Builders try to hunt customers with attractime offers but homebuyers should be careful of realty schemes

Q: Slow realty market throwing up attractive offers for homebuyers in Mumbai and Delhi/NCR.

pradyumanapte, Mumbai

10th July 2015

Real estate News in Mumbai

real estate in mumbai

cibil rating

liases foras

realty schemes

subvention schemes

lower interest in property

possession-linked plans

Follow Discussion

Also see discussions for

Mumbai Real estate News Real estate News in Mumbai

Replies (6)

Hi everybody,
A lot of small developers advertise low-cost properties in small towns and suburbs. Don't trust them blindly.
Until there are entry barriers and tough rules for developers, it's your responsibility to verify the builder's credentials.

Ravindra Singh,

24th July 2015

Comment

@pradyumanapte, Very nice thread. Now a days trusting anyone is very tedious task. You need to be very careful while dealing with any of the Real Estate Agent.

MadhavJha, Mumbai

14th July 2015

Comment

Right Madhav,
Specially, investing in a property in the pre-launch stage is highly risky. Since such projects are still on the drawing board, their final specifications can change drastically. Secondly, they don't get required approval and in the absence of approval project get stuck and poor buyers or investors have to face a lot's of difficulties during the period.

Manisbapu, Mumbai

24th July 2015

@Ravindra,
It should also be noted is that most of these subvention schemes are offered at a price that is at least 10% higher than the rate charged for regular schemes. Buyers need to make sure that all these offers are not added in the overall cost.

Niyati Juthali, Mumbai

10th July 2015

Comment

What is wrong in subvention schemes? Can you explain about it?

Surinder,

10th July 2015

Comment

Hi Surinder,
A subvention scheme (20:80 or 10:80:10) the builder pays the pre EMIs on the loan taken by the buyer for either a specified period or till possession. Since the EMIs are on account of the buyer, it is his credit history that is at stake if for some reasons the project is delayed way beyond scheduled date and additional cash outflow, due to EMIs, cause financial stress. The same is the case with the builder defaults on the payment of pre EMI to the bank.

Ravindra Singh,

10th July 2015

Thanks Surinder,
What is CIBIL Score and how it plays an important role in the loan approval process? Can you explain?

Surinder,

10th July 2015

Well Surinder,
CIBIL score is an individual's credit score and plays an important role in the loan approval process as it indicates the credit worthiness of an individual to lenders. A low score on account of defaults impacts eligibility for loans in the future. If the property gets delayed beyond the end of the subvention period, it could wipe out all benefits accrued to the buyer in a matter of months.

Ravindra Singh,

10th July 2015

Good afternoon Dwarkesh,
Very true. There are too many horror stories of abandoned projects, much delayed homes and builders not honouring their commitments. Property brokers are also having a tough time explaining such schemes to the buyers. Because of awareness in the buyers, they know the end results of those schemes and Once they realize the risks, many back out.

Ravindra Singh,

10th July 2015

Comment

Right Ravindra,
We are taking a financial risk based on a builder's guarantee. But who guarantees the guarantor? Have you ever asked a homebuyer who is currently fighting a legal battle with a builder for delaying his apartment by more than 3-5 years.

Dwarkesh,

10th July 2015

Right Pradyuman,
Buyers should be very careful to understand the various schemes on offer before committing yourself to what will probably be the biggest investment in your life. Builder may try to attract you by offering schemes such as 20:80 or 8:92, or offer of lower interest rate of 7.99% for 3 years, guaranteed rentals for 3 years or a 100% buyback scheme. I can understand that this is the best time to buy property as prices are relatively low.

Dwarkesh,

10th July 2015

Comment