What are the payment options you are choosing for buying your property?

What are the payment options you are choosing for buying your property

?

Apartments for sale Bangalore

Apartments for sale Bangalore

An additional factor that must figure towards the top of our checklist, but often goes amiss, is choosing a payment plan that is in line with our ability to pay and risk exposure while booking a property proposed to be con- structed. At present, down payment plan, time-linked payment plan and construction-linked payment plan are the prevalent forms of payment plans being offered by developers at the time of booking. Each payment plan has its own set of advantages and disadvantages.

One often comes across incidents of buyers having paid the full/major amount at the time of booking towards purchase of a property, where construction is far from complete within the stipulated time period specified by the developer in the buyer's agreement, or worse, where construction doesn't commence till much later.

Such unprecedented delays in getting possession of the Apartments for sale Bangalore property can take its personal toll.

Down payment plan The down payment plan (DPP) requires buyers to pay between 90-95 per cent of the property's purchase price at the time of booking / within a short period after booking.

As per this plan, 10 per cent to 15 per cent of the purchase price constitutes the booking advance (also commonly termed as `earnest money') and thereafter, up to 80-90 per cent of the balance amount is paid within the next few days of the booking.

The remaining 5-10 per cent balance amount along with other charges, if any, is payable at the time of taking over possession. What often attracts buyers to DPP is the lure of receiving a 10-12 per cent discount on the purchase price.

Sometimes a developer may be open to negotiation for higher discounts. However, DPP comes with the highest risk exposure to buyers as project abandonment and cancellations are harsh realities in India's highly unregulated real estate sector. If the completion and delivery of a property is delayed/post- poned, buyers find them- selves in the difficult position of being unable to withdraw from the project due to contractual clauses. If the property being purchased has been financed, payment of interest to the bank becomes an added liability for a buyer. Those having limited financial resources then find themselves unable to invest or buy property in an alter- native project.

Moreover, the recession and realty slump worldwide in 2008-09 has made loan providers apprehensive of lending money upfront under the DPP for projects for which construction has yet to begin.

DPP benefits a buyer only if the developer completes the construction and delivers the property on time clearly, this is seldom achieved.

Time-linked payment plan The time-linked payment plan (TLPP) requires buyers to pay towards the property's purchase price in instal- ments, based on a schedule decided by the developer. It is incumbent upon the buyer to pay these instalments on time, irrespective of the progress on construction and development of the property.

In addition, a TLPP is a con- tractual and non-negotiable commitment. Thus, delayed payments may come with hefty penalties imposed by the developer, such as payment of interest over and above the installment amount for the period of delay. Also, TLPPs do not hold a develop- er accountable, even if construction does not commence Construction-linked payment plan The construction-linked payment plan (CLPP) requires buyers to pay the initial 10 per cent to 15 per cent of purchase price as booking advance, and subsequent amount in installments based on the achievement of construction-linked milestones.

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