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Buying your own home can be quite costly these days. Apartment prices being sky high in metros like Mumbai, are out of reach of the common man. This is when you come across some interesting hoardings by some developers and real estate Companies, enticing you to buy that dream house, using a very attractive loan scheme. The 80: 20 loan scheme.
If you want to purchase an under construction apartment, you pay 20% of the cost of the apartment, as a down payment. You avail a home loan from a bank, for the remaining 80% of the amount.The apartment you buy is an under construction apartment. You have to pay EMI (Principal + Interest), on the home loan availed, only on possession of your apartment.Till the construction is complete, you will have to pay only the Pre-EMI. This is the interest portion on the home loan amount, which has been disbursed by the bank.Banks disburse loans for your apartment as each stage of construction is completed. Interest portion that you pay on the disbursed loan amounts by the bank is called Pre-Emi. In the 80: 20 loan scheme the builder agrees to pay the interest, till you get possession of the apartment or for a certain number of years. If you buy an apartment for INR 50 Lakhs from the builder, under the 80: 20 loan scheme, you will have to pay INR 10 Lakhs as a down payment. You would avail a home loan for INR 40 Lakhs. The builder would pay the interest on this home loan called Pre-Emi, until you get possession of the apartment. Here’s the bad news… RBI scrapped the 80: 20 and the 75:25 loan scheme, way back in September 2013.
Yes…The 80:20 loan scheme and its cousin the 75:25 scheme, has made a comeback under a new avatar, the 10:80:10, 2:92:6, and even 6:88:6 loan schemes. Under the 10:80:10 loan scheme a very popular scheme, you/buyer would pay 10% of the cost of the apartment at the time of booking, along with the service tax and stamp duty.The builder would pay the interest to the bank on your home loan, till you get possession of the apartment. You/buyer would pay the remaining 10% at the time of possession of the apartment.
The builders are using these new avatars to escape the net of the RBI.
If you are staying on rent and book an under construction apartment, you will have to pay both the rent on the house you stay and also the Pre-Emi on the home loan. You can escape paying the Pre-Emi, by opting for these loan schemes, as the builder recompenses you the Pre-Emi.
You need to beware of
You must buy an under construction apartment under these loan schemes, only from a builder with a good reputation and track record. This builder would most likely complete the construction of your apartment on time and you benefit from a rise in the prices over time on your apartment.