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CLP payment plans, Best way for payments ??

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CLP payment plans, Best way for payments ??

Last updated: September 16 2010
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  • CLP payment plans, Best way for payments ??

    Hi All,

    Whats is the best way to go ahead with CLP.

    Say I plan to pay 70% from bank loan and rest from savings.

    having paid 10% from your savings, What should one do : pay next 20% from savings and then go for bank loan ??


    Point 1 : If you pay from your savings , say FD at 7.5% then you loose financial security and what if project go for a toss ?

    Point 2: If you go for early loan then at the end you end up paying extra bucks.(FD at 7.5% and loan at 9%).


    Both investors and end user would have different opinion here, please write in title in what context you speaking
  • #2

    #2

    Re : CLP payment plans, Best way for payments ??

    I think CLP is best,because if there is delay in project atleast your total amt is not blocked.

    Comment

    • #3

      #3

      Re : CLP payment plans, Best way for payments ??

      really 2 factors will affect this.
      1. risk management - how much risk you can take on builder reputation? even in most CLPs, you have to pay 30% in first 90 days. after that installments are construction linked. my thinking is any builder can be an ahole(even the reputed ones) and you should not pay 30% of total amount before any work has been started. in case of loan at least bank is sharing some of the risk with you.
      2. fd at 7.5% are very bad form of investment as rate of inflation is almost 14 % nowadays. so basically you are loosing your money by 7% per annum. fd should only be used as an alternative to keep too much money in your current/savings account( almost all the banks provide facility to book and liquidate fd online, HDFC even provides a facility when you can link fd to your account, and if you overdraw from your account, that much amount is cut from your fd, rest continues as it is). so invest in , MFs not fd for long term investment.
      Originally posted by amitexpert View Post
      Hi All,

      Whats is the best way to go ahead with CLP.

      Say I plan to pay 70% from bank loan and rest from savings.

      having paid 10% from your savings, What should one do : pay next 20% from savings and then go for bank loan ??


      Point 1 : If you pay from your savings , say FD at 7.5% then you loose financial security and what if project go for a toss ?

      Point 2: If you go for early loan then at the end you end up paying extra bucks.(FD at 7.5% and loan at 9%).


      Both investors and end user would have different opinion here, please write in title in what context you speaking

      Comment

      • #4

        #4

        Re : CLP payment plans, Best way for payments ??

        In some cases in CLP of flexi builder ask buyer to pay 10% intially and then the next installment of 30% is taken when the project is approved by the bank(like after 30-90 days of bank approval). If thats the case then the person can apply for the loan and pay the entire 30% amount from bank loan and only 10% from his pocket intially....when you follow this approach, you need to take care of one thing that you need to always maitain the margin money i.e. suppose bank have clause that 15% should be paid by customer and 85% is paid by bank than you have to always maintain margin of your 15% for each installment...you can plan in way where you pay it on each intallment and bank pays remaining amount or you can pay yourself some additional amount at the starting or pay some of the installment to maintain your margin.....I have devised a strategy for me....
        I have paid around 10% from my pocket and remaining amount was financed by bank(till date I have paid 40%).....I had some spare amount which I invested in shares, mutual fund and some safe instruments like FD(where i got interest rate of 8.5 for FD and it was invested earlier)....I plan to perpay the bank amount once I book profit on any of this investment...by following this approach I can reduce my interest amount outgo as I prepay.....I also reduce my risk as I am prepaying in installment and can see the progress and based on that can take my call if to prepay or not.....Suppose I can earn around 15% on my investment for a year and suppose I save around 3-4% on interest by prepay startegy than it gives me a good cushion....till now my startegy have worked good....I have target to pay entire entire flat cost by 5-7 years timeframe....i.e to prepay entire bank loan by till then.....I hope that I will be able save some amount on interest and also earn some amount on spare money I have or will get in due course of time...so I feel CLP is best approach to buy a house.

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