Payment Options For The Purchase Of Under Construction Properties

While purchasing a property, it is very much important to decide whether to go for a home loan or purchase the home with your own funds. There are different options for payment towards the purchase of a property that is under construction.

The first option is that the entire amount has to be paid in advance at the time of booking the apartment. This is very much benefit for the purchaser, because the builders give some discount when the apartment is purchased under construction. The purchaser need not keep track of the payments. But the purchaser should have that much cash available with him.

The second option is that the payment can also be made in installments. There will be a payment schedule that is agreed by both the builder and purchaser. The payments can be made as per the schedule. In this, the purchase price need not be paid immediately as a whole. It is spread over a period of time, like 2 or 3 years. If the purchaser has taken a housing loan, the bank directly pays these installments to the builder. In this case, the purchaser is required to make a payment of about 10-25 % of the cost of the apartment at the time of booking the apartment. The balance amount is spread over a period of time. Usually, it has to be paid every quarter. The final payment has to be done before taking possession of the flat.

Some builders link the payment schedule with the level of completion of the project. In this case, you have to make a payment at the time of booking the apartment. This will be followed by the installments depending on the stage of construction.

A purchaser must clearly understand the price of the apartment before booking it. He has to ensure whether the price is just the basic cost of the apartment or it includes the cost that is related to stamp duty, registration charges and the charges for all the amenities in the apartment like club membership fee, society maintenance deposit and parking facility.

If the purchaser has opted for a housing loan, he has to pay interest on a higher amount and also for a longer duration. All these have to be paid normally with the last installment as soon as the apartment is ready for occupation. It has to be paid before the purchaser takes possession of the flat.

Stamp duty and registration charges should be paid along with the last installment. The purchaser should know the fact that the recovery of the EMI starts only after disbursement of the entire loan amount. And so, in the second option, the purchaser needs to pay a higher interest amount. In fact, the purchaser should pay pre-EMI interest on the loan disbursed during the construction period.

These are the two payment options available for the purchase of the property that is under construction. Before deciding to buy an apartment, it is better to make a clear decision of the payment option to choose among the two.