Ashish Sapkale 29 May 2025

Home loan interest loss due to cancelled under-construction project – legal advice needed

Dear Legal Experts,

I am seeking guidance regarding a cancelled under-construction real estate project in Maharashtra that I had invested in last year.

My situation:

I booked a flat in an under-construction project in early 2024.

Shortly after, a legal dispute arose between the builder and the landowner.

The project was later cancelled by the builder, citing legal complications.

I had taken a home loan, and the bank had disbursed funds partially (~₹60 lakhs).

I’ve been paying EMIs regularly and have paid over ₹20 lakhs so far.

Of this, around ₹7.44 lakhs till date gone towards interest, which is now a financial loss to me.

The builder is unwilling to compensate for the interest, saying “they’ve also suffered losses.”

I’m being told that if the project enters a revoked state, I may lose everything, including my paid amounts.

Meanwhile, I am unable to invest in other projects, and property prices are rising daily — causing further financial strain.

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❓ I’d like to understand:

1. Can I claim refund/compensation for the interest paid on the loan?

2. Do I still have legal rights if the project is revoked under the regulator?

3. Can I approach Consumer Court or RERA Adjudication for financial & emotional loss?

4. Should I wait for refund communication or issue a legal notice now?

Any advice from lawyers or others who’ve handled similar cases would be highly appreciated.

I can share further details over private message if needed.

Thank you in advance

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3 Replies

R.K Nanda (Advocate) 29 May 2025

1.yes

2.yes

3.yes

4.No. directly file consumer complaint against builder and land owner..

T. Kalaiselvan, Advocate (Advocate) 29 May 2025

If a home construction project is canceled due to a dispute, you can potentially claim back the bank loan interest paid, but this is a complex issue with multiple factors to consider.

The outcome depends on various factors including the nature of the dispute, the terms of your agreement with the builder, and whether the project falls under RERA regulations.

Even if the project is canceled, you are still legally bound to repay your bank loan.

The bank's interest in your loan is separate from the builder's obligations.

If the project is registered under RERA (Real Estate (Regulation and Development) Act), you can approach the RERA authority for a refund and interest compensation.

You can also file a consumer complaint with the consumer forum if the builder has failed to complete the project or deliver possession as per the agreement.

If the builder refuses to refund or compensate, you may need to file a legal suit in court to recover the money and interest.

The builder is responsible for ensuring the completion of the project and timely possession, and they are liable for the consequences of their actions, including delays or cancellations.

The bank is concerned with the repayment of your loan and the interest accrued on it. They are not directly involved in the disputes between you and the builder.

kavksatyanarayana (subregistrar/supdt.(retired)) 29 May 2025

You can claim a refund of interest paid to the bank by you from the builder.
The agreement between the builder and you shall be verified regarding your legal rights.
You shall approach the Consumer Commission against the builder and landowner.
No. The bank is not concerned about your failures in the project, and you have to repay the loan to avoid legal complications.