What is the No EMI Scheme till possession?

Q: While hunting for homes, they came across some builders offering us the no EMI till possession scheme.

Rakshit, Mumbai

8th December 2014

Buying property in Mumbai

zero emi till possession

emi for a home

good property to invest in

potential buyers to invest

invest in a home

interest and the principal amount

find a property

new homes

no emi payment plan

no emi scheme

zero emi scheme

advantages of zero emi schemes

Follow Discussion

Also see discussions for

Mumbai Buying property Buying property in Mumbai

Replies (10)

The scheme in my case is from the builder, not the bank. I have not registered the property and not signed any agreement involving any bank. So no EMIs. On posession and posession only, I have to pay the 80% to the builder or at that time if required take a loan from the bank. Yes, the builder has charged a premium over construction linked plan from me.

Amitoj Singh, Apartment Resident, Mumbai

18th May 2015

Comment

Right Amitoj,
The real estate community is often at the receiving end of volatility in prices. Blame it on the markets that affect buying power.

The burden then falls on builders to come up with innovative ways in which to promote their projects and get potential buyers to invest. One of these schemes is that of "No EMI till possession".

Ketalpujara, Mumbai

1st July 2015

Right Ketal,
It is also called subvention scheme, this is primarily a financial structuring scheme that works on the principle of 20:80. As a property buyer, you will have to pay only 20% of the property cost upfront to the builder. All EMIs will then begin only after you have taken possession of your home.

Miraniyatin, Mumbai

1st July 2015

Hi all,
Zero EMI till possession scheme :- The Zero EMI scheme is something where the buyer is not required to pay the monthly installments once the property loan has been sanctioned. Here the builder pays the EMIs by issuing post-dated cheques for a pre-decided tenure. This period may last from a year to 30 months till possession. The interesting part is that the developer pays just the interest of your EMI and the principal amount is deducted from the buyer. So, be careful while buying property under this scheme.

Miraniyatin, Mumbai

18th May 2015

Comment

Very interesting answer Miraniyatin,
Can you tell me how Zero EMI scheme works? What are the conditions mentioned under this scheme?

Roshni Pawal, Mumbai

18th May 2015

Hello Roshini,
It is very simple. When a residential project starts, the developer ties up with the banks or other financial institutions to get the home loans sanctioned for purchase of properties in that particular project. The following conditions apply on the sanctioning of housing loans: 1) he amount sanctioned for the loan should be released in the form of construction-based installments that are decided by the developer’s demand. 2) A repayment holiday is given to pay back the principal amount for the fixed tenure or till the possession date (as mentioned by the builder), whichever is earlier.

Miraniyatin, Mumbai

18th May 2015

Rakshit, you had also made an enquiry in this forum on DB Skypark. As I've posted there too, I have a flat in the project at 20:80 from the builder, not the bank. So in this scheme, irrespective of when possession happens, the 80% will be paid by us only on actual posession. At posession, we may pay the 80% independently or take a loan from the bank.

Mine is only one of 5 flats sold by builder in this scheme. Anyone interested in buying my flat can call me on 9820991097. It's a good investment for a luxury segment flat at international airport, Mumbai near Hyatt, ITC Maratha, Hilton viscinity. 10th floor with airport view. 16250/- per sq ft 2 BHK with one Study room, 3 bathrooms. Ph-9820991097.

Amitoj Singh, Apartment Resident, Mumbai

2nd April 2015

Comment

In my point of view, check to see if there is a time limit on the number of years that the developer will pay the EMI. Many builders cap the number of years at 2, irrespective of whether the construction is complete or not. This may not work in your favor.

Always keep in mind that if the developer fail to pay on the EMI payment, then you will be responsible to pay the same and the bank will hold you explainable.

Sankalp, Mumbai

8th December 2014

Comment

But before investing here are some points to keep in mind:-
One should need to research a lot into the financial structuring of the scheme and check on whether the builder is actually paying the entire EMI. There are chances that instead of exciting the EMI, it may be passed down to the buyer through a higher price point. You will also have to check on whether the builder has successfully completed such a scheme in an earlier project.

Sandeep Mhatre, Mumbai

8th December 2014

Comment

Another advantages of this scheme is paying 20% of the down payment at the time of booking and then holding onto the EMIs till the construction is complete allows the buyer to reap better benefits from appreciation.

A project may take approximately 3 years to complete. At the end of 3 years, there is a natural appreciation in price, one that the buyer will be able to benefit from more considering he has only made a down payment based on a lower price rate for the property.

Sankalp, Mumbai

8th December 2014

Comment

Since the builders are now paying the EMIs on behalf of their buyers, the pressure to complete a project on time is higher. This works to the benefit of the buyer who will be ready to move into a home of their own and stop paying rents.

Sandeep Mhatre, Mumbai

8th December 2014

Comment

Hi Sandeep,
It means till the time of possession, EMIs are paid by the developer to the bank, instead of the home owner doing so.
But we will have to do our research on the kind of No EMI scheme being proposed.
In one, the builder pays a part of interest and principal on your EMI to the bank in a reducing format for a fixed period of time.
In another, they pay only the interest and the principal amount is deducted from your loan account.

Sankalp, Mumbai

8th December 2014

Comment

Real meaning of NO EMI till possession is also called the support scheme, this is primarily a financial structuring scheme that works on the principle of 20:80. As a property buyer, we will have to pay only 20% of the property cost to the builder on registration. All EMIs will then begin only after they have taken possession of their home.

Sandeep Mhatre, Mumbai

8th December 2014

Comment

Uncertain of the benefits of such a scheme, we must look into what this need. The real estate community is often at the receiving end of unpredictability in prices. Accuse it on the markets that influence buying power. This is nothing but a task that falls on builders to come up with innovative ways in which to promote their projects and get potential buyers to invest.

Sankalp, Mumbai

8th December 2014

Comment