My builder is offering subvention scheme. Is it good?
Under a subvention scheme, you can buy an under-construction property from builders by paying 15% to 25% of the total cost of the property, or even less. The remaining cost of the property is paid by the bank directly to the concerned builder and the pre-EMI interest is paid by the builder to the bank, as per the agreement.
Usually banks offer subvention schemes only to builders that are listed as Category A with them. Those builders who have their project finance with the same bank and those with a clean financial record will be considered for this scheme.
There will be a three-way agreement between the developer, the buyer and the bank. Often there will be a specific period up to which the builder agrees to pay the pre-EMI interest.
Banks pay the amount to the builder upfront or as installments under a deferred payment scheme. You must check the terms and conditions of such schemes carefully before opting for them.
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