Banks Introduce Financial Schemes to Woo Property Buyers
Poor real estate sales in the residential sector have made significant impact on home loan disbursements, revenues and balance sheets of banks etc. Most buyers reluctant of making immediate purchases are now being lured into the market by being offered lucrative financing schemes by Banks.
The residential property sector of the real estate market suffered a significant blow in recent times with sales going down. A number of buyers in planning to make purchases are waiting on the sidelines with the hope that with passing time, prices will correct and make it a suitable time for purchase.
Other sectors affected: the slowdown of the property sales have not only affected the real estate sector and its developers but also affected other financial sectors such as the bank and its loan disbursement processes. Under the impact of the slowdown, revenues have been low and Balance Sheets affected too.
Measures taken: to counter the poor state of affairs, Banks are taking measures such as offering attractive financial schemes with the aim of luring prospective property buyers.
Schemes on Offer:
- Subvention Scheme: also referred to as the 20:80 scheme, is popular among home buyers and investors. Under this, the property buyer pays 20% of the total cost availing loan for the remaining 80% and is a slight variation of the normal Home Loan. The developer pays the EMI for the first 2-3 years till possession and buyer starts paying thereafter. Property rates must be compared and verified with the prevailing market rates. Developers must be checked with for willingness of paying for the subvention scheme.
- Parallel/Pro Rata Funding, a popular funding for developers and Banks/HFCs – it reduces the initial burdens of the buyer unlike the conventional Home Loan in which the buyer has to first make his contribution of 20% before the disbursement of the loan. Parallel funding make property buying more attractive to the buyers. In the process, the initial 10% is paid for by the buyer while 40% is disbursed by the bank followed by the next 10% by the buyer and remaining 40% disbursed by the bank. Combination ratios also vary between 15:75:10 or 5:75:15 etc. and based on buyer requirements.
These innovative financial schemes introduced to woo home buyers are primarily being done with the objective of improving sales of the residential property sector as well as recover losses incurred. Such funding schemes help take away initial payment burdens for buyers, especially during the construction period.
Source: Money Control
financial schemes, home loan, Home loan disbursements, Property Buyers, Real-estate market, Residential property, Revenues
