How to Choose the Best Payment Plan for Property

2024-01-24

Real Estate Investment

Unlike the old days when down payment was the only option for buying a property, developers are offering several payment plans to the buyer these days. Since the property is a very huge investment, you also look for the most suitable payment plan.

In addition to traditional down payment plans, the most popular payment plans include construction-linked plans and Flexi payment plans. All these plans have their advantages and disadvantages. Let us discuss these in detail.

Down Payment Plan

The Plan requires you to pay 10% of the property's value at the time of booking and 90% within a certain timeframe, which is usually 30-45 days, and the rest at the time of possession. The Final Payment includes stamp fees and registration fees levied by various authorities, which is about 5% of the property value, property tax, maintenance fees, and other fees for using the society facilities such as gymnasium, swimming pool, and parking. This payment plan is generally for ready-to-move-property.

Benefits:

A down payment plan can get you a healthy discount on the total value of the property because you are paying the money to the builder up front. No other plan can give you up to an 8-10 percent discount.

Risk involved:

When there is a delay in the construction and delivery of the property, the down payment plans falls heavily on the buyers. Investors with such plans also risk being stuck or abandoning the project due to some legal issues. In such a situation it can be a challenge to recover money from the developer.

Construction Linked Payment Plan:

This payment plan is for new-launched and under-construction property. It is also known as a possession-linked plan. You have to pay the booking amount for this plan, which is usually 10-15 percent of the purchase price. The remaining amount is associated with construction milestones, for example, 20 percent with each floor being built. Compared to a down payment plan, the buyer is unlikely to get a discount under this plan.

Benefits:

Since the payment is not time-bound and is fully tied to the construction progress, the plan bears the least risk to the buyer. In addition, the builder would like to complete the construction on time to keep the cash flow consistent.

Risk involved:

The Construction Linked Plan (CLP) costs the buyer a lot in terms of interest paid to the bank as their tenure is long. Only the interest payment is payable until the property under construction, repayment of principal starts after occupation. So, a buyer ends up paying more to the bank.

Flexi Payment Plan

Flexi Payment Plan is a combination of Down Payment Plan and Construction Linked Payment Plan. Under this plan, you have to pay part of the cost at the time of booking. Another part of the cost was paid by you as construction progressed. The balance is paid at the time of ownership/possession.

Benefits:

Here you can see the plan like 50:50, 30:70, and 20:20:20:20:20 according to the construction of the project. Thus, you can take the plan according to your choice.

Risk involved:

If the project is affected after booking, especially in the case of new launches, then it is difficult to recover the money. Under the Flexi payment plans, you will have to pay interest on about 20-50% of the amount from the first year itself. So, Flexi plans are costlier than CLP.

The best payment plan depends on your situation, the construction status of the project, and the money available to you.

Watch the Explanatory Video of Types of Payment Plans for Property in Noida Extension

https://www.youtube.com/watch?v=FlhisrdCIQQ

So friends, if you are looking for property in Noida Extension with best payment plan, kindly call our property expert at + 91-7861008808.

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