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Builder Insisting on Axis Bank Home Loan. Why? What is his Interest?
  • After long search, I have finalized on the purchase of a flat and given the token money to the builder. It is an under construction flat, whose construction has already started. I am planning to finance about 80% of the cost of the flat.

    But my builder is pressing me hard for finalizing the loan from Axis Bank only. He is stating that the project is already approved by Axis Bank and other bank might take a lot of time for sanctioning the loan. He is not ready to wait for that long.

    His behavior is just confusing me. Why he is insisting so hard for Axis Bank only. Is something fishy out there? What should i do in such a case?

    Please help.
  • On the face of it, I may say that the builder has not right to force you to go for Axis Bank only. Why does it bother him that from where you are arranging your finances as long as you are committing your self to pay the dues in time.

    You are absolutely right to smell something fishy here. Is he getting some kickbacks from the lender, which is forcing him to push for a particular lender. One of our reader, who was in a similar situation was apprehensive that the particular bank might be in collusion with him and in case the borrower defaults, then the bank may quickly liquidate the property and re-sell it back to the builder for cheap.

    But in practical situations, things may be different also. There may be some merits in the arguments of the builder that since Axis Bank has already approved the project, the loan sanction and disbursal will be quicker.

    You have to weigh your options here. And most importantly you have to do your maths whether you have some other options, which are offering your better interest rates, terms and conditions. In case Axis Bank is offering you competitive quotes, what is the harm in going with them. Ultimately you have to see the finer details, without getting biased and without any prejudice.