Over the last decade, the dimensions of rise in all Indian Tier 1 and Tier 2 cities have been colossal. These days, the real estate sector has shown itself to be a lucrative investment platform. Property also follows our prime risk-high return game motivating buyers to invest inside of a property during initial phases of construction for higher returns.
With increasing borrowing rate from banking institutions, developers have started devising new schemes to fund their projects. They feature innovative payment plans, packaging and marketing it to seem attractive to your buyers. In reality, sometimes these plans usually find themselves entrapping the customer.
The most common payment plans today would be the 80:20 Plan, Subvention Plan, Flexi Plan, Pay in Plan and Construction Linked Plan. With difference in their execution most of these payment plans target buyers for bulk payments.
Subvention Plan: Per subvention plan the developer would collaborate with banks and the buyer invests inside an under construction property by making payment on the booking amount. Remainder of the payment is manufactured by the bank like a loan to your buyer. Post this buyer doesnt pay any EMI for your specified period (usually 2-3 years or until possession) and also the developer pays a persons vision incurred to the bank for the specific period.
80:20 Plan: This plan is just like the subvention Plan, except the client pays 20% on the property value at the time of booking and rest pays by way of the bank.
The above schemes were introduced by the developers to draw in more buyers and increase sales for the reason that market sentiments were low. Even so the base price for such schemes is higher than the actual base price for any project. Also, such projects have higher chances of getting delayed.
Moreover, even with 2-3 years the principal amount borrowed for your buyer continues to be same. So, eventually you will be paying more as worth of the house or property is very high and therefore is the interest paid.
Down Payment Plan: Here the individual pays 95% from the property value during initial months of booking (usually within 1-3 months duration). Hour or longer . the builder provides discount on the buyer (around 10-15% for the base price).
Flexi Plan: Its a mix plan when the buyer pays all-around 40-50% in the property value initially additionally, the balance amount is paid in equal installments and the balance amount gets linked to the construction linked plan. Here also buyer supplied a deep discount.
The above payment plans add up when you has huge savings (rather money that he or she can spare for years without bothers over it). It involves maximum risk. If picking a loan and paying 40-95% all at once then this interest component paid might be high. Eventually the expense of the house could well be high and discount invalid.
Construction Linked Plan: Because the name suggests after booking the house and property, the disbursement of future payment depends on the building of the property. Usually these stages are according to laying within the structural slab at various levels. But being built linked plans, around 80-90% on the payment is taken from the developer within first couple of numerous the acquisition and mostly post structural work the progress is slow.
Under normal circumstances a construction linked plan’s logical because payments are disbursed in parts and interest paid is not as much as other plans. And if the consumer has savings later on he neednt operate the whole loan value.
Many instances when projects face heavy execution delays, there are possibilities of developers taking the buyers for that ride. Without progress or super slow progress of the project, huge sum of buyers money gets trapped. In fact a customer pays EMIs or better interest on loan, but has no clue as he would get obtaining his house.
Its a buyers duty to maintain his eyes open despite buying the property. He should at regular time intervals go to project site figure out progress within the project. Also keeping a record in type of pictures is an excellent replacement for compare the project progress with time. If a purchaser is undoubtedly an NRI or resides in another city he should make sure which a friend or relative is performing exactly the same on his behalf.
In case associated with a township having multiple towers, you should be sure that they’re paying according to progress of his tower additionally, the developer will not be misleading him. Also, at regular intervals especially before releasing your next payment, an individual should open and look his repayment plan to confirm the agreed upon timelines.