Hello Friends,

I have booked flat in wakad. Following is more info.

Developers give me 100 RS discount on ADF option.

Sellable area is 1288 * 2775 /RS (For ADF option.)
Sellable area is 1288 * 2875 /RS (For NON-ADF option.)

Now problem is only Kotak (8.5 % Rate) and ICICI (8.75 % Rate) bank give ADF for this project.

Which option I need to select. ADF or Non-ADF.? I am also evaluating Axis bank with Non-ADF option.

Please give me your valuable suggestions


-Tushar
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  • Somewhere I had read that selecting ADF option will give some discount, but you are at the mercy of the builder. I think ADF means Advance Disbursal Facility, so the builder gets the money without completing the project. Then why will he be interested in completing it on time.

    So evaluate option and find out more details.

    Here is an article from rediff on the same: http://www.rediff.com/getahead/2006/jul/03loan.htm
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  • Dont take risk for saving 1-2 lacks. better to opt for ready possession. Rs 100/- discount is kind of CHOCOLATE to fool buyers.
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  • Originally Posted by tushar4p
    Hello Friends,

    I have booked flat in wakad. Following is more info.

    Developers give me 100 RS discount on ADF option.

    Sellable area is 1288 * 2775 /RS (For ADF option.)
    Sellable area is 1288 * 2875 /RS (For NON-ADF option.)

    Now problem is only Kotak (8.5 % Rate) and ICICI (8.75 % Rate) bank give ADF for this project.

    Which option I need to select. ADF or Non-ADF.? I am also evaluating Axis bank with Non-ADF option.

    Please give me your valuable suggestions


    -Tushar


    You are going to save 1.2 lakhs with ADF option. But considering that you need to pay full interest on complete amout you might be end up paying additional interest of 4 lakhs or more during this period.
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  • Never go for ADF. You may see a short term gain in terms of 100 psqft, but in the long term there is really no benefit if the builder doesnt deliver on time. Go for EMI under construction which will have the benefit of faster repayment of principal and at the same time disbursement to the builder based on construction progress.
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  • You can ask for a counter offer, reduce the rate to 2400 or less psft then you will consider the ADF option..
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  • Never ADF. It is like handing over your cash to thieves & hoping that they would not steal it. Always go for step by step payment, if at all u want to go for any in-progress projects. You would not have sleepless nights this way.
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  • Absolutely true, BIG NO to ADF, given the frauds that have happened to people from these Pune builders.

    I would personally buy, if at all, resale apartments only.
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  • Is it good to opt for ADF in current market scenario with a reputed builder??
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  • guys..whats ADF? can someone pls tell me..
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  • ADF literally means - Another Dumb *beep* :bab (5):
    Theoretically it is Advance Disbursement Facility where you pay the builder the entire cost of the flat at the construction phase itself. Now why would you want to do that even if the builder is reputed one? Some people are lured by the discount offered by the builder. But does a discount of 100 psqft justify this? Some say they do not want to pay pre-EMI as it is basically money lost.

    By taking ADF the builder is just saving himself from taking the same amount from bank at much higher interest rate. In this case since buyer takes ADF, the builder gets the money at 0% interest and the entire liability is with the buyer. Does a discount of 100 psqft matter to the builder in this case? It's a very sweet deal from the builders perspective.

    What options do buyers have?
    1. Take ADF scheme - Buyer gets 1-2L discount (depending on builders offer), but his EMI starts immedietly and monthly outgo is huge right from the point plinth is laid. This may be OK for some people who have no shortage of money, but risk is still there if the construction gets delayed. The buyer has no control over the builder in this case.

    2. Dont take ADF, pay pre-EMI - Pay builder as per construction progress. Keep paying pre-EMI until70-80% of the money is disbursed, start your EMI after that. Advantage is that you dont pay the builder till he shows some progress and disadvantage is that you pay pre-EMI which does not count towards your loan repayment. You can however claim it as tax deduction after completion certificate is recieved.

