DDA Housing Finance Schemes: 10 Things You Must Know

The Delhi Development Authority's housing scheme for over 25,000 flats in the national capital presents a great opportunity for banks to earn some easy money. No wonder, most banks have rolled out schemes to finance Rs 1 lakh registration money necessary to apply for these flats.

The DDA has authorised 13 banks to sell application forms for its residential scheme. These banks are State Bank of India, Punjab National Bank, Syndicate Bank, Union Bank of India, IDBI Bank, Corporation Bank, Central Bank of India, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, ICICI Bank, Yes Bank and HDFC Bank. Most of these lenders have come out with attracting finance schemes.

Here are 10 things to know about these finance schemes:

1) Private sector banks are charging more for financing the registration money needed to apply for a flat. ICICI Bank and Axis Bank are charging Rs 4,050 to finance Rs 1 lakh registration money.

2) Public sector banks are charging lower amount than their private sector peers. State Bank of India, the country's biggest lender, is charging Rs 3,550 for financing the Rs 1 lakh registration money. Punjab National Bank is charging Rs 3,800.

3) Some brokerages, such as SMC Global, are also offering finance for DDA's housing scheme. SMC Global has tied up with private lender Kotak Mahindra Bank for the finance scheme.

4) Documents needed for finance: Applicants may be asked for proof of residential address, PAN card, identity proof, photograph, post-dated cheque.

5) How it works: Once you deposit the finance money (say Rs 3,550 with SBI), the bank will furnish Rs 1 lakh (on your behalf) towards the registration money with DDA.

6) You don't need to have a savings account with a private sector bank to opt for the finance scheme. However, public sector banks may ask you to open a savings account before they extend a loan for the DDA scheme.

7) If you are successful in the draw, but do not want to buy the flat, you can surrender or cancel the flat. There is no penalty if the cancellation is done before the DDA issues a demand letter for the payment of your flat.

8) If a successful applicant (who has opted for finance) fails to repay the registration money to the bank, the lender can use the post-dated cheque to recover its money.

9) Should you opt for the finance scheme: Applicants should not choose the finance scheme if they can pay the registration money on their own. The DDA has promised to conduct the draw within three months of the closure of the scheme. Currently, banks offer 7.75-8 per cent for three-month deposits. So Rs 1 lakh deposit will earn an interest of around Rs 2,000 over three months. If you opt for the finance scheme, you will have to pay nearly double of the interest earned to banks.

10) The DDA will pay an interest of 8 per cent per annum if draw of lots is not held within three months. The interest will be paid for the period beyond three months after the closure of the scheme.