then the regular EMI starts (or start full EMI earlier).
8. Possession: final release, occupancy certificate and registration formalities; see the flat possession checklist.

Depending on the builder, the sale deed for your flat or your undivided share of land is registered early (with a construction agreement) or at completion. LIC HFL’s mortgage is created on whichever deed is registered.

Tax benefit on interest paid during construction

Under the old tax regime only: no deduction while the flat is being built. The interest you pay before possession (pre-EMI) is added up and claimed in five equal parts from the year you get possession, within the ₹2 lakh yearly limit for a self-occupied home (section 22 of the Income-tax Act, 2025, formerly 24(b)). Construction must be completed within five years from the end of the tax year in which you took the loan, or the limit drops to ₹30,000. The new regime gives no interest deduction for a self-occupied home. Details: home loan tax benefits 2026.

Which one costs less in total?

On a ₹60 lakh flat, GST adds about ₹3 lakh to an under-construction purchase, plus pre-EMI interest and rent for 2–3 years. A ready flat avoids both but usually costs more per sq ft. Compare the all-in figure, not just the base price: stamp duty, transfer duty and registration are about 7.5% either way, plus a 0.1% mutation fee in GHMC. See the hidden costs of buying a flat.

How to reduce the risk of an under-construction flat

• Check the project on Telangana RERA: registration, promoter name and the declared completion date. See how to check a project on Telangana RERA.
• Prefer an LIC HFL APF-approved project: LIC HFL has already checked its title and approvals, and you get a processing-fee discount and no legal and technical fee. See the approved projects list.
• Link your payments to construction stages, not dates. Under RERA, a builder cannot take more than 10% of the price as an advance before the agreement for sale is registered.
• For a ready flat, insist on the occupancy certificate before registration.

Nearing possession? Use our flat possession checklist for the OC, snag list, final loan release and utilities.

Also read: What UDS (undivided share of land) means in a flat, and why pre-launch UDS deals are risky · Tellapur, Kollur or Kokapet for a 3 BHK: prices, access and the loan you need

Where your payments go while the flat is being built: RERA escrow account and the 70% rule.

Frequently asked questions

Does LIC HFL give loans for under-construction flats?

Yes. The loan is disbursed in stages as construction progresses (LIC HFL FAQ). Approved projects are processed faster.

Is GST payable on a resale flat?

No. GST applies only to under-construction flats bought from the builder before the OC.

Can I claim tax benefits on pre-EMI interest?

Under the old tax regime, yes: interest paid before possession is claimed in five equal parts from the year of possession, within the ₹2 lakh limit. The new regime gives no deduction for a self-occupied home. Confirm your case with your tax adviser.

Which is easier to get a loan for?

Both are routine for LIC HFL. Ready flats with an OC and APF-approved under-construction projects have the simplest files.

Next step: share the project name and price; we will tell you the loan amount, pre-EMI and total upfront cost. Or start with a free eligibility check and read our LIC HFL home loan in Hyderabad guide.

Sources: lichousing.com home loan page and housing loan FAQ (checked 9 October 2026); GST rates on residential property (5% / 1% affordable, no GST after OC); Real Estate (Regulation and Development) Act, 2016, Section 13; Telangana Registration & Stamps Department orders. Pre-EMI and EMI figures are our calculations.

Hyderabad Home Loans is run by Elite Financial Services, an authorised Direct Selling Agent (DSA) of LIC Housing Finance Ltd. We are not LIC HFL. Loans are sanctioned solely at LIC HFL’s discretion; rates and fees may change.