Since buying a home is your biggest investment in life there are certain facets to it that you must understand. The current scenario of the real estate industry seems attractive and interesting but you must not rush on these matters. It means it’s a good thing that buying property is now easier and all it means is before committing anything you must be aware of a few schemes.

There are a few people who aren’t aware of certain basic details of property shopping. For example, about the 20:80 subvention schemes, lower interest rate of 7.99%, profession linked plans or a 100% buyback scheme.

People have heard of various schemes and most of them initially try to understand them better which are a bit difficult for first-timers. But there are a lot of horror stories that one hears of before buying homes, most of which are true. For example stories of abandoned projects, delayed homes, builders’ negligence on commitments, etc.

Even the property brokers fail to explain the schemes properly and after understanding the risks properly, many of them back out. The rampant malpractices by some developers and projects getting delayed in most of the cases is an undeniable reality. This in turn affects the credibility of prestigious property developers too.

Now let’s understand some basic schemes that every home buyer must be aware of prior to committing:

The Subvention Schemes:

In a subvention scheme such as 20:80 or 10:80:10, the builder pays the pre-EMIs for the loan of the buyer for a specific period or until possession. But since the loan account is in the name of the buyer, in case of delayed projects, it’s the buyer who bears the additional cash outflow and hence causes financial stress. A lot many times it so happens that a builder defaults on the payments which in turn affect the credit history or CIBIL score of the buyers.

Lower Interest Rates of 7.99% 

lower interest rates

Under this scheme the buyers get a lower interest rate on their home loans but it’s mostly for a period of 2 or 3 years. Before applying for this lucrative offer, you must carefully scan through the interest rates that would be applicable after that period. This new interest rate after 2-3 years may be more than the prevailing market rates which would then hurt you financially.

Read more: Easy home buying tips in first deal

Possession-linked Plans

Many of the developers nowadays are coming up with innovative sales plans. For example, 30:70 scheme is where the buyer actually pays just 30% of the property value and pays the rest only after taking possession. This offer sounds very lucrative since most people won’t have to even take a home loan for this and it even works with many developers. But there are chances that the developer doesn’t start the project at all and was just raising funds for some other project.

Check for Portfolio and track record 

builders trust

There are plenty of attractive schemes that builders come up with. There are a number of them which are actually genuine and in truth plenty of them are scams too. But sometimes the excitement is so overpowering and their marketing tactics so professional, that people give in to their sales pitch no matter what.

It’s imperative for any home buyer to check and get the facts right before venturing out. Always check the track record of any developer before trusting them. Do not go by their booklets, but do some research by yourself and discuss with some of their actual customers.

Read more: Beware of hidden cost of while property buying

9 Responses

  1. Rani

    If you are buying a flat you must choose the right builders.Some builders offering the flats at low prices and don’t attract to them.Kindly go to the some companies or interact with the people you get some idea about the buying flats.

  2. Deeksha

    Buying a home is our lifetime investment it needs some proper guidance and analysis. And it is not an easy deal to complete with in a short time We require some time to verify the property documents with the legal advisers and the opinions of the existing customers are and all very important to know the track record of the builder.

    • Teju

      As a middle-class person, it is a our biggest dream in our life and It is our lifetime investment for us and our kids. So we should have clarity on builders, their schemes and bankers too.

      • Lavanya

        Buying a home is like a lifetime achievement for middle class people. Home is such an important in their life. That’s we need to take suggestions, advices while investing our hard earned money because in the reality market, there are many litigation companies if you invest in such companies you definite loss your money so be careful such companies.

  3. Rakesh

    Hello new investors, you are very lucky because you are visiting this article before going to buy flats blindly by seeing attractive offers. Now you have capability to analyse this article and compare the offers of builders and their interest rates including time bound. After coming to one logical end to their offer. You can ask many questions relating to your analysis and observe their answers and find the difference of their answers said before and now. Then you will get full idea about company and offer. Then you can go forward. This article helps me to find out a fraud offer from one company. That’s why I’m sharing my experience

  4. Mohammed Mudassir

    I’m very glad to appreciate this article because it is very clear about almost all things. As a first time home buyer I was attracted by some builders and prepared to buy flat. But when I read this article I’ve some doubts and I asked them but no clear information from them. I decided that those offers are some what true in reality. There are some hidden and internal logic’s in schemes, So be aware all. Thank you very much for such a good article given by you.

  5. Raghu Ram

    Very informative article on real estate investment, although investments in bank like long term or short term deposit gives a secure investment option but the fall in interest rate now not even equal to the inflation rate of India. Investment in stock market is really need a critical analysis otherwise which common man can not understand however real estate market is much safer than stock and gives high returns compared to long term bank deposit.

    • Dhinesh

      It is very useful article to make our hard earned money to make secure and invest in real estate to get excellent profit. It only market you double your investment with in shorter period.

  6. Shwetha

    Don’t trust any builder blindly. Specially first time home buyers will make mistake for choosing right builder for their home. Because they are in excitement and they will fall for the attractive scheme. So whoever it may before proceeding verify the scheme logic.


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