In an innovative attempt to woo home buyers, Tata Housing Development, the property development arm of the Tata group, has introduced a scheme under which it will share 50% of the pre-possession equated monthly instalment (EMI) paid by the customer.
The limited-period offer is being launched in association with the State Bank of India (SBI) under the latter’s advance deposit fund.

Under this scheme, the consumer gets the desired finance from SBI for buying a Tata Housing property in addition to additional benefits from the developer such as discounts for cash payments in advance.

Brotin Banerjee, CEO and MD, Tata Housing said the company will share 50% of the customers’ EMIs till they are given possession of their projects or December 2010, whichever is earlier.

“Customer will have to pay the EMI to the bank and present the proof post which 50% of the same will be reimbursed,” he added.

Tata Housing hopes to counter the ongoing slump in the real estate market by leveraging its association with banks and financial institutions.

The company claims that customers availing this scheme would be able to make savings of Rs 6.5 lakh to Rs 9.9 lakh for a two-bedroom and three-bedroom apartment, respectively. That works out to a benefit of Rs 450-470 per square foot (PSF), depending on the apartment size.

The loan tenure is 20 years. The interest rate charged is a flat 8% for the first 12 months, 10.65% for the next 10 months and the prevailing floating interest rate thereafter. Also, SBI will not charge any processing fee to customers availing this offer.
SBI officials were not available for comment on this offering.

The scheme is applicable for Tata Housing’s under-development projects in Bangalore (Aquila Heights) and Gurgaon (Raisina Residency), and restricted to all disbursements taking place before the end of April, 2009.

For example, a 1,449 sq ft two-bedroom apartment at Tata Housing’s Aquila Heights project in Bangalore will cost Rs 66,25,300 at Rs 4,350 PSF, including stamp duty and registration costs. SBI Home Loan will finance up to 75% of the project cost, which works out to Rs 49,69,200. The customer will pay Rs 10,04,793 in EMIs over the first 22 months at an average rate of interest of 9.3% (8% for the first 12 months and 10.65% for the next 10 months). Of this, Tata Housing will bear half the sum, or Rs 5,02,396 (Rs 10,04,793/2).

This works out to additional savings of Rs 45,216 for the customer, assuming the money reimbursed by the company gets invested in a savings instrument garnering interest at 9%. This takes the overall savings to Rs 6,52,690 or Rs 450 PSF.