How to choose the best payment plan?

How to choose the best payment plan?Property purchase is one of the major financial decision of an individual’s life. To make it less burdensome for the buyers, the developers have come up with innovative payment plans. But every plan has its own terms and conditions; its own advantages and disadvantages.

To get a better idea as to which real estate payment plan is best suited for you according to your financial condition and other requirements, let us analyze the plans in some details:

Down Payment Plan (DP)- As the name suggests, the Down Payment Plan requires you to pay a major part of the amount at the time of booking. It is good for entrepreneurs and businessmen or those who have enough saving to pay a major amount upfront. This plan, however, is not very safe in case the project is delayed. Since you would have paid a considerable amount, recovering it from the developer can be a frustrating affair. Given the risks involved, developers also offer higher rates of discounts on Down Payment Plan.

Construction Linked Plan (CLP)- Under Construction Linked Plan, you will have to pay the installments to the developers according to the stages of construction. The developer predetermines the construction related milestones and the buyers are expected to make the payments accordingly. For example, 10% on booking, 10% on completion on ground floor, 10% on completion of 5th floor, and so on. It is not very likely to get heavy discounts under this payment plan.

Possession Linked Plan (PLP)- Under Possession Linked Payment plan, you will have to pay 20-25% of the cost at the time of booking and the rest on possession. The risk of delay is least in this case as the pressure is on the developer to complete the project on time so that he can receive the payment. The plan also gives the buyer enough time to save money for the final payment. However, you should check builder’s background, the cost difference between CLP and PLP, etc., to be sure if the plan is properly justified.

Subvention Scheme- Subvention scheme is actually a popular scheme under the Special Payment Plan (SPP). The latter also includes 30:70, 40:60, etc. Subvention scheme is the 10:80:10 plan. Under this, the buyer has to pay 10% on booking and the final 10% on possession. The rest 80% will be financed by the bank loan, the interest for which will be paid by the builder till possession. It is beneficial for the buyer as it provides enough time to save for the EMI payment.

Every payment plan has its own pros and cons. As a smart buyer, you should choose the one that best matches your requirements. Do thorough research about the builder’s background. Also check if all the approvals for the project have been taken. Compare the costs under different payment plans and then decide to make the most of what is available.