ATM :: Sharing home loan interest costs is new realty freebie

Saturday, 21 March 2015 – 5:30am IST | Place: Mumbai | Agency: dna | From the print edition
With home loan interest rate cuts staying elusive and freebies not working, realtors siting on huge residential inventory are thinking ‘out of the box’ to push sales.

With home loan interest rate cuts staying elusive and freebies not working, realtors siting on huge residential inventory are thinking ‘out of the box’ to push sales.

A Delhi-NCR-based realtor has come out with an offer that shouts ‘home loans at 4.99% fixed interest rate for the next five years’ to lure buyers deterred by high bank home loan interest rates that are in 10.10-1.25% range.
The realtor, International Land Developers (ILD), a part of ALM Group, has tied up with home search portal to offer ‘online only apartments’ across its four sites in Gurgaon.

Under the four-day offer that ends today, the buyer can book an apartment of his/her choice by paying Rs 18,000.

Explaining the scheme, a customer service executive said after booking the apartment, the buyer will have to complete the formalities with the developer and make an additional down-payment. The buyer can then avail of a 15-year home loan from a set of banks preferred by the developer or any other lender.

“Once the equated monthly installments (EMIs) start, the developer will refund buyer to the tune of 50% to 60% of the interest component, thus bringing down the home loan rate of interest by 50%.”

For example, if the buyer’s EMI comes to say Rs 35,000, of which principal component is Rs 5,000 and balance is interest, then the realty firm will refund the buyer Rs 15,000 i.e. 50% of the interest component on the loan.
This will be done for the next 60 installments, or a period of five years, after which the buyer will have to bear the entire interest cost. In case the purchase is self-funded, the buyer gets a 10% discount.

Samantak Das, chief economist and director – research, Knight Frank India, ILD is making the home loan interest rate a very attractive proposition.

Banks haven’t yet reduced interest rates on home loans despite the Reserve Bank of India cutting repo rate cut 50 basis point this year. In such a scenario, developers are seeking ways to bring the fence sitters into the market. While this is an interesting approach buyers need to be careful and have a clear understanding of the caveats before making the purchase,” said Das.

However, it is very typical of realtors to build into the total cost any sort of discounts/ freebies that are offered, he said.

A search at few other home portals like and revealed that the per square feet (psf) rate of ILD’s projects located in Gurgaon’s Sector 33 and 37 C are between Rs 4,500 to Rs 4,800.

However, the rate offered on for both projects is Rs 4,950 psf. That’s a premium of 3.1% to 10%, and a back-of-the-envelope calculation show a buyer will save 10% if the apartments are bought on

Rahul Purohit, principal partner and co-founder, Square Yards Consulting, said, “If we look at this offer more logically, it is the same payment plan as any other project in the market but the catch is the interest rate, which is 4.99% for five years fixed. Rest of the payment plan is same as construction linked plan, wherein buyer has to pay 10% of the total amount in 60 days.”

He said a closer look into the location reveals that the projects on offer are not really well connected currently. “Most of all these sectors have not performed really well in past few years on investment front. Appreciation is lowest in these sectors as compared to rest of the Dwarka Expressway sectors. In fact, certain areas are still under litigation near project sites resulting into delay of Dwarka Expressway,” Purohit said.

The Indian real estate sector has been going through challenging times for over a year now with bookings not really coming through the way it did during 2010-12. Industry experts feel realtors need to do a lot of introspection and get realistic about rates rather then resorting to marketing gimmicks.

The issue in the industry, Anuj Puri, chairman and country head, Jones Lang LaSalle India said, “Despite having the ability, the buyer today is not willing to pay the rates that developers are asking. Besides, I am not sure if giving a marketing spiel around small benefits will in any way enhance the saleability of the project.”

Source :

Leave a Comment / Feedback / Say a good word!

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s