How to make the right choice when buying a house

Q: Buying a house is a big financial liability. So, don't let an investment of Rs 50-60 lakh be effected by freebies & offers worth a few thousands.

Mritunjoy Deb,

20th October 2015

Investment Advice in Mumbai

buying properties

under construction property

discounts

buying a house

ready to move property

festive discounts

freebies

festive offers

construction linked plan

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Replies (4)

Hello Devika,
Go for construction-linked plan if you don't have extra cash for a large up-front payment or cannot pay huge EMIs. Banks usually give 2-kinds of loans for such payment plans. 1st, the loan is for the initial contributions and only pre-EMIs are charged for that amount.

Supratim,

22nd October 2015

Comment

Hi everybody,
What is you advice on construction-linked plan? Who should go for it?

Devika, Mumbai

21st October 2015

Comment

Hi Supratim and Arup,
Though construction-linked plans project buyers against delays, they may not bring you the attractive discounts that financially weak builders are offering. Facing slowdown in sales, real estate developers are attracting prospective buyers with new payment options and freebies. Each option has its advantages and disadvantages and only suits buyers in specific financial situations.

Himangi deshmukh, Delhi-NCR

20th October 2015

Comment

Can you explain the term construction-linked plan? How one has to make payment under this scheme?

Supratim,

20th October 2015

Well Supratim,
Construction-linked plan is very common payment plan and is offered by most builders. Under this option, the first 2-3 installments are calendar based and rest of the payments are linked to the progress in the construction of the project. You may be asked to pay 5-10% at the time of booking, another 5-10% within 3-months and 20% within 6-months. The remaining 60-70% is paid when the construction reaches predetermined milestones.

Himangi deshmukh, Delhi-NCR

20th October 2015

But there was a time when the payments were time based but after delays became endemic, these construction-linked plans became popular. Initially time-linked payment plans used to be the norm. This changed to construction-linked plans due to delays faced in many project.

Supratim,

20th October 2015

Yes, builders will promise you to handover possession within 18 months. He will even offer a heavy discounts. In this festive season builders may say that you have to pay only 30% as booking and rest of the amount after possession. Think twice, when they offer such discounts, project is under construction and there is no saying when possession will be handed over.

Supratim,

20th October 2015

Comment

Right Supratim,
Delay in projects has become a common thing across the country. The best option for buyers is to choose for a construction linked payment plan (CLP) under which they pay as work on the project progresses. This way you don't lock up your money in a project that is not moving ahead.

Arup rajan, Mumbai

20th October 2015