Buying a house is one of the biggest financial decision any person makes in his life. After they identify the house of their dreams, the next indecision that follows is how to make a payment for that. The problem is not there are limited tough options, but it is that many flexible options are available and it is hard to choose the best. The situation becomes chaotic because many homebuyers are unaware of these payment plans. Since it is the buyerâ€™s market, the developers are offering all kind of payment options to move the buying process fast. It is also sometimes possible to switch from one payment plan to another if after buying the buyer requests so. So, before selecting the plan your neighbour opted for, read further to make a savvy decision.
1. Down Payment Plan
One of the most popular plans in India. In this plan, 10% of the deal is paid at the time of booking. Around 80% to 85% is to be paid within 30 days after that and the remaining 5 to 10% is to be paid at the time of the ownership. Beside these payments, around 5% of the cost of the house also accounts for the stamp duty, property maintenance costs, cost of the amenities etc.
ALERT: Since the buyer has already paid the majority of the amount of the deal if the project gets delayed, there is no way than to wait of the possession of the house.
2. The Subvention plan
20:80 or 30:70 plan
In this plan, the buyer makes a small upfront payment at the time of the booking and takes a home loan on the remaining money (arranged by the builder through his personal connections at the banks and other financial institutions). The builder pays the EMI till the possession. The builders send the customers to the bank and thus, both of them earn and the buyerâ€™s loan gets approved faster.
ALERT: If the developer delays the EMI, the CIBIL score of the buyers takes the impact.
3. Construction-Linked Plan
The first two or three instalments of 5 to 10% are paid at the fixed point of time while the rest of the payment is due with the pre-determined milestones in the construction of the project. Thus, the initial payment is very less and the buyer can buy the house even when he does not have much saving in hand at the time of booking.
ALERT: The EMI instalments start only after the buyer gets the possession of the house and we do not know how high the EMI rates would be at that time.
4. Possession-Linked Plan
In this type of payment option, there are two instalments only. 20 to 25% is to be paid upfront while the rest of the payment is at the time of transfer of the ownership. Thus, this payment option is safer as the buyer does not have to be stressed about the timely completion of the project. It is the builder for whom the clock is ticking.
ALERT: Not all the builders offer PLP and those who offer they charge additional 10 to 15% fees over the standard rates.
5. Time-Linked Plan
In this plan, the payment of the instalments is made at the fixed intervals irrespective of the status of the project. An equal installment is to be paid at the pre-decided date. However, since it is not connected with the rate of completion of the project, the delay in the project poses a major problem.
ALERT: In case instalments are not paid at the time, one has to pay double the instalments after gaining the ownership of the property.
6. Flexi Payments
It can be considered as the best of the CLP and PLP. A 10% payment is to be made at the time of booking, another 10% within 2 months and 10% at the time of the possession. The 70% of the amount is paid with the fixed advancement stages of the project. Since the payment is flexible, the buyer does not feel the financial strain.
ALERT: The builders donâ€™t offer a good discount (it is around 3 to 4% only) on the purchase of the house.
7. Systematic Investment Plan
For the housing solutions of around 60-80 lakh, many builders are offering this option of converting the amount into SIPs. Thus, there is a need of paying a lump sum amount at the beginning of each year and the rest is then converted into monthly SIP payments.
ALERT: This is suitable only for the buyers who are financially capable and do not need a home loan to pay for it.
All of these options have their own advantages and disadvantages, it all depends on the requirements of the buyer. Weigh the finances and try to find your best-fit option rather than opting for what generally works in the modern real estate market. For any payment related help, do contact us.