How to choose the perfect payment plan ?

Saturday, April 4, 2015

When you buy a property from a developer, you will have a choice from varied options of how to pay for the investment. A builder or developer can provide you many different payment plans to choose from. Let us discuss different types of payment plans to help you opt for the right payment plan for yourself.
·      Construction-linked plan (CLP): This is the most chosen plan by investors and end users. At pre-determined construction related milestones, you will have to pay installments to the developer as per progress of the property development. The percentage can vary from 5 to 15 percent as per the plan.
·      Down payment plan (DP): As the name proposes, in this payment plan the entire amount will have to be paid to the developer at the time of booking your property. A discount on the purchase price can also be made available by the buyer under this plan.
·      Time-linked plan (TLP): In this plan the payments are made on predetermined time table disrespectful of the progress made towards completion of construction.
·      Flexi payment plan (FPP): In this payment developers ask for bigger installment amount in comparison to CLP. This plan is beneficial if the project is at an advanced stage of construction.
·      Possession linked payment plan (PLP): In this plan the buyer pays 20 – 25 percent during booking and the rest on possession of the apartment. Many buyers mistake it to be an 80:20 scheme.
·      Subvention scheme: When a customer applies for home loan while purchasing a property he is not required to pay EMIs for a fixed period of time till possession. The EMIs during that duration is paid by the developer. This is a beneficial scheme for those buyers who cannot afford to pay EMI and rent at the same time.

The agreeableness of one plan over another entirely depends on your particular situation. It also depends on the repute that the builder has in terms of their record of project delivery. As a general practice that most Indian families opt for is a construction-linked plan. In case the project gets delayed, you are at the safer side as you have not paid all money to the developer. On the other hand if the construction is on time then one can continue paying installments until possession of the property. It is always advisable that home buyers do a proper homework on the history and previously delivered projects by the builder.
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