Srijan Kar, Christ University
What is a Subvention Scheme?
A three-party arrangement is a subvention scheme. The individual may apply for a loan to buy a residence in accordance with this agreement. For a predetermined amount of time, as specified in the contract's conditions, the financial business or bank delivering the loan is not required to pay interest on that loan. This is a financial gift or aid, typically given by the government. Subvention programmes are provided by numerous real estate developers. A down payment of 5% to 10% of the home's cost is required from the buyer. The remaining sum is paid in the form of a loan. Due to the fact that they are not required to pay back the loan amount, this programme benefits those wishing to purchase properties.
Importance of Subvention Scheme
The Subvention Scheme offers significant advantages to homebuyers. The person does not have to pay back the loan money to the bank or the financing firm until or unless he takes possession of the house. There is less of a strain on the person because the money is to be repaid in the form of EMI. After paying the advance, you can begin building on the land, and the loan money is used for all other expenses. The Subvention Scheme is applicable to both mortgage loans and rent on residential properties.
Difference Between a Subvention and Subsidy
A government grant of money to a buyer is referred to as a subsidy, and the buyer is exempt from repaying the loan for a predetermined length of time. Once that decisionmaking period is finished, the buyer might choose to pay the sum in EMIs or small instalments. As opposed to subsidy, which sees the government picking up some of the expense for the buyer. The primary distinction between a subsidy and a subvention is that a portion of the cost is eliminated in a subsidy. In contrast, the amount of time you have to pay the money back is extended and the interest rate is reduced in subvention.
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