A construction loan is not a lump sum; it arrives in instalments tied to progress. Planning your material purchases around those instalments keeps the site moving.
How Disbursement Typically Works
| Stage | What happens |
|---|---|
| Sanction | Bank approves against title, approved plan and cost estimate |
| Your margin | You fund the first part of the cost |
| Foundation complete | Inspection → first instalment |
| Each slab complete | Inspection → further instalments |
| Walls, plaster | Inspection → instalments |
| Finishing | Final instalment |
Stages and percentages vary between banks; get the schedule in writing.
Loan-to-Value Limits (RBI)
| Loan amount | Maximum LTV |
|---|---|
| Up to ₹30 lakh | 90% |
| Above ₹30 lakh to ₹75 lakh | 80% |
| Above ₹75 lakh | 75% |
These are ceilings; your bank may lend less based on its valuation.
Planning Cash Flow
- Align payment schedules — contractor stages with bank stages.
- Keep a buffer for the gap between finishing a stage and receiving the instalment.
- Buy materials per stage so cash is not tied up in stock.
- Budget pre-EMI interest during construction.
- Keep documents ready for each inspection — approved plan, photos, bills.
The Short Version
Expect to pay your margin first, then receive the loan stage by stage after inspections, within RBI's LTV caps. Match your contractor's schedule to the bank's, keep a buffer, and buy materials stage by stage.
