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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.
Also Read: Value Investing in Real Estate
Advantages of the 10:90 Payment Plan
The 10:90 payment plan has specific advantages, making it appealing to particular buyers:
| Benefit | Details |
|---|---|
| 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. |
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Disadvantages of the 90:10 Payment Plan
Before committing to any financial scheme, it’s crucial to assess the associated risks. Investors should carefully evaluate the potential downsides before proceeding.
- Limited Availability: Not all real estate developers offer this payment plan, restricting buyers’ options.
- Applicable Only for Under-Construction Projects: This scheme is designed for new launches and properties under construction. Those looking for ready-to-move-in homes or projects nearing possession may not benefit from it.
- Higher Overall Cost: The total price of the property under this plan is usually higher compared to traditional payment structures.
- Builder Credibility Matters: Buyers must ensure they are dealing with reputable developers. It is advisable to check the project’s legitimacy on the RERA website before making any commitments.
Check Out: Property Flipping in India
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.
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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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.
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.
Frequently Asked Questions
This plan is typically offered for under-construction properties. Ready-to-move-in properties usually require full payment upfront or through standard home loans.
Switching from the 10:90 payment plan to a different option, such as a conventional home loan, may be possible, but it will depend on the specific terms and conditions agreed upon with the developer. It’s essential to carefully review the contract and evaluate any potential penalties or fees associated with such a switch.
GST application remains the same as other under-construction properties. Currently, it’s 5% for affordable housing and 1% for other residential properties.
It’s crucial to have a solid financial plan. If you can’t arrange the payment, you might risk losing your initial investment. Consider discussing options with the developer or exploring bridge loans.
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