If you are a prospective homebuyer in an under-construction housing project, which is already half built or nearing completion, the developer may ask for payment under downpayment or flexi plans instead of construction-linked plan. This is because a construction-linked plan staggers your payment over various stages of construction and some of these stages may be over by the time you make your booking.
What are these plans?
Construction-linked plan: In this, you pay 10% of the price of property at the booking time and another 10% after 30 days from the date of booking. Thereafter, at each stage of construction, say completion of the foundation, basement slab, the first floor and so on, you pay 8-10% along with the associated costs.
Downpayment plan: Here you have to pay up to 10% of the property’s value as downpayment. Over the next 30 days of the booking date, you need to pay another 85% of the value to the builder along with the associated costs, such as car parking, club membership, lease rent and preferential location charges. The remaining 5% along with the annual maintenance charge has to be paid at the time of possession.
Flexi plan: This is a combination of the construction-linked and downpayment plans. Under this, you need to pay 10% of the property’s price at the time of booking the flat and another 30-40% of the value within 30 days of booking. The rest of the payment is construction-linked.
Discounts under various plans
While you can get maximum discount of 8-10% under a downpayment scheme, you get the least discount in a construction-linked plan. Since the flexi plan has features of both the plans, it can offer you a discount of 5-6%.
What works for you?
A downpayment plan may work for you because it gives you the maximum discount. The other advantage of paying by down payment is that your equated monthly instalment (EMI) begins at the time of allotment. However, if the builder fails to deliver the project, your money gets locked in this plan.
In a construction-linked plan, you pay for what you get since the payment depends on the construction. However, you have to pay pre-EMIs in this case. In a pre-EMI, you have to pay interest on the portion of the loan disbursed. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement. EMI commences only after you get the possession. Thus, your total cost in a construction-linked plan may be more.
So whether you want to take more risk or are willing to pay a little more to avoid the risk is a choice you will have to make.