How choose from multiple options for property payments
Multiple options for property payments, a major financial responsibility that comes with owning a house. The urban sector’s soaring costs bring more to the issue. Therefore, it appears unlikely for the biggest chunk of all salaried and self-employed home buyers to purchase a house without a loan.
The home-buying aspirants find some respite in different forms of property payment plans planned and recommended by builders and banks in the middle of such tough circumstances to make it convenient. The architects come up with a number of payment plans to promote cash flow into the projects long before the actual building begins, because of the weak consumer sentiment prevalent in the real estate.
Generally, for homeowners to select from, there are four forms of property payment options available. Let’s figure out what these payment systems are and which is known as the strongest real estate payment package.
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The most prevalent types of property payment arrangements suggested to buyers are:
- Down payment connected package
- Construction-related project
- Time-connected plan
- Flexi billing system
Property Payment: Related plan of down payment
The customer needs to invest the entire buying price in certain sections of conventional down payment schemes. The first portion, which is up to 15 percent of the selling price, is payable at the time the property is booked. Approximately 80%-90% of the outstanding balance must be paid during the timeframe negotiated by the parties concerned, and all remaining payments must be made at the time of taking custody of the asset. There will be extra costs such as the amount of registration and Stamp Duties (that makeup approximately 5 percent of the land price), taxes for utilities, original property tax, upkeep fees for society, etc. that compose the remaining amount.
Because of the number of risks involved, this payment strategy is not so lucrative. If things do not go smoothly or as expected, the builders and buying parties can find themselves in different forms of conflicts, and recovery is often a matter of significant concern and time-consuming in those situations.
Any builders resort to schemes such as “no EMI until possession,” options for “shared EMI,” etc. But, for different kinds of customers, all those systems mean different things. For eg, if proposed on ready-to-move-in houses, a scheme such as ‘no EMI till ownership’ would not help efficiently distribute the liability.
Schemes such as a guaranteed portion of EMI shared by the builder may be open, but those consumers who have lent under the adjustable-rate schedule will not benefit from it. Likewise, only part of the EMI interest or full EMI interest can be included in the joint EMI payment package. In order to prevent any surprises, it is best to analyze and compare and, most importantly, consider each payment schedule.
Land Payment: Plan for construction-linked
Builders recommend that, with the completion of each floor, they accept a certain amount of the property purchase price. Construction is broken into certain stages, such as completion of the basement slab, completion of the first floor, etc. At the time of booking, about 0 percent of the price of the property is charged and another 10 percent at the end of the 30 days after booking. Around 10 percent of the price is charged after the completion of each point.
For the construction-linked payment package, there is often a loan agreement. Banks offer a pre-EMI option, also known as a subsidy package, to help buyers handle pre-possession costs. In this method, complete EMI only begins after possession.
Until the time of ownership, the creditor is requested to pay only the EMI interest, the bank agrees to disburse the loan to the developer in accordance with the completion phases of the building. For individuals who need to handle rent when waiting for possession, this payment system fits best.
However, the construction-linked strategy is more costly, making the protection aspect all the extra expense. It is a win-win scenario where the completion of the stage is accurately compensated for by the contractor. In the event of a pause in possession, there is no additional loss for the EMI payer.
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Payment of Property: time-linked strategy
Accept the condition in which you are obligated, as a customer, to make a deposit equal to a portion of the property price before those deadlines are set, regardless of whether or not the building or some section of it is finished satisfactorily before then. All payment terms are structured to take only the needs of the builders into account. For finished developments or ready-to-move-in projects, this sort of strategy is seldom available. And, it is certainly a major gamble to take this alternative for under-construction assets.
Payment of Property: Flexi contract or Flexi payment plan
The characteristics in both the down payment package and the construction-related plan are included in the Flexi Plan. This arrangement entails paying 10% of the property price at the time of booking, another part of the payment, say up to 40%, at the end of one month after booking. With the end of the building point, the residual sum is due, much as what is proposed in the construction-linked schedule.
In such a contract, the customers forfeit a discount. The contractor may give a discount of 10% or so during the down payment plan. In the Flexi payment alternative, this is lowered to 4-5 percent.
If we compare all payment options and choose the best real estate payment package, the vote of experts will definitely go to construction-related plans and corresponding subsidy plans. This agreement makes the property more manageable and helps the client to properly handle the funds. Since the construction-linked plans have a ‘security of investment’ feature added to them, the buyers choose these.
Point to recall
Each buyer is different and so is his financial status; there is also a different reason for investing in a house. Thus, for all, all payment plans will not work. Even, in their payment time, builders may or may not have any of the plans.
So, before deciding the payment package, analyze the pros and cons of each of them objectively and figure out which of these is the perfect complement to your needs. Pay heed to the builder/track developer’s record in any event, too.
Only when the builder is honest and committed to ensuring timely and quality service, without any legal issues or consequences, are the advantages of the payment arrangements understood.
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