HOME LOANS LINKED TO DEVELOPER’s PLANS

HOME LOANS LINKED TO DEVELOPER’s PLANS

Buying a house involves huge investment and the same is not possible to many of the middle-class families. However, now-a-days, the Banks as well as the Financial Institutions are coming forward to lend finance for purchase of homes through their innovative schemes under home loans, with varied interest rates.  In this connection, let us now confine to glance through the modus being adopted by the Project Developers with a view to mitigate the hardship of the buyer.  In line with this, the Project Developers are offering different types of plans for the prospective buyers, and if we look at those plans, we observe that there are three most attractive plans that are currently followed viz., CLP, TLP, DPP i.e., Construction Linked Plan, Time – Linked Plan, Down Payment Plan, respectively.   Construction Linked Plan (CLP): In this category, the buyer has to pay the amounts in installments as per the progress of construction. For example, if the construction is completed up to basement level, then the buyer has to pay certain percentage, as already agreed upon, i.e., up to basement level, in terms of the agreement, as first installment. Later, when the construction is completed up to certain level, say the skeleton of the building is completed either up to second, third or fourth floor, the buyer has to pay certain further percentage of amount towards second installment. Similarly, the buyer  shall pay the entire balance amount in such instalments, as per the progress of the construction and in terms of the already mutually agreed terms & conditions of the Agreement.  Even the Banks/Financial Institutions are also ready to adopt such plan of the Project Developers/Builders and the buyer will be burdened only with such amount/s as and when released to the Project Developers on behalf of the buyer. So to make it clear, the buyer will be charged for the 1st instalment amount only till the 2nd instalment amount is released. When the 2nd instalment loan amount is released, then the interest would be charged on the amount inclusive of 1st as well as 2nd instalments, and so on.In this scheme, the Bankers also shall have an agreement with the Project Developer/builder and as such the reputed builder’s projects can only avail bank loans with agreed interest rates; while the other Project Developers/Builders can avail loans from market sources and/or from other Financial Institutions.

Time–linked plan: In this type of plan, the buyer has to pay the installments within the specified time period. This is not linked to the development of the construction and the buyer’s money can be used to construct the buildings to enable the builder to avoid bank loans and interest on it. After paying the full amount in either three or four installments, the buyer has to wait for the completion of the construction. Again here the buyer has to select the right builder who has enough funds for the construction, otherwise there is every possibility of diversion of funds by the Project Developer/Builder to other projects, in which case the buyer shall be over-burdened with interest for the loan amount availed by him, without having the house delivered to him.

Down payment plan:This is the plan financial institutions following for decades and now the builders offering the same scheme to buy the apartments. The buyer has to pay at least one fourth of the apartment value on booking and the rest will have to be paid before the completion of the project and before the registration is done.    

There are many other plans available in the market, but the buyer has to choose the right one by consulting the experts, otherwise there is every likelihood that the buyer would get caught in a trap and taking delivery of the flat may take considerably long time while the buyer is burdened with loan instalment and its interest falling due for repayment.  

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