Struggling to clear their unsold inventory, real estate companies have started raining offers once again . While few are offering lower interest rate, others are promising free stay till the possession is given. These offers might look lucrative, but one must not forget that there are always hidden risks which one should know about before signing on the dotted lines. Let’s look at what these schemes are.
Low Home Loan Rate
In one of the schemes, a developer is offering a home loan at 2.99%. Given that home loan interest rates are currently at 8-9% the offer looks too good to be true.
Parveen Jain,vice-chairman, National Real Estate Development Council (NAREDCO), a self-regulatory body, says, “Even for government schemes home loan rates are in the range of 6 – 6.5%. Low interest rate might be for few initial years. One should properly read the fine print for any hidden costs, as it might be difficult to pay high interest rate at the later stage.”
Pay just 5- 10%; and move-in now
There are schemes that are asking to pay just 5 -10% per cent and get free accommodation till the possession of the property is given. Jain says, “Most of such schemes are offered for relaxation of GST. Also, builders are making them stay in their unsold inventory.”
In these schemes it is important to look at the financing scheme of the builder. It is quite possible that the builder will get rest of the amount cleared from a bank. Some schemes also state that developers will bear EMI cost till a fixed period. But again there is a catch.
The most important is your credit score might get affected if the builder fails to pay EMI on time as the loan is in your name. Jain, “Real estate companies are under stress. They are coming out with offers as they want to complete their old projects.”
According to Knight Frank, compared with the previous year new launches crashed by 41 per cent in 2017 to 1,03,570 units. NCR has seen much more decline at 56 per cent. Sales has also gone down by 7 per cent with 2,28,072 housing units being sold in 2017. Though unsold inventory dropped by 19 per cent, the number is still high at 5,28,494 units.
What to do?
The golden rule is to always doubt whenever unreasonable returns and guarantees are offered to you. Considering there is lot of unsold inventory in the market it is always good to buy a property, where instead of discounts, builders offer you lower prices.
It was assumed that RERA would bring much-needed transparency in the real estate market, but the current state of affair indicates that much more needs to be done for rekindling the builder-buyer trust in the real estate space.