Payment Plan You Can Opt For Based On Your Cash Flows

With the emergence of home buyers in different income groups, the real estate market in India is picking up really fast. To help these growing number of home buyers across various income groups, developers now offer various payment options, thus, increasing the possibility of home sales.

But, before you settle in for one of the payment plans, here is all you need to know about these plans based on your cash flows:

Down-payment plan

Under this plan, the home buyer has to pay around 10 per cent of the total property value upfront for booking of the apartment. The major chunk can be paid via the home loan within 60-90 days based on the deal with the developer. The balance amount, if any, is paid at the time of possession.

In this form of payment plan, you should have a good amount of cash flow ready. Your savings should be liquid enough for you to advance the amount. This is suitable for those who have a large sum of cash available. The developers have the best of deals for the buyer under this plan.

Construction-linked plan

This payment plan does not include a down-payment. It is the most suitable plan for newly launched projects and are yet to get off the ground. Since the risk is high, the payments are linked to the construction milestones achieved.

Around 10-20 per cent of the total value of the project can be paid within three months of the booking. The rest is spread across milestones starting from laying of the foundation until completion of the structure.

A major part of this form of payment can be sourced from the loan and can be paid via equated monthly instalments (EMIs). Hence, it is best suited for those who can take up a higher monthly burden in the form of EMIs. This payment plan is also tax-friendly as you get the benefits right at the beginning of the project.

Flexi-payment plan

If you have enough money to make a decent down payment, and want the security of a construction-linked payment, there are hybrid options. The flexi-payment plan combines both.

Under this plan, the home owner pays 10 per cent of the down payment. Another 30-40 per cent is paid within three months of the booking, which can be sourced from a home loan. The remaining 50 per cent of the amount is paid after the project reaches its construction milestones. Since the down payment is being made, developers are ready to offer discounts and good deals. It is suitable for the home buyers who want to ensure that the apartment is delivered in time.  

Time-linked payment plans

It is suitable for home buyers who have partial cash in hand and can source the rest over time. As per this plan, the developer sets a calendar for payments and the said amount is be paid as per the date, bound by a contractual agreement. It is not linked to any construction milestones.

Since this form of payment has the balance of power shifted to the developer, the project should be at a mature stage of construction where the risk for the home buyer is low. This plan is as tax-friendly as construction-linked plan.