How to check the approved financial project number (APF) before buying a property?February 16, 2023 . Home Buying Insights . 10 min read
A project gets an approved financial project number from a bank or a recognized financial institution. The number is allocated when the bank or the housing finance company vests its interest in the project. It also indicates that all the paperwork is complete and the documents pertaining to the construction have been submitted, reviewed, and approved by the appropriate agencies. The APF number ensures that the project has been approved and you can confidently invest in it. Companies involved in construction often collaborate with selected housing finance companies and banks to enable their clients to obtain loans for buying houses, flats and apartments. Obtaining and clearing documentation can be a time-consuming process. But if a construction project already has an APF, most of the documentation regarding the financing of a particular project is already completed, at least on the construction side.
How to check the APF number before buying a property?
As a home buyer you must check the approved project finance number before you invest in a property. How do you find the APF number of the property you are planning to buy?
Every construction project these days has a dedicated website. All approved construction projects have their APF number listed on the website. If the construction agency has multiple projects going on, you can go to their website, choose a project you are interested in, and look for the APF number.
Many banks and housing finance companies also list the approved projects on their websites, along with the APF number, although, it may not always be the case.
Why is it important to check the it before buying a property?
When you apply for a home loan, there are only certain banks and housing finance companies that are ready to give you the loan for the property in question. These banks and institutions, if they are ready to give you the loan, have approved this particular property. When they have approved the property, they must have given the APF number to the property being built.
When they have given the APF number, it means they have verified that the people responsible for building the property can be trusted with the project and it is safe to invest in it. Which further means, these banks and institutions trust this property enough to give you the loan that you can use to buy the apartment in the project.
There is a stringent procedure used before allocating the APF number. Thorough inspection of the project is carried out by the bank or the housing finance companies because they don’t want to jeopardise their reputation and money. Therefore, if a project has the APF number, in all probability, it is a safe project for you to invest your money in.
A construction project must gain the confidence of financiers to obtain the correct APF number. After obtaining the APF number, you can get it verified from the concerned bank. It also becomes much easier for you to obtain a housing loan once the upcoming construction property has a valid APF number.
How do banks and housing finance companies allocate it?
To begin with, the banks and the housing finance companies that are interested in granting loans for a particular construction project check whether the ongoing project is on the RBI’s negative list. If the project is on the RBI’s negative list, they don’t collaborate.
They also review the history of the people involved in the current construction project. How many projects have they successfully completed? What was the quality of the finished project? What is the feedback of the buyers? Were they able to stick to their schedule? Have they been engaged in some sort of dispute?
The banks and the housing finance companies use their own experts as well as gather information from different sources before deciding to allocate an APF number to the ongoing project.
What if a project does not have an APF number?
If a particular construction project does not have an APF number one of the reasons could be that the company responsible for the project is on the RBI’s negative list.
Another reason might be that the group responsible for the construction is still seeking the APF number – maybe in the process of getting it, but hasn’t gotten it yet.
Should it raise the red flag if a certain project does not have an APF number?
Certainly. After all, great stakes are involved when you are purchasing a property. Whether you are investing money from your own pocket or planning to get a loan from a bank or a housing finance company, you need to make sure that the property is legitimate and the people responsible for the construction can be relied on. A big reason why they don’t have it may be because they don’t have a good track record. They may not have obtained the required legal or technical approval or the license.
Is it important that you know the approved financial project number before you buy a property? Yes, it is.
An APF number tells you that it is a legitimate construction project, and you can put your stakes into it. You can rest assured that multiple agencies of repute have inspected the construction project and have approved it.
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