Payment Plans Explained: Construction-Linked, Time-Linked and Down-Payment Schemes

Two buyers can pay the same price and end up with very different cash-flow and risk depending on the payment plan they choose. Here are the structures you are most likely to meet in Pune and the questions that matter for each.

Construction-linked plan (CLP)

Payments are tied to completion of defined stages, such as foundation, plinth, a certain number of slabs, brickwork, plastering and possession. You pay as the building goes up. Because each demand is tied to a visible stage, you can check progress on site and on the MahaRERA project page before paying.

Time-linked plan (TLP)

Payments fall due on fixed dates or months after booking, regardless of how far construction has progressed. This can suit buyers who prefer predictability, but it can also mean paying more than the percentage of work completed. Read the delay and interest clauses carefully.

Down-payment and subvention-style schemes

Some developers offer a discount for paying a large share upfront, or arrangements in which the developer services part of the loan interest for a period. These can look attractive, but the benefit depends on the terms.

• Ask who bears the cost if construction is delayed.
• Ask what happens to the subvention if the loan is prepaid.
• Compare the discounted price against the normal price, not against the advertised rate.
• Remember that paying more upfront increases your exposure if the project slips.

A word on the 10% rule

Under Section 13 of the RERA Act, a promoter cannot accept more than 10% of the cost as an advance or application fee without first entering into a registered Agreement for Sale. If a developer asks for significantly more before a registered agreement, ask why.

What to check in the agreement

• Each instalment and what triggers it
• Interest rates on late payment by you, and on delay by the promoter
• The registered possession date
• What happens if you cancel
• Charges payable on possession, such as maintenance deposits

Comparing plans fairly

To compare two offers, add up every payment, including the taxes and charges, and lay them on a timeline. Then consider the risk attached to each schedule. The cheaper-looking plan is not always cheaper once timing and risk are included.

Get it in writing

Verbal assurances about discounts, waivers or extensions have no value unless they are recorded in the agreement or a signed document. Keep copies of everything you sign.