10:90 Payment Plan: Meaning, Advantages & Disadvantages

Table of Content:

10:90 Payment Plan:Overview
10:90 Payment Plan: Advantages
10:90 Payment Plan: Disadvantages
10:90 Payment Plan VS Other Payment Plans
How To Choose Which Payment Method For Property Purchase Is Right For You?

When you purchase a house, it may be for personal use or for an investment. Still, it comes with a significant financial commitment that can occasionally seem overwhelming, particularly when making a down payment. Many real estate payment plans came into existence to ease this feeling. Earlier, CLP, which stands for Construction Linked Plan, was offered by the builders. In this method, buyers make payments after construction reaches specific milestones. In reality, it was becoming a big challenge to address this issue, so a 10:90 payment plan emerged.

This informative article will help you understand the 10:90 Payment Plan Scheme and its advantages and disadvantages.

10:90 Payment Plan: Overview

The 10:90 plan has gained quite a bit of popularity in the real estate market. The plan has its benefits for under-construction projects. The 10:90 plan aims to gather buyers' attention so that they buy properties in India. Furthermore, the 10:90 payment plan requires buyers to pay 10% upfront and the remaining 90% at the time of possession.

Due to the scheme, buyers get the opportunity to secure the property with a relatively low initial investment. So, if a buyer has insufficient funds to invest, they can opt for this scheme. And not to forget, the 10:90 plan is also beneficial for real estate investors as they seek to capitalise on potential price appreciation during construction.

10:90 Payment Plan: Advantages

Read the below-mentioned advantages to gain a better understanding of the plan.

You can purchase a property with minimal investment. For instance, if the property's worth is INR 80 lacs, you can book it by depositing INR 8 lacs in the initial period.
The 10:90 payment plan does not require any interest or home loans post the initial payment until possession. For instance, if you acquire a home loan at a 6.9% interest rate for INR 80 lacs, you must pay INR 5.52 Lacs each year. With the 10:90 payment plan, you will be able to save INR 5-15 Lacs based on the worth of your property.
The scheme requires minimal paperwork, and making payments has become easy as developers usually offer online booking options.
Buyers can avoid paying 90% of the purchase price by reselling the property before they take possession.

10:90 Payment Plan: Disadvantages

A smart real estate investor understands the risks and challenges involved in any scheme. Read below about the disadvantages of the 10:90 payment plan before making a random real estate investment.

All real estate developers and builders do not offer the 10:90 payment plan.
The 10:90 Payment Plan Scheme is only applicable for under-construction and new projects.
The choice of a reliable builder or developer is important, and buyers should check the legitimacy and project information on the RERA website.

10:90 Payment Plan VS Other Payment Plans

While there are different real estate payment plans, how can one be sure which one to opt to? If that's the case with you, the below-mentioned payment plans, along with their pros and cons, will help you make a better decision.

1. Down Payment Plan

When booking a property, a buyer must pay 10 to 15% of the property’s value. The buyer is obligated to pay 80 to 90% of the remaining amount within 45 to 60 days and the remainder at the time of possession. Property costs, stamp duty, registration charges, property tax, maintenance, society amenities, etc. payments are included in the pending amount.

The merit of the down payment plans is that you get a discount of 8 to 10% on property prices as you pay the builder upfront, which ensures healthy savings on the total property value.

Also Read: Down Payment for Home Loan: Tips, Benefits & How to Calculate

2. Construction Linked Plan (CLP)

In this payment plan, a buyer pays 10 to 15% of the property purchase price at the time of booking. Then the remaining 20% has to be paid with the construction milestone.

The merit of opting for this plan is that it is completely linked to the construction progress and involves minimum risk. Furthermore, builders become obligated to complete the construction work on time!

3. Time Linked Plan

In this payment method, the developer has nothing to do with the progress of construction work. You have to pay property installments based on a predetermined schedule. Developers offer an 8–9% discount to buyers who opt for this method.

4. Flexi Payment Plan

In this payment method, the buyer pays around 50 % of the purchase price before the beginning of the construction work. Usually, it takes three to six months to take possession from booking time, and the rest you can pay as the construction progresses.

Also Read: 7 Most Important Things to Ensure Investment in the Right Property Within Budget

How To Choose Which Payment Method For Property Purchase Is Right For You?

Home buying is a daunting task that requires your undivided attention, time, and money. For some people, property buying is a once-in-a-lifetime decision. So you need to be mindful of the choices you intend to make. The below-mentioned generic situations will bring you out of your misery.

Scenario I: If the real estate project is on the verge of completion and you think that the builder is less likely to miss the deadline, opt for the "down-payment plan”.

Scenario II: If your project is at the initial stage and you lack sufficient funds, opt for the "Construction-Linked Plan."

Scenario III: If you have a little bit of cash and can fund your buying partially while the property is in the middle of construction, opt for the "Time-Linked Plan".

Scenario IV: If you wish to pay in different ratios until you receive the possession, you can choose the "flexi payment plan".

A game-changer in the real estate sector, the 10:90 payment plan offers many potential investors and homeowners the chance to buy their dream property. This payment plan can alter people's perspectives on home ownership by providing flexibility and reducing the initial financial load.