Real estate payment plans

By iTrust Financial Advisors (www.itrust.in)

Do you understand the nuances of your payment plan to your developer? When you buy property and pay by installments, soon after the initial payment you make at the time of booking, you will be expected to make recurring payments to the developer.

Here we explain the process of how this works and what you stand to gain or lose under each option.

Time-Linked Payment Plan

Time-linked plans require you to pay installments to the developer based on a pre-determined time schedule, independent of the rate at which the project’s construction progresses. This is a contractual commitment you are signing up for, and is non-negotiable.

If your payments are late or if you miss an installment, you can be liable for penalty interest or anything that you might have contractually agreed to as a penalty.

A typical time-linked plan conceptually looks like the following:

- 10% of basic selling price (BSP) at time of booking

- 10% of BSP every quarter thereafter for next 8 quarters