A home purchase is a lifetime achievement, which at times can put your financial stability at stake if not planned well. Not to blame the builder if you land in a soup because they allow options of payment but you have to make a wise choice based on how you are financially placed.
Down-Payment
It is the most traditional of the different payment plans offered by the builder where the buyer needs to make an upfront payment comprising 10 to 15 per cent which is termed as a down payment for the booking. He is allowed a period of 30 to 90 days since the day of booking for paying 80 to 85 per cent of the sum and the balance 5 to 10 per cent accompanied with extra charges, if any, has to be paid on possession.
In the context of paying through the home loan, the EMI payments commence with the completion of the upfront payment by the bank. Thus, the buyer is charged interest on the whole payment right from the first day. Besides, no tax benefit is available on the principal amount until you have received possession.
When to Opt For?
If there is no scope for the builder to miss the deadline meaning that the project has almost reached completion. Besides, a smooth flow of cash is required for relying on the builder that might fetch you a large discount.
Construction Related
Another plan of payment is related to the progress in the construction of the project. About 25 to 30 per cent of the home buying price has to be paid with a period of 90 days starting from the day you booked it. The remaining price has to be paid in small percentages at significant construction developments. This plan won’t get you discounts but the risks of project delays are negligible as against the aforementioned plan. Section 80C offers full tax benefit since the beginning.
When to Opt For?
If you don’t have sufficient cash ready at hand or if the project is at its early stage.
Time Related
Time-bound payment of the price in instalments is based on a calendar that the builder sets. Whether or the project construction is progressing or has even exceeded the deadline, the timetable contract becomes binding on the buyer to pay on the set time. Delay in payment will cause a penalty that is paying interest on the instalments. To compensate for the high risks, discounts are offered by developers and full tax benefit is also available like in the case of the previous plan.
When to Opt For?
You can partially fund your home purchase at the moment while the project construction has reached its middle stage.
Flexi-Payment
This is the safest plan in terms of possession delays and also allows you to enjoy significant discounts. 10 per cent of the total price is charged for booking and the next 30 to 40 per cent has to be paid within 30 days of it. The remaining 40 to 50 per cent can be paid on the advancements in construction leaving out the final 10 per cent alongside the one-time charges for payment on possession.
40-60 Plan
This type of plan is on offer for buyers mostly during the festive seasons where he has to pay 40 and 60 per cent of the property value as upfront and at the time of possession, respectively. This payment scheme is suitable when buying a property that is almost halfway towards its completion. There isn’t a fear of much delay with the builder getting some in-hand cash from the buyer while the latter gets enough time to arrange the remaining 60 per cent amount to be paid after receiving possession.
EMI Sharing Plan
This plan acts as a protection to the buyer against financial loss with the builder agreeing to pay a fraction of or the whole of EMI interest for a certain period or till the property possession. But the difference between the existing and increased home loan rate has to be paid by the buyer. But the difference would be paid by the builder if the plan is a “Zero EMI Till Possession” one.
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