    3. Dont take ADF, dont pay pre-EMI - This is a third option which banks dont disclose voluntarily. ICICI bank calls this construction linked EMI. Other banks may have a similar scheme. In this scheme, you pay the builder as per the construction progress but you pay the entire EMI from start. Advantage is that the interest component of the EMI will be calculated only based on the amount disbursed till that point and the rest of the EMI will be principal. So principal repayment will be huge during the construction period and this will bring down your outstanding loan much faster

    Bottom line - Never take ADF. Always go with construction linked payment and if possible go for construction linked EMI as well
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  • Originally Posted by lazybone007


    money, but risk is still there if the construction gets delayed. The buyer has no control over the builder in this case.


    Reputed builder has the ability to complete the project in time, what if he offers to pay compensation if the project gets delayed? can we opt?

    Originally Posted by lazybone007


    2. Dont take ADF, pay pre-EMI - Pay builder as per construction progress. Keep paying pre-EMI until70-80% of the money is disbursed, start your EMI after that. Advantage is that you dont pay the builder till he shows some progress and disadvantage is that you pay pre-EMI which does not count towards your loan repayment. You can however claim it as tax deduction after completion certificate is recieved.



    Thanks for the idea !!

    Originally Posted by lazybone007


    3. Dont take ADF, dont pay pre-EMI - This is a third option which banks dont disclose voluntarily. ICICI bank calls this construction linked EMI. Other banks may have a similar scheme. In this scheme, you pay the builder as per the construction progress but you pay the entire EMI from start. Advantage is that the interest component of the EMI will be calculated only based on the amount disbursed till that point and the rest of the EMI will be principal. So principal repayment will be huge during the construction period and this will bring down your outstanding loan much faster



    how different is this for ADF??

    Bottom line - Never take ADF. Always go with construction linked payment and if possible go for construction linked EMI as well

    Thanks Lazybone !!

    What if i sell the flat after possession , will i get the benefited??

    Thanks Lazybone !!

    What if i sell the flat after possession , will i get the benefited??
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  • Assumptions: You have the capacity to pay full EMI right from start of construction phase

    1. ADF & Full EMI - Consider loan of 50L for 20 yrs at 10.5% which has an EMI of Rs. 50,000 per month. You pay 50L to builder and your EMI starts. For simplification consider that every month 50k gets deducted as EMI out of which 6K is principal and 44K is interest. Principal component is very less during initial stages of EMI repayment and increases gradually. Check Ammortization charts given by banks. At the end of 2 yrs (assuming construction takes 2 yrs) you would have paid EMI of 12L out of which principal would have been around 1.6L and interest of 10.4L

    2. Non-ADF & Construction linked EMI - Again consider the same loan. This time you pay the builder as per slab wise status BUT your full EMI starts to the bank. For the first month consider only plinth is laid, so bank disburses 2L to the builder. You still pay an EMI of 50k based on total loan, but the interest is calculated only on the disbursed amount. So interest on 2L would be roughly Rs. 2k and the principal would be Rs. 48k. This interest would increase as the disbursements increase. So at the end of 2 yrs, you would have paid maximum principal and minimum interest, which is good for you.

    Clearly in the second case, you have maximized your principal repayment during the construction phase and also not paid the entire amount to the builder. This enables you to stop payment or delay payment if the builder is not showing good progress. Assume builder offers 200 psqft as ADF discount, which comes to roughly 3L. You can save much more by paying lesser interest to bank by opting for construction linked EMI. It does not matter if the builder is reputed or not, you still save much more.

    Talk to your bank about the available options and then take a call. Do not be tempted by the 100-200 psqft discount offered by builder.

    Selling the flat has nothing to do with ADF or non-ADF. The loan simply gets transferred to the new buyer.
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  • Originally Posted by lazybone007
    ADF literally means - Another Dumb *beep* :bab (5):
    Theoretically it is Advance Disbursement Facility where you pay the builder the entire cost of the flat at the construction phase itself.

    Ohh.. both the full forms work well it seems :)
    Thanks for this info lazybone007
    Ohh.. both the full forms work well it seems :)
    Thanks for this info lazybone007
    Ohh.. both the full forms work well it seems :)
    Thanks for this info lazybone007
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  • Lazybone007!!!
    you are awesome !!
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  • Just look at ADF issues in NCR thread. Builders sign one sided agreement & you are left with no choice in case of delays by the builders. Best to opt for CLP only. Atleast, you get option to pull out with min loss if projects get stalled in between. The cancellation charges in case of ADF are also very high. Consider this aspect too.
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