The festive season is buzzing and people find it to be the perfect time to buy a house. Earlier, it was really difficult to buy a house but now a days the real estate companies and the banks offer many schemes for the people who have a dream to buy their own house. To let your dreams come true at affordable prices, developers have brought in the most advertised, and probably the most innovative, and of interest, the subvention scheme. Though these schemes have been in existence for few years, but a larger population wasn’t aware about this. Now the developers are advertising it to attract buyers.

How does this scheme works?

There are three parties-the buyer, the banker and the developer. The buyer books the property by paying 5-30% money upfront. The bank in the form of loan pays the rest of the amount to the buyer. The bank disburses the loan to the developer as construction progresses. The most important aspect is that the developer bears the interest cost till possession or for a fixed period mentioned in the buyer-seller agreement. The subvention scheme is preferable for those who stay on rent as they will not have to bear the burden of both the loan equated monthly installments (EMIs) and the rent while their house is under construction. It is an added advantage for the customer as the developer is bearing the interest cost till the construction is on. This is an incentive for the buyers at a time when project delays are so common.

How it benefits to the developer?

In view of tight liquidity with banks, when they are not willing to lend directly to developers, such schemes provide the builders an access to the funds, and that too at a low rate. It also helps buyers, who do not want to commit a big sum upfront as the project might take up more time than the committed period.