With prospects of under-construction properties looking up following the cut in Goods and Services Tax (GST), interest subvention schemes offered by builders through tie-ups with banks are likely to come into focus. Along with discounts and freebies, such schemes could be promoted heavily to attract customers in what is seen as a buyer’s market at the moment.  How it works  Paying a small amount—5-20%—upfront to book an apartment and deferring EMIs till possession will attract prospective home buyers who want to avoid the EMI burden till they move into the house. “The target group is home-seekers who are currently living on rent and wish to avoid interest payment in addition to rent,” says Shaji Varghese, ED and Head, PNB Housing Finance. Such home buyers would find it difficult to afford both rent and interest servicing on the disbursed amount or pre-EMIs, before completion, making subvention schemes useful.  The developers pay the pre-EMIs on behalf of the borrowers until a period specified in the contract or date of possession. “Loan disbursement is linked to the stage of construction, minimising the risks for banks and borrowers. The developer undertakes to service the interest component of the loan until a specified period. This is an incentive offered to buyers instead of giving an upfront discount on the going rate,” says D.S. Tripathi, MD and CEO, Aadhaar Housing Finance.  Source :- Economic Times