Any real estate investment begins with research. After that you contact different realtors or agents to guide you with proper details about the best locations in the city for investment. When you buy a property for construction, you always have a choice on how to pay the seller. Because you are not aware about the best payment methods, you should conduct a research on the available payment methods.
Whatever method of payment you choose, certain terms and conditions are imposed under each option. The payment plans may vary from one housing scheme to the next. For instance several housing projects offer installment plans and lump sum payments. While there are those as well that offer only the lump sum payment in cash.
So, never invest blindly, make sure you have all the details about the payment plans.
There are four different types of payment plans that anyone can choose for themselves. Let’s take a look at them.
1- Time-linked plan
These plans require a person to make installment payments according to the given timetable or schedule. It is irrespective of the completion of the project. If you choose this payment option, sometimes developers even offer discounted rates.
For instance royal orchard Multan plot installment plan is super easy for someone who is willing to not to make a lump sum investment in one go. Installment plan allows you to take possession in a couple of years while you manage the rest of the finances.
It is one of the most popular payment plans for the buyers.
Advantage: Such plans give you time to arrange the remaining funds over the time period.
Risks: The buyer is bound to make installments as given, any delay could risk the possession.
2- Construction linked plan
Also known as CLP, the buyer has to pay installments to the developer as the property development progresses.
It varies from the predetermined construction related milestones. So you will be expected to make a payment. Unlike time-linked plans, it’s unlikely to expect any discounts. Usually a 10-15% of purchase price upfront is paid. The remaining amount is divided into the milestones.
Advantage: This plan consists of least risk for the buyer.
Risks: CLP can cost a lot to the buyer in terms of the interest paid to the lender. It also has a longer tenure.
3- Flexi payment plan
Under this payment plan the buyer is supposed to pay at least 50% of the total amount right at the time when construction starts. Within the housing societies buyers have options for lump sum payment or installment options.
However, the lump sum amount can be paid via flexi payment plan too, hence the reason for its popularity. It takes 3-6 months from the booking time to pay the amount. The remaining amount is paid as construction begins. So it’s a combination of the down payment plan and construction linked plan,
Advantage: Buyer can receive a 5% discount on the basic property cost.
Risks: After booking, it is hard to recover any money once the project begins.
4- Down payment plan
Under this plan the buyer has to pay almost 10-15 % of the property value at booking. The rest of 80-90% is given during the time frame of 45-60 days. It is the time of possession.
The remaining amount is the balance of the cost of property. The charges are levied by governmental authorities that includes stamp duty, registration fees for a 5% of the value.
Advantage: It’s a healthy discount on the total price of the property. You can get a discount as high as 8-10%.
Risks: It can cost heavily to the buyer in case of construction and delivery delays.
Our verdict
In order to decide the payment plan, the decision will depend on the personal and financial conditions. If you are planning on taking the home loan then the choice of payment plan would be a lot different than if you had cash on hand.
If your financial condition allows, opt for a plan that your realtor is most confident about. It gives you much credibility, and this way you can make an easy upfront payment. So instead of jumping the gun blindly, always talk to the real estate agent first, and get the consultation services.
