No EMI Till Possession Scheme: 5 Reasons Why Homebuyers Should Think Twice

Buying a home is often the biggest financial decision of one’s life, and developers are always coming up with attractive offers to lure buyers. One such popular offer is the “No EMI Till Possession” scheme, also known as the builder subvention scheme. At first glance, this sounds like a dream deal—book your flat, take a home loan, and don’t worry about monthly EMIs until you actually get possession.

While the scheme seems appealing, especially to young professionals and first-time buyers, it comes with several hidden risks and financial traps. The Reserve Bank of India (RBI) and Real Estate Regulatory Authority (RERA) have both expressed concerns about such schemes due to the potential for misuse and financial burden on buyers.

In this blog, we will break down the five key reasons why homebuyers should think twice before opting for “No EMI till possession” offers, and what safer alternatives they can consider.

Before understanding the risks, let’s clarify how this scheme works.

The buyer books a flat and takes a home loan from a bank.

Instead of the buyer paying the EMIs, the builder pays the interest portion until the possession is handed over.

The buyer is only expected to pay EMIs after possession.

This sounds like a win-win deal, but the reality is more complicated. The entire loan is disbursed upfront to the builder, and if there are construction delays or defaults, the burden eventually falls on the buyer.

The biggest risk in this scheme is project delays. In many cases, builders promise possession within 2–3 years but fail to deliver due to funding issues, approvals, or mismanagement.

If the project is delayed, the buyer still has to start paying EMIs once the subvention period ends, regardless of whether the house is ready.

Many buyers have ended up paying both rent and EMIs simultaneously, defeating the purpose of the scheme.

Legal battles with builders can drag for years, leaving buyers stuck in a financial trap.

In short, the scheme works only if the builder delivers on time—a promise that is often broken in the Indian real estate sector.

Developers rarely give away offers without recovering costs. Flats sold under the No EMI till possession scheme are usually priced higher compared to regular projects.

The builder factors in the interest payments he has to make to the bank.

Buyers end up paying a premium on the property price, making the deal less attractive in the long run.

Compared to ready-to-move-in properties, such projects often have hidden charges and inflated rates.

Thus, while the scheme feels like a financial relief in the short term, the buyer is indirectly paying for it through a higher property price.

In many cases, builders default on making EMI payments to the bank. While the loan is in the buyer’s name, banks expect the homebuyer to continue payments.

Even if the builder stops paying, the buyer’s credit score gets affected.

Banks don’t accept the excuse of builder default because the legal loan agreement is with the buyer.

Recovery becomes difficult, and buyers are left to pursue lengthy legal disputes.

This is one of the major reasons why RBI discouraged subvention schemes, as they expose buyers to risks beyond their control.

When opting for a No EMI till possession scheme:

The loan is usually fully disbursed upfront to the builder, leaving no flexibility for the buyer.

In normal construction-linked plans, the loan disbursement happens in stages, ensuring better monitoring of project progress.

With subvention, the builder gets full access to funds without accountability, which increases chances of misuse of money.

This lack of flexibility reduces the buyer’s control and bargaining power, making it a risky bet.

Both RBI and RERA have raised concerns about subvention schemes:

RBI has discouraged banks from financing such schemes due to rising cases of defaults.

RERA has emphasized buyer awareness, warning that such offers often mask hidden risks.

Some states have even imposed restrictions on such practices.

Legally, while the scheme is not banned, the burden of risk always falls on the buyer, making it a dangerous financial gamble.

If you are considering buying a property, here are safer alternatives:

Construction-Linked Payment Plans – Pay in stages as the project progresses, reducing risk.

Ready-to-Move-In Properties – Higher upfront cost, but no risk of delays.

Resale Properties – Can often be cheaper and come with faster possession.

Government-Approved Affordable Housing – Projects under schemes like PMAY are regulated and safer.

These options may not have flashy offers like “No EMI till possession,” but they ensure greater financial security.

The No EMI till possession scheme might sound like a smart financial hack, but in reality, it often turns into a debt trap for homebuyers. With risks like project delays, higher costs, builder defaults, and lack of regulatory protection, the scheme is far from safe.

Instead of falling for marketing gimmicks, homebuyers should focus on transparent, construction-linked, or ready-to-move projects that guarantee peace of mind. After all, buying a home is not just about affordability today—it’s about long-term financial security and stability.

So before you sign up for that “dream deal,” remember the golden rule: in real estate, if it looks too good to be true, it probably is.

The “No EMI till possession” scheme may look attractive to homebuyers, but it comes with significant risks. Delayed possession, higher property prices, builder defaults, and regulatory concerns make it a risky financial move. RBI and RERA have repeatedly warned against such subvention schemes, highlighting their dangers. Instead, buyers should opt for construction-linked or ready-to-move-in properties that ensure better security. Before falling for marketing gimmicks, homebuyers must carefully evaluate the long-term financial impact of these schemes.