Real estate developers, these days, leave no stone unturned to boost sales volume. Some builders run festive offers or pre-launch offers, while some offer freebies to the buyers to garner interest and augment sales. But they usually end up making up for this by charging homebuyers extra for amenities or maintenance.
Another popular way of luring buyers is the flexible payment plan. Until a few years ago, construction linked payment plan was the most popular one. In this scheme, you typically pay about 10-15% of the total cost as down-payment. As construction progresses, the rest of the money needs to be deposited in instalments.
However, real estate developers found enough ways to circumvent it. By the time the structure of the building was ready, a buyer would have already paid 80-90% of the total cost. The remaining amount would be paid after the final finishing work. It is at this stage that developers would delay the project and divert the collected funds to different projects.
To address this problem, some developers started the possession linked payment plan. So, how is it different?
Well, in this plan, a buyer has to make the payment to the builder in two stages. About 20-25% of the total cost has to paid while booking a property, while the remaining is paid after the buyer has received the possession. This plan mitigates the risk of project delay. Also, with RERA in place, the developer is expected to complete the project in the given timeline.
The possession linked payment plan has another benefit as well. You can book an apartment with just 20-25% of the total cost of the property. Not only that, you get ample time to arrange funds comfortably. Thus, you can skip the entire loan process, if your pocket permits.
So far so good. But can it all be so simple and straightforward? Well, it can be, provided you do your due diligence.
Few things to consider
The financial health of the developer
While opting for possession linked payment plan, experts recommend going with established and reputed developers with a good track record. You can check the financial health of a builder by simply checking for ISO-certification, which is usually displayed on builder websites.
Additionally, you can also check if the builder’s project has any ratings such as CRISIL or CARE for added credibility. Lastly, you can always check builder ratings in ICRA, an Independent Credit Ratings Agency.
Is there any cost difference?
In an ideal scenario, the cost of the property under both the payment plans should be the same. However, developers often add about 10-15% to the total cost for possession linked plan. Thus, make sure that the developer is not trying to recover anything extra from you.
The best thing to do is to check every detail of the scheme you want to go for. Some offers might help you save a lot of money, and some might not, so be careful and make sure you get your money’s worth.
