Question

Describe the construction financing process. How does the money flow and when/what types of loans are needed for a project?

Answer 1

Construction financing process

Usually banks give loans for constructions for example i.e. own house, constructing roads, irrigation projects, corporate buildings.

Money flow for the construction of properties

Primarily the officials come to the construction site and verify project and verify documents of the property

And then based on value of construction and creditworthiness of borrower the loan will be sanctioned and the amount will be deposited to the borrower in two ways

1st way

Direct amount deposit

In this total amount of loan will be deposited in the account of borrower at once

Phase deposit of amount

In this type the amount is deposited in borrowers account in phase manner it means 1st amount will be credited for the foundation of construction then bank officials will verify the construction of it was really going on the they will deposit the total amount generally this type will be done for huge amounts only.

Type of loans for constructions

1. Construction to permanent loans

2. Standalone construction loans.

Thank you.