You might have come across many payment plans at the time of buying an under-construction residential property. While some may offer you down payment plan or special plans whereas some may tell you to opt for flexi or subvention payment plans. However, one plan that suits most home buyers is construction linked plan.
So, this post by Bullmen Realty is to tell everything you should know about construction linked payment plan.
What is Construction Linked Payment Plan?
The construction linked plan is one of those ideas in the Indian real estate where the buyers, banks and builders come together to make an alliance. The bank here disburses the amount of the apartment on behalf of the home buyer to the builder until the possession is given by him.
This disbursement by the bank is directly linked to the amount of progress in the construction of the project. Every time a slab is laid or a section of the tower is completed, the bank disburses some pre-decided amount in the account of the builder.
To clear things, here is an instance which gives a proper insight into the construction linked plan:
In case of this payment plan, the initial 2 or 3 instalments are based on the calendar, however, the rest of the payment is paid in parts with the development in the construction work. For instance, at the time of the excavation of the project, the bank will disburse 10% of the loan payment. Then, 10% at the time of the stilt roof casting, 5% subsequently on the first-floor completion and so on.
The construction linked plan is designed in such a way that almost 95% of the loan amount can be disbursed to the developer by the time he starts offering possession. Rest 5% of the amount is given to the home buyers once he gets possession of the unit.
Benefits of the Construction Linked Plan
- The construction linked plan is best for those who are not in a position to give a hefty to the builder
- Home buyers start paying their EMIs only after getting the possession of their apartment
Drawback of the Construction Linked Plan
- Apart from paying the EMIs, the home buyers are liable to pay the Pre-EMI, the rent for their current home and the interest on the loan
- Even after paying 90-95% of the unit amount to the builder, there are chances that he may delay the possession by 2-3 years. Due to this, the buyer has to bear the unnecessary burden of interest on the loan.