Real Estate Payment Plans: Types and Pros/Cons

I am Sumit Mishra–a writer who works in the real estate industry. I am always surrounded by people talking about high-value transactions; not even a single person talks about less than a crore.

I used to think only business people might be buying these properties, but while working in the industry, I realised that business people have half of the share in buying properties than salaried ones. 

Out of curiosity, I researched it and found that 60-65 percent of those buying properties are salaried professionals, and only 30-35 percent are business people or self-employed. Then I asked one of my seniors how these salaried persons are purchasing such expensive properties, and they introduced me to a thing called “payment plans.” Let's delve into understanding it and its essentials.

What Are Payment Plans In Real Estate?

Real estate payment plans are a way to help you buy your dream property even if you are unable to pay the full amount at once. It provides you extra time to arrange or pay in EMIs, but not all payment plans for real estate provide EMI or the same options. 

Different Developers have different payment plans to help you pay your money. But it also depends on your income if you are earning a good chunk of money, you can go for payment plans for a shorter period. But if your income is low, you can go for more flexible payment plans with different EMI options for a longer period. Let’s explore different payment plans in Real Estate.

What Are Different Payment Plans In Real Estate?

Real estate has different payment plans to ease your property purchase and give you a peace of mind. Some famous payment plans consist of the following:

       •  Down Payment Plans
       •  CLP (Construction Linked Payment Plan)
       •  TLP ( Time Linked Payment Plan)
       •  Flexi Payment Plans
       •  Possession Linked Payment Plan

These payment plans for real estate help a buyer with a low initial investment to purchase property and pay in parts for a shorter or longer period, depending on needs and capability to pay. In this blog, we will understand these payment plans and their pros and cons.

What Is a Real Estate Down Payment Plan?

In real estate "down payment plans" offers lucrative perks and subsidy, where buyers pay a lump sum amount upfront to the developer, typically 10-15 percent, and the rest of the amount within 40-60 days, normally 80 percent, and the rest at the time of possession.

It is the only payment plan that provides you with a huge upfront subsidy of up to 10 percent or sometimes more perks and guaranteed discounts. But only if you work with a reputed developer with a good track record. 

Developers with delayed projects in the past or those with a track record of delayed projects can be risky when dealing with this payment plan. So, if you are going with this payment plan, always go with reputed developers with a good track record in project completion.

What Is a CLP Payment Plan?

The Construction-Linked Payment (CLP) plan is a way to buy a property where you pay a part of the total price upfront, usually around 10-15 percent. After that, you pay the rest based on how the building is progressing. For example, you might need to spend another 10 percent within 45 days of your first payment. Then, you could pay another 20 percent when the building reaches the fifth floor, and so on. This plan is popular among people with regular jobs because it’s flexible.

One big advantage of this plan is that you only pay as the construction moves forward. This means you’re not risking your money if the building is delayed. Builders also want to finish the project on time so they can keep the money coming in.

However, there are some risks. If the construction slows down or stops for any reason, you still have to pay your home loan every month. This can be tough because you’ll be paying both the loan and your rent at the same time until the building is finished.

What Is a TLP Payment Plan? (Time-Linked Payment Plan)

In a Time-Linked Payment (TLP) plan, you pay for a property in regular instalments based on a schedule set by the builder. Think of it like paying EMIs, but instead of paying a bank, you're paying the developer directly. 

You have to make these payments on time, regardless of how the building is progressing. Although this plan isn't as common these days, some buyers still like it because developers sometimes offer discounts for making payments on time.

One advantage of the TLP plan is that you might get a discount, and having a set payment schedule can make it easier to manage your finances. You know exactly when you need to pay and can plan your budget accordingly.

The downside is that you still have to make payments even if the construction is delayed. However, this is usually less risky than paying the full amount upfront because you're only paying small amounts over time instead of one large sum.

What Is a Flexi Payment Plan?

A Flexi Payment Plan (FPP) combines two payment methods: down payment and construction-linked payments. With this plan, you pay about 50 percent of the total cost before construction begins. After that, you make the remaining payments as the building is completed.

This plan has some benefits. You might get discounts on the initial payment, and you can pay the rest in instalments as the construction progresses.

However, there are risks. If construction is delayed or there are problems, you might face issues. If you choose to make a down payment, you can't get that money back even if you switch to a construction-linked plan. Also, if you take a loan to cover the remaining costs, you might have to pay both rent and the loan every month if construction is delayed.

What Is a Possession Linked Payment Plan?

A Deferred Payment Plan (DPP) is a way to buy a home by paying a small amount upfront and then paying the rest only after you get the keys to the property. Here’s how it works: When you book the home, you spend about 20-25% of the total cost. Then, you pay the remaining 75-80% after the property is ready, and you can move in.

The big advantage of a DPP is that it makes buying a home more manageable. You don’t need to come up with the full amount right away. Instead, you can secure your new home with a smaller initial payment and have more time to get the rest of the money ready before the property is handed over. This plan also makes it easier to back out if you don’t want to purchase during construction.

However, there are some downsides. DPPs are uncommon, and the amount you must pay upfront can vary depending on the developer. Plus, it could not be easy to complete the payment if you don’t have the money ready when the property is finished.

In A Nutshell 

Real estate payment plans offer flexible options to make buying a property more manageable. Whether you choose a down payment plan, construction-linked payments, or other methods, each has its own benefits and challenges. 

Down payment plans might offer discounts, while construction-linked plans align payments with building progress. Flexi and possession-linked plans provide a mix of flexibility and timing. Choose the plan that fits your financial situation and ensures peace of mind during your property purchase.