Preferred mode of payment while purchase of home
During the purchase of a home, there are three main types of payment plans that are popular in India namely, Construction-Linked Plan (CLP), Time bound plan and Down payment plan. The preference of one plan over another depends upon an individual’s urgency to buy a home as well as the financial situation.
As a general practice, it is best to pay according to the progress towards completion; the same is also confirmed by a research undertaken by www.makaan.com wherein people were asked as to which mode of payment they prefer. As a result, 100% down payment also becomes tough to sell before possession as not many buyers have capacity to pay the complete amount. Majority of Indian families, 70%, choose a construction-linked plan while only 16% and 13% prefer time bound plan and 100% down payment plan respectively. Given below is a comparison among the three modes of payment so that you can know the advantages and disadvantages of all the three for a better decision making.
Construction linked plan
Time bound plan
100% down payment
||Have to pay more psf value||A little cheaper than CLP||
Less psf value as compared to other options
||Easily financed by banks||Easily financed by banks||Banks are a little hesitant in providing the entire amount|
||EMI rises gradually||EMI increases before possession as 40-50% is to be paid||Interest is charged on the entire amount from the first day|
||Generally, developers do not offer discounts under this plan||Some developers offer discounts under this plan||Generally, 8-10% of discount is offered by the developers|
||Less risk in case possession is delayed as payment is based on progress of property development||Somewhat less risk in case possession is delayed as payment is on the basis of a predetermined timetable||Extra risk in form of extra pre-EMI interest in case possession is delayed|
||Full Tax benefit||Full Tax benefit||No Tax benefit on the principal value till the possession|
|Tip: Best option if the construction is in initial stages||Tip: Best option if the construction is midway and you can arrange a lump sum amount||Tip: Best to be avoided unless it is paid from pocket or possession is in a few weeks time|
Some of the developers all offer the option of shifting from one plan to another, so if you feel that you want to change it, you can try and talk about it with the developer. Buying a property is one of the most significant financial investments that one ever makes; therefore, it is only advisable to do a proper market research and survey prior to finalizing anything. For more of such poll reports and to cast your vote in a poll, visit: http://makaaniq.makaan.com/