Home Loan Market
Tuesday, December 29th, 2009Banks who provide Home Loans are now insisting on construction –linked disbursal of funds to new projects, as they look to make developers more accountable after getting stuck in several stalled projects.Large number of developers have either stopped construction midway or slowed down due to shortage of funds in the recent recession in Real Estate Market. According to experts Buyers in such projects are in a difficult situation, they have to pay monthly installments to-wards the loan with outs getting the possession of house, plus they also end up shelling out monthly rents during that period.
Some Developers initially used to offer homebuyers up to 10% discount on up front payment and then these developers subsequently diverted substantial part of funds to other projects. In Construction-linked payment, the home finance companies or banks do not release the funds up front. They release and the rest is disbursed as per the progress of project. Because of this now many developers have changed the payment schedule to construction-linked as against up front payment option. Market experts say this is good for the Real Estate industry as there is less risk involve now for both banks & home buyers.