Purchasing your dream home is one of life’s most significant accomplishments. When a buyer decides to buy a home, the first thing that comes to mind is the EMI and large down payment that will be required at the time of booking.
Developers have now come up with some attractive payment plans to reduce the payment pressure on buyers as a result of technological advancements in the real estate sector. Many changes have occurred in the real estate market as a result of the implementation of GST and RERA. This enticed many buyers to invest in real estate, as well as allowed developers to entice buyers by offering new payment options.
Various payment plans are available to encourage buyers to invest:
– Plan of Subvention
Builders offer a variety of payment plans to entice customers to purchase the property. One of the most lucrative schemes available to buyers is the subsidy scheme, which only a few builders offer. For home buyers who live in a rented home, this scheme relieves them of the burden of EMI and rent at the same time. Typically, the builder pays the EMI on behalf of the buyer until the buyer takes possession.
This scheme has a few modifications, such as the builder paying EMI for a set period of time. This type of subsidy scheme is not dependent on the date of possession. Another type is where the builder and the buyer share the EMI burden equally.
– Pros: People who live on rent benefit the most from the plan because they have more time to save money. The best part about this plan is that the buyer does not have to pay the EMI until a specific time period has passed. In some ways, the buyer will be secure because he or she has taken out a bank loan.
– Cons: The only disadvantage of the subvention plan is that if the developer fails to pay interest, the customer’s CIBIL will be severely impacted.
– Plan for Down Payment
A buyer must pay a deposit of 10-15% of the property value at the time of booking, with the remaining 80-90 percent due within the developer’s specified time frame, which is usually 45 to 60 days. The stamp duty and registration charges, which are approximately 5% of the property value, are not included in the cost of your property. There are also property tax and maintenance charges for the developer’s amenities. The EMI will begin at the time of booking in this plan.
– Pros: If you choose the down payment plan, you will save money on the total cost of the property because you will be paying the developer right away. You won’t be able to get a discount of about 8% to 10% with any other plan.
– Cons: In a down payment plan, this happens very rarely. In most cases, a down payment plan becomes a costly plan for buyers if the developer takes too long to give the property to the buyer. Investors are exposed to a variety of risks, and projects can become stranded. In this case, recovering funds from the developer can be a difficult task for many.
– Linked Construction Plan
A construction-linked plan, also known as a possession-linked plan, requires a buyer to pay 10—15 percent of the total cost upfront at the time of booking, with the remainder linked to the construction plan as each floor is completed. And, unlike the down payment plan, there is no discount for the buyer.
– Pros because this plan is entirely dependent on the construction process, the buyer faces the least risk of losing money because the developer is paid in installments as each slab is completed, rather than in one lump sum.
– Cons: The buyer of a construction-linked plan pays more in interest to the bank. The buyer is responsible for paying the interest to the bank until he or she receives possession, and the payment of the principal amount begins once the buyer receives possession. As a result, the buyer ends up paying more than the property’s actual value.
– Plan that is linked to time
This plan is not very popular these days, but it is still available from a few developers. According to it, the buyer must pay the installments according to the developer’s schedule. Some developers provide an 8-10% discount on the base price.
– Pros: Because this plan gives a buyer very little time to arrange for funds, it is not preferred by many buyers. There is no guarantee that the construction will proceed in the correct direction or at the appropriate pace.
– Cons: Even if the construction is delayed, the buyer will be required to pay the installments under this plan. The only thing that makes this plan safe is that, unlike the down payment plan, you don’t have to pay the entire amount upfront.
– Payment Plan with Flexibility
This plan combines a down payment plan with a construction-linked plan. This plan necessitates a buyer paying 50% of the total property value before construction can begin. Developers who launch new products frequently offer a flexible payment plan. The remaining balance is paid as the project progresses.
– Pros In this plan, the buyer pays almost half of the purchase price upfront, resulting in a substantial discount from the developer on the property.
– Cons: This plan is extremely risky for the buyer because it is difficult to get money back if projects are canceled after booking, which frequently occurs with new launches. In a flexi payment, you must pay interest on 50% of the amount, whereas, in a construction-linked plan, you will only be charged 35% interest.
Each scheme has advantages and disadvantages; choose the one that best suits your needs.