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Is Subvention Plan a Good Option For Noida Projects?

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Is Subvention Plan a Good Option For Noida Projects?

Last updated: December 11 2015
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  • Is Subvention Plan a Good Option For Noida Projects?

    Pls advise if subvention plan is good as lot of banks and buiders are offering this plan.

    The scheme is... bank funds 85% of the amount. The builder gives Down payment prices to bank (but u get CLP rate) The diffrence is taken by the bank. In return u dont give any EMI until 2 years.
    By the time of 2 years the property would have appreciated. BY this time builder would have anyway taken 60-70% of the total amount. So ineffect you save the interest on this amount plus you can afford a unit if u dont have funds but think can get them tomorow.
    Pls advise any catch as I am interested in buying a property in this plan.
  • #2

    #2

    Re : Is Subvention Plan a Good Option For Noida Projects?

    If I am correct, JP along with few banks is offering this plan.

    Projects which will get delayed for surely will give such plans.

    Please ask the proper documentation before hand to see what would be the conditions from bank. What if builder doesn't give the time possession. What is builder doesn't show a good progress on contruction front.

    You said, you'll be saving interest for two years. But what about the difference (benefit) in DP & CLP, which in this case is taken over by bank. You don't save, you loose.

    Do the proper calculation.

    My PoV. Logical differences are welcome.

    Comment

    • #3

      #3

      Re : Is Subvention Plan a Good Option For Noida Projects?

      I believe its a big catch. Because in actual unknowingly you are buying in DP which is very risk. If builder doesn't deliver, you'll end up paying 100% to bank.

      Comment

      • #4

        #4

        Re : Is Subvention Plan a Good Option For Noida Projects?

        Originally posted by LChand View Post
        I believe its a big catch. Because in actual unknowingly you are buying in DP which is very risk. If builder doesn't deliver, you'll end up paying 100% to bank.
        Thanks for your pov.
        I will request more views.
        My point is that from purely investment view, u pay only 15%. No instalments 4 2 years. Suppose the rate of 2000 sq ft property is rs.4500/sq ft. My calculation is that i n 2 years good property on Noida expressway shouild reach 5500-6000 (of course the builder has to be good and doing the construction also).
        Even consrvatively at appreciation of rs. 1000 (in 2 yrs whic is perfectly getable)The profit will be rs. 20,00,000(twenty lacs)....actualy it may reach 40,00,000. The diiference b/w clp and dp is kept by the builder but then he is investing on your behalf so bank makes sure that proprty is safe also.
        This keeping in view that proprty on noida expressway is going to appreciate very fast and soon.

        Comment

        • #5

          #5

          Re : Is Subvention Plan a Good Option For Noida Projects?

          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 ....

          Comment

          • #6

            #6

            Re : Is Subvention Plan a Good Option For Noida Projects?

            I will request more views.
            My point is that from purely investment view, u pay only 15%.


            WRONG ASSUMPTION. BANK HAS ALREADY PAID REST OF 85% ON YOUR BEHALF PAID TO THE BUILDER.
            Now will builder bother to complete the project when he has already got the 100% money. he and his generations will use the interest to live a lavish life and you paying interest on 85% wothout even a brick being put.


            This keeping in view that proprty on noida expressway is going to appreciate very fast and soon.

            Very unlikely but even then CLP is better,

            Comment

            • #7

              #7

              Re : Is Subvention Plan a Good Option For Noida Projects?

              2. No hassle of part payments to the builder. As such no calculation and re calculations for the EMIs you will have to pay.

              YOU CONSIDER IT A HASSLE....MAN YOU ARE TAKING A LIABILITY WORTH SEVERAL SEVERAL LAKHS AND YOU ARE NOT WILLING TO EVEN CALCULATE THE EMI etc. such a lazy fellow you are....online calculators are available..try them and be ready to do a little hard work.

              Now we know the reason why people are cheated.
              In best hope.

              Comment

              • #8

                #8

                Re : Is Subvention Plan a Good Option For Noida Projects?

                Originally posted by Jai_Singh View Post
                2. No hassle of part payments to the builder. As such no calculation and re calculations for the EMIs you will have to pay.

                YOU CONSIDER IT A HASSLE....MAN YOU ARE TAKING A LIABILITY WORTH SEVERAL SEVERAL LAKHS AND YOU ARE NOT WILLING TO EVEN CALCULATE THE EMI etc. such a lazy fellow you are....online calculators are available..try them and be ready to do a little hard work.

                Now we know the reason why people are cheated.
                In best hope.
                I agree with Jai Singh, I also think CLP is better than Subvention

                Comment

                • #9

                  #9

                  Re : Is Subvention Plan a Good Option For Noida Projects?

                  JaiSingh and Navyasaxena,

                  I agree that the point of hassles is a minor one. But consider if the bank does not provide you the facility to repay principal before possession, CLP will hurt you badly in case of project delays, coz you will be only paying interest till you get possession. Your principal will stand as is.

                  Also, think about the fact that for 2 years you can put your money in some best investment scheme (some banks give you 9% on FD for 1 year !) and make a hefty early payment to the bank after 2 years to reduce your loan liability.

                  Subvention is suited for people who think that they can save a good amount in the next 2 years.

                  Also Jaisingh, your point of builder sitting lavishly is valid only if all the buyers give him money in advance (under subvention). I am not sure in what way is subvention plan "cheating". I think certain set of people will gain from it. In the process if the builder is getting the whole money in advance, I'll call it as a mutual benefit.

                  Property on expressway is quite hot and is bound to grow in years to come. Wishtown's location is superb, near delhi and in Noida.

                  All in all, I think you must check with your bank if you can make principal repayments before possession. In that case project delays won't hurt the people with CLP.

                  Comment


                  • sandkhur68
                    sandkhur68 commented
                    Editing a comment
                    Reading in 2018 . Wishtown location is superb and will appreciate very fast . LoL
                • #10

                  #10

                  Re : Is Subvention Plan a Good Option For Noida Projects?

                  I agree that the point of hassles is a minor one. But consider if the bank does not provide you the facility to repay principal before possession, CLP will hurt you badly in case of project delays, coz you will be only paying interest till you get possession. Your principal will stand as is.
                  I'm not sure about it. You are saying that in CLP you can't prepay the sanctioned amount before possession. Oh my god.
                  1. ARE YOU 100% SURE ABOUT IT. EVen with some penalty.
                  2. on the other hand can one prepay the loan in Subvention before possession???

                  Also, think about the fact that for 2 years you can put your money in some best investment scheme (some banks give you 9% on FD for 1 year !) and make a hefty early payment to the bank after 2 years to reduce your loan liability.

                  Boss if one really has that much of cash,,,,then i dont know what should one do,..have never handled that much cash


                  Also Jaisingh, your point of builder sitting lavishly is valid only if all the buyers give him money in advance (under subvention). I am not sure in what way is subvention plan "cheating". I think certain set of people will gain from it. In the process if the builder is getting the whole money in advance, I'll call it as a mutual benefit.

                  Boss it is mutual but risk is totally yours ....BUILDER HAVE GOT 100% MONEY...Do you really think builders care about benefit of customer even mutual...heck no....

                  Property on expressway is quite hot and is bound to grow in years to come. Wishtown's location is superb, near delhi and in Noida. Amen

                  All in all, I think you must check with your bank if you can make principal repayments before possession. In that case project delays won't hurt the people with CLP. Oohh...you are asking the same question,

                  CAN SOME1 CONFIRM IF PREPAYMENT CAN BE MADE before possession?????????

                  Comment

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