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Old July 15 2011, 10:06 AM   #1
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Default Subvention Scheme

Some builder are offering No EMI for two years etc etc. What is the catch there?
If I am not wrong this is called Subvention Scheme. Could experts help me understand what exactly it is?

As a buyer what are the things one should know and consider before opting it? appreciate your response.

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Old July 15 2011, 10:32 AM   #2
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BSP for such flats is higher.
for example in Ramprashtha,under this cheme the BSP for flats offered is 3700 psft which is 3400 psft otherwise.
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Old July 16 2011, 10:28 PM   #3
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I think it may get complicated if you want to exit the project before possession, as the second buyer will have to pay you the premium over already higher BSP. It may work well for sure end-users.
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Old July 17 2011, 12:36 AM   #4
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Quote:
Originally Posted by moh_maya View Post
I think it may get complicated if you want to exit the project before possession, as the second buyer will have to pay you the premium over already higher BSP. It may work well for sure end-users.

When you take a loan...intially for some time you mostly pay the interest not the principal as EMI..

In subvention...builder agree to pay the interest EMI for you for couple of years....

But remember the loan is always in your name...its just builder paying the EMI for the time being....hence generally charging higher BSP...

end of two year if you offer builder the whole flat of the cost...he would not take it rather ask you to settle the loan with bank.......

All in all...I do not like it much
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Old December 12 2011, 05:19 PM   #5
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Icon21 Suvention

Hi,

As per my understanding if we have to buy something in CLP, it is better to buy in Subvention as we do not pay interest for 2 years.

any view ....

this is quite a big saving

Regards
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Old December 12 2011, 09:25 PM   #6
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besides CHD any other subvention scheme currently going on..any idea?
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Old December 12 2011, 09:28 PM   #7
 
 
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indiabulls sector 110
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Old December 30 2011, 12:46 PM   #8
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Hello Folks,

Please help me in deciding which one to go for - Subvention scheme or CLP for one of the Jaypee Projects in the wishtown. I am relatively inexperienced in the matters of property and would appreciate quick help from the senior members:

Subvention Scheme benefits:
1. Save your money for 2 months, invest in some FD and pay to the bank at the start of EMI (after 2 years) so that the overall loan liability reduces.
2. No hassle of part payments to the builder. As such no calculation and re calculations for the EMIs you will have to pay.

Risks:
1. In case of dispute in the property- you will have to fight with the mighty builder to get the bank's money back !

CLP benefits:
1. Let the bank disburse only the amount you need. You can club your own money with the bank's money to make payments. As such you withdraw the minimum required from the bank and hence lesser loan liability.
2. In case of project delays, you have time to make payments by your own.

Risks:
1. If the bank does not provide the facility of repaying the principal as soon as you withdraw the money, you will suffer in case the project is delayed after say 50% construction is done. This is because you will have to pay only the interest till you get possession. since the duration increases due to delay, you pay more interest.
2. Hassles of part payments, calculations and re calculations may result in an error at your end!

Please share your views....add to the points above or comment on them ....
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Old December 30 2011, 01:36 PM   #9
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Quote:
Originally Posted by alok11 View Post

CLP benefits:
1. Let the bank disburse only the amount you need. You can club your own money with the bank's money to make payments. As such you withdraw the minimum required from the bank and hence lesser loan liability.
2. In case of project delays, you have time to make payments by your own.

Risks:
1. If the bank does not provide the facility of repaying the principal as soon as you withdraw the money, you will suffer in case the project is delayed after say 50% construction is done. This is because you will have to pay only the interest till you get possession. since the duration increases due to delay, you pay more interest.
2. Hassles of part payments, calculations and re calculations may result in an error at your end!
Hi frnds

Do banks provide the facility of repaying the principal as soon as they disburse the money to builder in CLP (i.e., before possession)? If yes, which banks are allowing this or do you have to make this point clear during agreement beforehand?

Regards
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Old December 30 2011, 02:49 PM   #10
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I talked to one HDFC guy and he said that you can pay interest+principal on part payments made under CLP. Yes you need to clarify everything before going for a plan.
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