All About the 10:90 Payment Plan in India

Estimated reading time: 5 minutes

The 10:90 payment plan is growing in popularity among home buyers in India, thanks to its buyer-friendly approach, which requires only a 10% upfront payment. This plan appeals to those who want to minimize their initial financial outlay while gaining flexibility before taking possession of their property.

Let’s look into all you need to know about the 10:90 payment plan in this blog.

What is the 10:90 Payment Plan?

In the 10:90 payment plan, buyers pay only 10% of the total property cost at the time of booking, with the remaining 90% due upon possession. This means that, unlike traditional plans where multiple payments are spread throughout the construction phase, this structure allows buyers to pay the bulk only when they’re ready to move in.

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Key Advantages of the 10:90 Payment Plan

The 10:90 payment plan has specific advantages, making it appealing to particular buyers:

• Low Initial Outlay:
  Only 10% is required upfront, allowing buyers to manage cash flow better.
  
• Reduced Financial Stress:
  With the main payment due only upon possession, buyers have time to arrange funds or secure loans as needed.
  
• Protection Against Delays:
  Buyers aren’t obligated to make payments during construction, so they are protected if construction is delayed.

Who Should Consider the 10:90 Payment Plan?

The 10:90 payment plan is ideal for:

• First-Time Buyers: Those with limited upfront funds find this plan helpful.
  
• Investors: Since the bulk payment is delayed, investors can focus on other investments.
  
• Buyers Concerned with Construction Delays: If there are delays, buyers don’t face financial burdens as payments align with possession.

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Things to Keep in Mind Before Choosing a 10:90 Payment Plan

While the 10:90 plan has several benefits, certain considerations are essential before committing:

• Builder Credibility: Ensure the builder has a strong track record and credibility in the market.
  
• Project Status: Be clear about the construction timeline and any approvals or legalities to avoid potential delays.
  
• Loan Arrangements: While the bulk payment happens later, buyers should have their financing arranged to avoid last-minute complications.
  
• Total Cost: Some builders may charge a premium on the 10:90 payment structure due to the delay in payments, so evaluate the total cost compared to traditional plans.

10:90 Payment Plan vs. Other Payment Plans

Here’s a comparison to highlight how the 10:90 plan stands against other common payment options:

Payment Plan	Initial Payment	Payments During Construction	Final Payment
10:90 Plan	10%	None	90% at possession
Construction-Linked Plan	10-15%	Multiple instalments linked to construction stages	Remaining at possession
Down Payment Plan	10-15%	80-90% within 45-60 days	Remaining at possession

The 10:90 plan stands out for its minimal initial investment and no payments during construction, making it more accessible for many buyers.

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Potential Risks and Drawbacks of the 10:90 Payment Plan

While attractive, the 10:90 plan isn’t without risks:

• Higher Total Cost: Due to delayed payments, builders may charge a premium.
  
• Dependency on Builder’s Integrity: Buyers are at risk if the builder fails to complete the project. If the project is delayed, buyers may face uncertainty about when the large 90% payment will be due.
  
• Loan Processing Constraints: Some banks may not approve a loan under this payment structure, or they may offer it on stricter terms.

Tips for Maximizing the Benefits of a 10:90 Payment Plan

To make the most of this payment plan, consider the following tips:

• Do a Background Check: Choose builders with a reputation for on-time delivery and high-quality projects.
  
• Negotiate Terms: Some builders may be open to removing premium charges.
  
• Secure Pre-Approval for Loans: Having a loan pre-approved ensures smooth processing when the final payment is due.
  
• Understand Terms and Conditions: Review the terms in the builder-buyer agreement, including any delay penalties.

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Conclusion

To sum it up, the 10:90 payment plan in India offers a compelling alternative for those seeking to enter the real estate market with a lower upfront investment. While it’s a great option for first-time buyers and investors, buyers should consider builder credibility, financing needs, and the total cost before making a decision. This payment plan can be a smart choice if approached with due diligence.

Credit Dharma’s home loan experts with decades of experience can help you shape the plan for your home loan. Connect with Credit Dharma today for a free consultation call.

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Frequently Asked Questions