Caution 20/80 Home Loan Schemes

wealthymattersReal estate companies have been offering schemes called 20:80 and 25:75 where the builder agrees to pay interest on the borrower’s loan for a specific period. The buyer pays 20% upfront and the bank disburses the entire loan to the builder through the individual. The builder finances the construction of the project with the money, and agrees to pay interest on behalf of the borrower to the bank.

Banks such as ICICI Bank ,HDFC Bank and Axis Bank have been lending under these schemes in the hope of increasing the pace of home loan disbursement.

Here is what the RBI has to say about :

Any delayed payments by developers/ builders on behalf of individual borrowers to banks may lead to lower credit rating/ scoring of such borrowers by credit information companies as information about servicing of loans gets passed on to the CICs on a regular basis.In cases where bank loans are also disbursed upfront on behalf of their individual borrowers in a lump-sum to builders/developers without any linkage to stages of construction, banks run disproportionately higher exposures with concomitant risks of diversion of funds.

Teaser products, of any nature entail risks. You need to be cautious of ‘too-good-to-be-true’ type of products. You can’t be blinkered into believing that there are no risks when developers offer to pay interest on a your loan for a specified period. You have to be cautious because in the event of a developer delaying payment, the credit bureau reports will reflect this in your records, thereby impacting your creditworthiness.

About Keerthika Singaravel

3 Responses to Caution 20/80 Home Loan Schemes

  1. williams brown says:

    We give out our Loan in USD($) and GBP(£) and any currency of your choice.
    Are you financially Squeezed?
    Do you seek funds to pay off credits and debts
    Do you seek finance to set up your own business?
    Are you in need of private or business loans for various purposes?
    Do you seek loans to carry out large projects
    Do you seek funding for other various processes?!
    Loan up to $1,000,000.00
    Attractive Interest Rate & Processing charges
    Easy documentation
    Speedy loan processing
    No security/collateral required.
    Flexible repayment options
    Part Payment Option upto 25% of principle outstanding in a year
    Personalized and professional service.

    * NAME——————–
    * COUNTRY—————–
    * OCCUPATION————–
    * PHONE NUMBER————
    * ADDRESS—————–
    * AMOUNT——————
    * DURATION—————-

    All interested persons are to fill the application form
    and send it back to us Via email:
    and we promise to make your dreams come true.


  2. Yashik says:

    I like your post , because of it’s uniqueness.

    • Glad you liked my post.
      I took a look at your site too.It looks very interesting.
      I have one question-Does a person have to be a citizen or green card holder to own a house in the US?Or can foreign nationals own a home there as well?If not is there some workaround,say a firm that owns property?

Please Leave Me Your Comments!I Love Reading Them!

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

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

Facebook photo

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

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: