By P. Asha Ritu:
Purchasing land, construction maps, supervision, raw materials and a lot many things are required to build on your ‘dream property’ but the one thing that determines the worth of your property is the capital invested by you — the money. So what do you while choosing from your options as to how to pay the seller when you buy a property from a developer? Hundreds of things such as tax saving, spending the smart way, loans, EMI (Easy monthly installments) etc. come in the way of deciding the correct plan for your payments.
A payment plan generally has a construction-linked plan and a time-linked plan. A good payment plan would be a balance between the two. In a Construction linked plan, one needs to pay the developer in installments according to the progress the property makes in terms of construction. There are certain significant construction thresholds when the buyer has to make payments since those are already determined by the developer. Since it is a predetermined activity, one hardly expects to get any deduct or discount in the amount.
In a time linked plan, on the other hand, the payment must be done in accordance to a time based schedule which is no where related to the progress the property has made in terms of construction. This might be tricky since though your payments are scheduled, the work done on the property might not be. Thus it is equally important that you keep a constant check on the gradual development in the property. Getting discounts on the time based plan is subjective.
Apart from these two, there is a down payment option available, which requires you to pay the entire amount at the time of booking the property. If not the entire amount, then at least 95% of the amount must be paid. And since you are making such a heavy payment, the discount rates are generally high, and can go up to 8%- 10% on the buying price. This option might not seem very welcoming since the property is still not fit for settlement and in case of any error, it would be very difficult to get the amount back from the developer. Apart from these, certain things like maintenance, parking space, security etc are one-time payments and must be compulsorily paid to the developer.
The plans might be very suitable for you but the choice of a plan is a question which depends on many parameters. From your capital abilities, the developer, and the markets to the location of the property, the discounts, and the ‘best deal’ prices — everything must be considered while choosing the payment plan. Much depends on the developer and his attitude towards the property. Trust and consistent progress inspire the buyer to pay. Construction linked plan is seen as the most viable option since the amount paid is justified and is visible in the progress of the property development.
Properties might still be a ‘dream’ but choosing the right mix of payment plans help realize the dream in a much realistic and controlled manner!