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Subvention Scheme Home Loan

Last updated: March 29 2019
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  • Subvention Scheme Home Loan

    I have booked a flat in Noid Extn with a subvention scheme. The builder has tie up with Axis and HDFC for the subvention, till 2016. Which bank is better for loan?

    Here are some things that I found:
    * HDFC loans through HDFC housing finance (hdfc.com), not through hdfcbank (hdfcbank.com). Hence, it may or may not follow RBI regulations, esp when RBI cuts rate.
    Axis is a bank and have to follow RBI regulations. Is this correct?

    * The current interest rate does not matter in subvention scheme as EMI will start at possession, and the EMI will be calculated at the interest rate that is applicable at the time of possession. Right?

    Any other point I must remember before signing up with a bank?

    * As the rates may drop in coming months, it is not wise to for Fixed rate loans.

    * I have a salary account with HDFC, will this get me some discount in the processing fee?



    At the time of possesion, if I want to transfer my loan to SBI, what charges will I have to pay to Axis/HDFC? Does Axis charge for preclosure in case of a transfer?
    Last edited January 18 2019, 04:57 PM.
  • #2

    #2

    Re : Subvention Scheme Home Loan

    - HDFC is a bank and not a NBFC therefore they have to follow RBI norms. Axis, yes is a bank and your right.
    - Rate of interest depends on fixed or fluctuating that you opt for.
    - You right, you should not fix, expected to reduce below even 9 as the overall economic growth does not support the same.
    - Processing fees are applicable irrespective but also can depend on ur negotiations skills and how desperate the bank sales guy is to achieve his target.
    - Since the simple interest is borne by the developer through this period, you can shift but check with the bank for any penalty clause.

    * also note ensure to read your agreement, whether your emi starts after physical possession of the apt. or after 2/3 yrs etc. Any tenure fixed will affect your overall cost estimation. As any further delays in the possession will add unnecessary interest to your loan amnt.

    hope the above info helps ya!

    Cheers

    Comment

    • #3

      #3

      Re : Subvention Scheme Home Loan

      I have taken loan from HDFC Ltd. under subvention scheme.

      The good thing i liked about it is the Pre-EMI interest is not deducted per month from Builder.

      Rather, the first disbursement of 80% itself is the total demand minus the Pre-emi for 12 month (my subvention scheme is for 12 month).

      Hence there is no chance of default by builder on payment of interest to bank.
      Last edited April 7 2015, 02:19 PM.

      Comment

      • #4

        #4

        Re : Subvention Scheme Home Loan

        dceite - good to know. Thanks for your reply.
        Is your subvention plan time bound, or possession bound?

        Comment

        • #5

          #5

          Re : Subvention Scheme Home Loan

          Originally posted by dhruvstar View Post
          dceite - good to know. Thanks for your reply.
          Is your subvention plan time bound, or possession bound?
          For 12 months its time bound, for the rest of the period, builder has written commitment of payment of pre-emi in case possession is delayed beyond 12 month. That is the time when the builder is bound to pay pre-emi to bank for every delayed month post 12 month period is over.

          Although from current project status it does seem likely that the project be offered for possession within next 12 month.

          Comment

          • #6

            #6

            Re : Subvention Scheme Home Loan

            Do not assume builder will deliver on time or pay EMI in case of delays beyond 12 months promptly . If the builder does it for you. Well and good . If the delivery gets delayed and builder does not pay EMI on time or defaults your credit score will nose dive and you will have hard time getting loans in the future . As long as the delivery risk is minimal you will be ok else you have to be prepared to pay EMI on your own if the builder defaults payment to protect your credit score like CIBIL score .

            Comment

            • #7

              #7

              Re : Subvention Scheme Home Loan

              Originally posted by skanadu View Post
              Do not assume builder will deliver on time or pay EMI in case of delays beyond 12 months promptly . If the builder does it for you. Well and good . If the delivery gets delayed and builder does not pay EMI on time or defaults your credit score will nose dive and you will have hard time getting loans in the future . As long as the delivery risk is minimal you will be ok else you have to be prepared to pay EMI on your own if the builder defaults payment to protect your credit score like CIBIL score .
              I understand that. That element of risk is is definitely there in any subvention scheme. That is why its important to choose subvention plan only fot projects which are at an advanced stage of construction.
              Last edited April 7 2015, 07:28 PM.

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              • #8

                #8

                Re : Subvention Scheme Home Loan

                Who is the builder?

                Comment

                • #9

                  #9

                  Re : Subvention Scheme Home Loan

                  pre-EMI

                  Hi ,
                  I have prepared a property in Raj Nagar Ext.
                  Builder is giving pre-Emi scheme for 2 years and after that if requires next 6 month extension for SBI , DHFL and SBP


                  Now my Question is?


                  1. He is not mentioning this in try party rather he is giving us a letter notarized saying he will bear the Interest part for said period. I believe that is a Risk? does that Letter from Builder going to help if any fraud occurs from bank?


                  2. lets say if builder did not pay the Interest part for in that case is that letter will help to show to the Bank. So, that we cannot be default. or any other mechanism which can help to protect us.


                  3. If i Pay principal part and builder will pay interest part then still there is any moratorium period condition will there. I hope it will work as CLP.


                  4. as below told that Bank can issue fund after deducting interest part . In this case is it possible in CLP plan as well. as builder is saying in this case Bank will issue 70% loan one go after deducting interest part.




                  Please guide, this is urgent


                  Thanks,

                  Comment

                  • #10

                    #10

                    Re : Subvention Scheme Home Loan

                    Here is some advice on Subvention Scheme. It is advised to stay away from such scheme unless you read the fine print and understand the risks.

                    Subvention Scheme and the risks associated with them | The Logical Buyer

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