Indian Real Estate Forum - www.indianrealestateforum.com - View Single Post - Down payment,Flexi payment and construction linked plan

victors · 11-09-11

Down payment Plan

Advantages:
- You pay less psf value as compared to other options. Usually around 200 psf less. (That's the only benefit)

Disadvantages:
- Banks will start charging you interest on the whole disbursed amount from the very first day itself.
- You don't enjoy tax benefit on the principal value you pay till you get the possession.
- A big burden on those who are living on rent, as you will pay Rent + full EMI.
- Banks may be a bit hesitant in giving you this option.
- If possession gets delayed, you will keep on paying extra pre-emi interest.

My View:
Unless someone is paying the entire downpayment by himself/herself, and possesion date is only few days or weeks away, this option should be avoided.
Because it will be a big burden on your EMI right away. And you lose tax benefit on principal as well. So paying around 200psf less may not be worth it, specially if your possession is 2-3 years away.

Construction Linked Plan

Advantages:
- Easily financed by banks.
- You get time to arrange for few more lakhs by the time you get possession, and you can pay that to your bank, that can substantially reduce interest & principal burden on you.
- You enjoy full tax benefit. In pre emi you get tax benefit on interest, and after possession you get on both interest and principal.
- Your EMI rise gradually as and when you keep taking from banks, so reducing your financial burden.
- Reduces risk, as you only pay to builder on specific milestones (like you pay when 5th floor is made, and so on.), so things like delay in possession due to external factors like farmers agitation etc., may have less impact on you, as you will not ask your bank to disburse loan, because milestone is delayed.

Disadvantages:
- You pay around 200 psf extra. (thats all i think. yaar soch lo ki land rate mehenga ho gaya aur aapne thodi mehengi khareedi)

My View:
Unless you really need quick possession, CLP is the option you should choose.
It also depends on how much construction has already been done. If its in the initial stages, then you may go for CLP, or if its somewhere near midway (like 3rd, 4th floor or something), then you may go for Flexi plan, because after first few installments, flexi is like CLP.

Flexi Plan:

Advantages:
- A little cheaper than CLP.
- All advantages of CLP.

Disadvantages:
- It requires you/bank to pay 30-40% in a pan of 4-5 months. This quickly increases the interest EMI you pay before possession. So, more EMI burden than CLP.

My View:
- If you have 30-40% amount with you, or if construction is around midway and you need possession quicker than 2-3 years (like in 1.5 -2 years or something), then only you should consider this option.

I hope i have given some clarity on these 3 plans. If there is anything, anyone would like to add/subtract, suggestions are most welcome. Happy buying!!

11-09-11	#5
victors Senior Member Join Date: Sep 2011 Posts: 650 My Mood: Thanks: 57 Thanked 141 Times in 107 Posts	Down payment Plan Advantages: - You pay less psf value as compared to other options. Usually around 200 psf less. (That's the only benefit) Disadvantages: - Banks will start charging you interest on the whole disbursed amount from the very first day itself. - You don't enjoy tax benefit on the principal value you pay till you get the possession. - A big burden on those who are living on rent, as you will pay Rent + full EMI. - Banks may be a bit hesitant in giving you this option. - If possession gets delayed, you will keep on paying extra pre-emi interest. My View: Unless someone is paying the entire downpayment by himself/herself, and possesion date is only few days or weeks away, this option should be avoided. Because it will be a big burden on your EMI right away. And you lose tax benefit on principal as well. So paying around 200psf less may not be worth it, specially if your possession is 2-3 years away. Construction Linked Plan Advantages: - Easily financed by banks. - You get time to arrange for few more lakhs by the time you get possession, and you can pay that to your bank, that can substantially reduce interest & principal burden on you. - You enjoy full tax benefit. In pre emi you get tax benefit on interest, and after possession you get on both interest and principal. - Your EMI rise gradually as and when you keep taking from banks, so reducing your financial burden. - Reduces risk, as you only pay to builder on specific milestones (like you pay when 5th floor is made, and so on.), so things like delay in possession due to external factors like farmers agitation etc., may have less impact on you, as you will not ask your bank to disburse loan, because milestone is delayed. Disadvantages: - You pay around 200 psf extra. (thats all i think. yaar soch lo ki land rate mehenga ho gaya aur aapne thodi mehengi khareedi) My View: Unless you really need quick possession, CLP is the option you should choose. It also depends on how much construction has already been done. If its in the initial stages, then you may go for CLP, or if its somewhere near midway (like 3rd, 4th floor or something), then you may go for Flexi plan, because after first few installments, flexi is like CLP. Flexi Plan: Advantages: - A little cheaper than CLP. - All advantages of CLP. Disadvantages: - It requires you/bank to pay 30-40% in a pan of 4-5 months. This quickly increases the interest EMI you pay before possession. So, more EMI burden than CLP. My View: - If you have 30-40% amount with you, or if construction is around midway and you need possession quicker than 2-3 years (like in 1.5 -2 years or something), then only you should consider this option. I hope i have given some clarity on these 3 plans. If there is anything, anyone would like to add/subtract, suggestions are most welcome. Happy buying!!