Quick answer: A construction loan is paid in instalments as your house reaches each stage, not in one go. LIC HFL needs the approved plan and an engineer’s or architect’s estimate before sanction, and releases money after its team checks each completed stage. Until the last release, you pay interest on the amount released or a full EMI.
By Vijay Arjun V (B.Pharm, PGDM): authorised LIC HFL DSA since 2002 and DME (Direct Marketing Executive) appointed by LIC HFL. Loan terms checked on lichousing.com on 17 October 2026.
How is a construction loan released?
In stages, as the work on site moves forward. A house is usually built in this order:
- Foundation and plinth
- RCC frame: columns, beams and roof slab, floor by floor
- Brickwork and plastering
- Flooring, doors and windows, with plumbing and electrical work
- Painting and finishing
Before each release, LIC HFL’s technical team checks that the stage is complete. Your sanction letter sets the number and size of the instalments, so read it before you sign with a contractor.
How much does each stage cost?
Planning shares from a July 2026 HouseYog construction budget guide, applied to a ₹44 lakh build (a 2,000 sq ft G+1 house at ₹2,200 per sq ft, from our construction cost per sq ft guide):
| Stage | Share of budget | On a ₹44 lakh build |
|---|---|---|
| Site preparation and foundation | 10–15% | ₹4.4–6.6 lakh |
| RCC structure (columns, beams, slabs, staircase) | 25–30% | ₹11–13.2 lakh |
| Masonry and plastering | 15–20% | ₹6.6–8.8 lakh |
| Flooring, doors and windows | 20–25% | ₹8.8–11 lakh |
| Plumbing and electrical | 10–15% | ₹4.4–6.6 lakh |
| Painting and finishing | 10–15% | ₹4.4–6.6 lakh |
An architect writing for Studio Matrx (September 2026) makes the same point another way: the grey structure, from foundation to plaster, is about half the bill, and the finishes are the other half. Plan your cash for the finishing months, not just the slabs.
What should the cost estimate show?
The estimate is the document the loan amount is built on. A usable one shows:
- the engineer’s or architect’s name, licence details, signature and date
- the plot details: survey or plot number, area and the building permission number
- the built-up area for each floor, matching the approved plan
- the specifications: structure, flooring, doors and windows, fittings
- the cost for each stage and the total, with the rate per sq ft
In Telangana, technical personnel are licensed through BuildNow, and the state asked existing licence holders to register their licences on the portal by 31 October 2026. For the permission itself, see building permission by plot size.
Which documents are needed before the first release?
- The building permission and approved plan
- The plot’s title documents: sale deed, link documents and an encumbrance certificate
- The cost estimate
- KYC and income documents for every applicant
- The mortgage of the plot in LIC HFL’s favour (in Telangana, registered as MODT: see what MOTD means)
Full checklist: home loan property documents in Telangana.
What do you pay while the house is being built?
Until the final release, you pay either interest on the amount released so far or the full EMI, as your sanction letter says. Example (our calculation): with ₹15 lakh released at 7.15%, the monthly interest is about ₹8,938.
Once the whole ₹35 lakh is released, the EMI is about ₹27,451 over 20 years or ₹23,639 over 30 years at 7.15%. Try your own numbers in the EMI calculator.
How much does LIC HFL fund?
- Up to 90% of the cost for loans up to ₹30 lakh, 80% for ₹30–75 lakh and 75% above that (lichousing.com, 17 October 2026).
- Rates from 7.15% for salaried and 7.30% for self-employed borrowers with CIBIL 825+.
- Terms up to 30 years for salaried and 20 years for self-employed borrowers, subject to age.
- The rest is your own share. In the ₹44 lakh example, a ₹35 lakh loan leaves about ₹9 lakh for you to fund, so keep it ready as work begins.
Details: home construction loan in Hyderabad. Buying the plot too? See the composite (plot + construction) loan, from 7.35%.
What delays a stage release?
- Building beyond the plan. Extra floors, reduced setbacks or a changed layout can stop releases: read home loans on properties with deviations.
- Own share not spent. Funding is a percentage of the cost, so the work on site has to reflect your contribution too.
- An expired permission. BuildNow lists a validity of 3 years for non-high-rise buildings (timelines).
- Missing records. Keep dated site photos and bills for each stage, and tell us as soon as a stage is complete.
Frequently asked questions
Can I get the whole construction loan at once?
No. A construction loan is released in instalments as the house is built. Only a purchase of a ready house is paid in one go.
What if construction costs go up?
The loan amount is fixed at sanction, so you fund any overrun yourself. If the increase is large, ask whether a higher loan is possible; it depends on your eligibility and the revised estimate.
Do I need a contractor for a construction loan?
The lender looks at the approved plan, the estimate and the progress on site. Whoever builds, the work must follow the plan and the estimate.
Is there a tax benefit while the house is being built?
Interest paid before completion is treated differently from interest after completion. See home loan tax benefits for 2026 and ask your tax adviser.
Sources: HouseYog (2 July 2026) and Studio Matrx (September 2026) for cost shares; BuildNow portal notices and timelines, checked 17 October 2026; LIC HFL terms on lichousing.com, checked 17 October 2026. Rupee figures are our calculation.
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.