Pre-EMI waiver offers. Is it really worth?

Recent times 2 popular builders Jains and Mantri were advertising huge on Pre-EMI waivers till the project is getting completed. What is in store for buyers. Going by the confusions people have over these kind of offers, i just thought of putting my views here.
 

To me it is all the gimmicks to sell the project. Imagine if one decides to buy a project for 45 lakhs and go for a loan of say 40 lakhs ,he ends up paying at least 2 lakhs as pre-emi. My question is WHY PAY PRE-EMI in the first place?. Why not avoid it. You are any going to pay EMI, why not now.

I always tell people to go for Advance Direct Funding. Ask the bank to release the payment one stretch.That is pay the builder upfront the entire payment. While there are advantages of Pre-EMI waivers, i just want to summarize pros and cons of advance direct funding.

Pros

  • No PRE-EMI. Your Actual EMI starts right after the month payment is released and you can begin part payment immediately.
  • Bargain with the builder for rate waiver. You can bargain for more. Premium tiles, free car park etc etc.
  • Some builders pay 18 percent interest on the additional capital lying with them. Believe me i know Real Value, Plaza builders doing this.you get back as much as 1.5 -2 lakhs back.
  • Cons
    Of course this benefits builders and there is an element of risk if the project is not completed because builder gets into some problem.

    But i sincerely believe people buy property only from reputed builders and CONS are negated comparing the PROS.

    My Opinion on Mantri and Jains

    Mantri Synergy and Jains Sunderbans are currently offering pre-emi offers. My advise is to avoid any project of Jains because of low quality construction and delayed delivery.
    Please read my article on Jains Green Acres

    Mantri’s Synergy has nothing unique. If you are really obsessed with Mantri, then go for it. But you have wait for 2010 to get it in your hand. As always hunt for ready built apartments which are coming for sale. Some might be priced even lower then market.

    2 Comments

    1. Sanjay

      The write lakes complete finance and tax knowledge.All speculations . He forgot important portion that pre emi comes into picture only if the building is under construction and bank has done payment to builder in installment. If you pay full emi during that period a large portion of that will go into principal payment which will not be allowed for tax deduction till the house is complete.

    2. Sanjeev Kapur

      The advantages of a NO Pre Emi scheme is that you do not pay anything else, other than initial 15/20% till possession. i.e. effectively by investing just 15 or 20% of property Value you get a chance to get appreciation on full 100% value of property. Which means that if you hv inested say 15% initially and you get your property possession in 3 yrs, assuming you are able to sell it at possession at 15% more than the Purchase price, then you get to double your investment in 3 yrs. i.e. ROI(Return on Investment) of 33% p.a. is achieved.
      In a regular construction linked payment plan you are required to pay the builder the entire amount ion 3 yrs, either from your resources or from home loan which obviously carries an interest, thus increasing the cost.

      Under No Pre Emi scheme, the interest is borne by the developer , who pays directly to Hpme Loan company/ bank.

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