Advantages & Disadvantages of Subvention payment plan.

Q: How far this scheme help full for buyers & builder?

Preeti J, Greater Noida

4th November 2014

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Replies (1)

Hi Preeti,

As per my knowledge, recently, a number of developers have come up with subvention schemes, where property buyers need to pay a small amount of the property at the time of booking and the rest can be paid at the time of possession. This schemes are new a new form of bank financing for home loans.

Aiza, Greater Noida

4th November 2014

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Hi Preeti,

As per my experience, according to these schemes, after a buyer applies for home loan for a property under construction, he need not pay any pre-EMIs upto a fixed period or till possession i.e. all the interest amount till a fixed period or possession will be paid by the developer.

Sai Kumar, Greater Noida

4th November 2014

Hi Preeti,
In my point of view, under the subvention schemes, the banks disburse 80% of the value of the property to the company and instead of passing the payment discount to the customer the company pays the interest component to the bank on behalf of the customer for the specific period as per the subvention scheme plan .

Amelia.J, Greater Noida

4th November 2014

@ Preeti,
Subvention schemes are beneficial for those looking for shelter and can’t afford to pay EMIs and the rent, together. As property buyers need to start paying only at possession, this comes as a mutual beneficial situation for both buyers as well as developers. However there are certain positive (Advantages) & negative (disadvantages) risks attached to this plan.

Sunil Panday, Patna

4th November 2014

Hi All,

According to me advantages of this schemes are :- Buyers are benefited as the builder ensures timely delivery of the project to decrease the interest rate burden on their financials . Some developers claim they would pay any penalty charges in case of delay in possession.

Pranita Pandit, Greater Noida

4th November 2014

Hi Guys,
Anither advantages of this scheme is :-

This scheme gives investors an EMI (Equated Monthly Installment) holiday typically for a period of 24 months or till possession of the unit, whichever is earlier. In such schemes, exposure of the investor is limited to only 20 per cent of the unit value till possession or 24 months, reducing the risk of investing in an under construction project. When banks are involved, it ensures that the customer’s investment is safe.

Zuned Laskar, Greater Noida

5th November 2014

Hi All,
As per my knowledge , disadvantages of subvention plan is :-

Subvention schemes come with a lock-in period or a mentioned time period of 24 or 36 months – i.e the developer will pay interest on EMIs only till the period of subvention. After the subvention period buyers will be paying the EMI to the banks, whether construction is completed or not or whether possession is handed over or not.

Zoya.A, Greater Noida

5th November 2014

Hi Preeti,
According to me, major disadvantages of this scheme are
CIBIL gets Impacted- If the developer delays the EMI payment during the subvention period, the credit score/CIBIL rating of the home buyer gets impacted.
Lock-in-period- Investors should always check the applicable lock-in period for these schemes as it may restrict them from selling the unit in the open market.

Rehan , Greater Noida

5th November 2014

Hi All,
In my point of view, these schemes may look good at first , but the fact is if the project get delayed by builder the buyer will definitely pay much more than actual loan amount. It is important to look at the developer’s track record of delivery, construction quality of existing projects and after sale services..

Aiza, Greater Noida

6th November 2014