The following options are available to the society for arranging the required funds:
Mumbai District Central Co-operative Bank Ltd – MDCC Bank
Commonly known as the Self Redevelopment Mumbai Bank, MDCCB or MDCC Bank is the only cooperative bank in Mumbai currently providing loans for self redevelopment projects in Mumbai.
The bank funds up to 95% of the project cost at simple rate of interest of 12.5% per year. The remaining 5% is required to be arranged by the society members. This 5% can be generated through society members purchasing extra area or an additional unit in the redeveloped project or through external investors.
The bank provides a loan repayment period of 7 years for projects up to Rs. 50 Crores. Out of these 7 years, the first 2 years is the Moratorium period during which the interest is accrued but the society can pay the bank after the period is over. The loan repayment period begins after the moratorium period. The total loan repayment period and moratorium period is extended to 10 years and 3 years respectively for projects more than Rs. 50 Crores.
At the end of the moratorium period, the interest accumulated has to be first cleared by the housing society. Once the interest is cleared, the installments towards repayment of the loan shall be determined by the bank. The housing society can however prepay the loan before the tenure for which there shall be no prepayment penalty.
MDCC Bank takes into consideration the cost of buying TDRs, fungible premium, cost of rent for alternate accomodation during the time the new building will be reconstructed, shifting and re-shifting of tenants, brokerage for sale of extra flats, professional fees to agencies, construction cost and other amenities planned like play area, garden etc while considering the total project cost for a self redevelopment project.