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Developers draw home buyers with interest rate concession

Comments Off on Developers draw home buyers with interest rate concession   |   January 18, 2014    04:36pm   |Contributed by manoja

PUNE: Members of the Confederation of Real Estate Developers’ Associations of India (Credai) have introduced a scheme wherein the buyer pays only 7.5% interest on the loan amount till the possession of the apartment or for 24 months – whichever is earlier.

The lender will not take a cut on the interest. Instead, the developer will shell out the difference between 7.5% and what the lender is charging for that specific period.

Also important are the various restrictions which the Reserve Bank of India has put on such ‘deals’ to attract customers and some recent court decisions have spelled out with the intention to contain the tendency of making lofty promises and taking the customer for a ride.

The offer aims at helping the hesitant prospective customers to buy, said vice-president Rohit Gera. “There is no slide in the demand, but many home buyers are sitting on the fence. We want him to act,” Gera said.

The offer implies that a customer pays 10% of the cost of the house as down payment and the bank will start disbursing the loan according to the progress of the project. Banks will process the loan applications according to their rules and charge the same interest. However, those who sign an agreement between January 17 and March 31 with any of the Credai Members will get back from the developer every month the interest in excess of 7.5%.

Gera said for a loan of Rs 40 lakh, a customer will save approximately Rs 10,000 per month during the period of construction. After two years, when the project will be complete, his income would have gone up and the regular EMI would not pinch him, he added.

So, are the days of liberal pricing and sweeteners of the post sub-prime crisis back in the realty sector? Credai Pune Metro president Hemant Naiknavare did not quite agree. “The situation in the aftermath of sub-prime crisis was different. The fear of an imminent job loss kept buyers away. This time, it is the economic slowdown that has made the buyer cautious and hesitant,” Naiknavare said on Wednesday.

http://timesofindia.indiatimes.com/city/pune/Developers-draw-home-buyers-with-interest-rate-concession/articleshow/28859215.cms

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