Attractive home loan EMI subvention scheme is no magic bullet: Know how it became an everlasting misery for these homebuyers

home loan EMI subvention scheme offered by many builders and developers a decade ago.

According to TOI, subvention schemes were supposed to make things easier for buyers, but in many cases, became instruments that gave builders access to loans without accountability and left homebuyers in the city to bear the aftershocks, like demand letters to pay EMIs despite houses running years behind schedule.

Also read | How an easy home loan EMI scheme turned into a nightmare for many homebuyers in Delhi NCR

How does a subvention plan work?

It's an investment plan in which one buys a house but begins to pay EMI only after possession. Usually, a buyer needs to pay around 10% upfront. So, if it's a 1-crore house, upfront payment is 10 lakh.

It differs as how is the house financed. The loan is taken by the realtor directly from the bank. The realtor pays a pre-EMI till the time of possession. But this EMI is only on the interest component. The buyer begins to pay EMI on the principal and the rest of the interest component after possession. The delivery timeline is typically 3 years with a grace of 6 months.

The problem was that the realtors missed the delivery timeline and stopped paying EMIs. Delays ran into years, and banks raised EMI demands to buyers, which included penalties on defaults. So what seemed like an easy way to buy a house became a nightmare

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