Purchasing a residential property is an important decision for an individual. Huge investments are made for that purpose. If the loans are taken for the same, then EMIs consume most of the portion of one’s income. Repayment of loans becomes an issue and that is why more builders are coming into real estate and bringing new payment methods to make it easier for customers to buy a home for themselves. The benefits and cost of the property must always be kept in mind while choosing the payment method.
When it is not affordable to buy a home because of the rising prices of the property and the higher rate of interest. Choosing the different payment options helps to book the property and is a benefit for both the builders and the customers.
Few payment methods are as follows:
The traditional mode of payment: An individual is required to pay 10-15% of the purchase amount while booking the property, another 80-90% within a given frame time. This model comes with a risk of delay in construction and delivery of the property. Sometimes the property delivered is different from the original design. Delay in the construction increases the cost of the property which the individual has to cough up. To avoid this, builders offer a free period to their customers for payment until they get possession. In a few cases, there is an option to pay the EMIs after the individual gets the possession.
Construction linked plans: In this mode, the individual is supposed to make payments in different phases. The builders ask to pay a few percentages of the money while the individual books the property, the other few percentages while the construction starts and the remaining money once they complete different floors. This is an easy way of payment and comes with the advantage of choosing the under-construction property.
Flexi-payment: In this, the payment should be made in 3 stages, the first installment at the time of booking, the second after a milestone and the third and final payment at the time of possession of the property. It is a good option as the money is paid in installments. But it will increase the financial burden as the repayment cannot be started of the principal amount until the individual gets the last amount sanctioned from the bank. Until then the individual is supposed to pay interest linked on the loan. This way the interest outgo will increase. In this mode, the possession of the property will get sooner as compared to under-construction property. And hence an individual can start repayment of the loan once he gets the possession after 60 days or after making the payment.
Time linked plan: This mode is not quite popular these days but few developers offer time-linked plans. In this mode of payment, installments must be made based on the preset timetable decided by the builder. This is irrespective of the construction progress. Some developers offer an 8-10% discount on the basic property cost to opt for this plan.
The mode of payment must be chosen smartly and the individual needs to be cautious regarding interest outgo on the whole amount. Hence, a payment method should be selected as per one’s convenience after understanding the procedures for each method. If needed expert opinion must be taken in this, as a huge amount is at stake, if any move goes wrong it will be hard for the individual to buy a property.
