Subvention is a grant or amount of money which is given by the government for support or aid. Subvention schemes are highly popular in real estate and you will see a mention of subvention schemes made in real estate advertisements.
Subvention scheme on EMI of home loans helps the buyer a great deal as through this scheme, the buyer has to pay a certain amount of money to the developer and the rest is paid by the bank in the form of loan.
This scheme gives a certain benefit to the buyer as the EMI only starts after the possession of the property. The developers also benefit because it attracts more buyers to their real estate. However, this subvention scheme was banned in India and realtors have proposed to revive this ban in the union budget 2021.
Why is subvention important in real estate?
Through the subvention scheme, the buyer, the developer and the bank work in a tripartite agreement. The buyer pays a certain percentage, that is about 5-10% to the developer and the rest is paid by the bank. The buyer only starts paying the EMI after the possession of the property.
Both buyers and developers are benefitted from the scheme, as the buyer only starts paying EMI after possession and the developers get more buyers.
