Flexi bargains

As with all good things in life, a house comes with its set of unsolicited paradoxes. While it offers high financial security, purchasing it can be monetarily draining. Though it's easy to get a home loan, paying the equated monthly instalment (EMI) is a tedious affair.

Still, the benefits outweigh the concerns and so you decide to buy one. Now is a good time to implement the decision given the bevy of bargains flooding the market and the discounts you are bound to land. But wouldn't it be wiser to wait till your next salary increment?

To help you make up your mind, builders have hit upon a novel idea-flexible payment plans. These can be customised depending on how much you can pay in the initial stages. So, in the coming weeks, be prepared to be bombarded with 'No EMI till possession', 'EMI sharing' and 'No EMI, no interest' schemes.

So far, the most popular way of paying for a house has been through a down-payment plan. You make a 10 per cent down payment from your pocket, the home loan takes care of 85 per cent of the cost and you pay the balance 5 per cent at the time of possession. While such a plan ensures maximum discounts for the buyer, it also burdens him with an upfront EMI.

The buyers who have a smaller budget and low risk appetite can opt for a construction-linked plan, wherein you pay in instalments as the construction progresses. The EMI payment starts only after the entire loan is disbursed. However, what works against it is that a borrower has to pay a pre-EMI interest on the money that the bank lends in stages. This means that the property under construction may not work out to be as cheap as you had thought, especially if you are paying rent till the project is completed.

What is Flexi Payment? You pay 10% at the time of booking. A further 10% is paid within two months of the date of allotment. Up to 70% is paid in tranches as the construction progresses. The balance 10% is paid at the time of possession.

To overcome the drawbacks of both these types of plans, developers are now offering flexi plans. Under such schemes, a buyer pays about 10 per cent of the property value at the time of booking (similar to a down-payment plan), but in the first 30-60 days, he is required to pay only 30-40 per cent of the cost (unlike 85 per cent in the case of a down-payment plan).

The schedule for the balance payment is similar to a construction-linked plan. So the initial EMI burden is low. However, the downside is that builders are not willing to offer as high a discount as for a downpayment plan. For instance, there is a 6-7 per cent discount on the latter scheme but under a flexi plan you will get a 3-4 per cent discount.

However, this is better than a construction-linked plan, which offers no discount. Also, most developers have tied up with banks, so that you don't have to pay a pre-EMI interest for the partial loan that the bank disburses in the first 60 days. This is only charged as and when the bank disburses the rest of the loan.

Flexi plans are also beneficial if you are an investor planning to sell the property within a couple of years. In such a case, you wouldn't have to pay a sizeable amount as EMI (as you would under a downpayment plan), and the pre-EMI interest would also be low compared with a construction-linked plan. Buyers have begun to opt for flexi plans as these don't exert too much financial strain. The success of this innovative plan has prompted developers to widen options for buyers in other areas too.

Choose your Design

Customisable houses are another lure that developers are using to woo buyers. While some offer a few standard options for floor plans, others will let you customise the space. "The residential real estate market has gradually moved towards the end-user rather than the speculator. Flexi homes cater to the needs of those who are going to live in the apartments," says Anil Kumar, executive director, marketing, Spire World, which is building flexi-home projects in Gurgaon.

Flexi homes You can choose from various layouts for a given apartment size. Customise the interiors within the cost fixed by the developer.

Customisation is offered at four levels-floor plan, layout, materials used for finishing and fixtures. In the case of floor plans, some developers may let you pick from three to four standard plans. Others provide more liberty to carve out space. For instance, for an apartment size of 1,600 sq ft, you could go for a 3-bedroom, 3-toilet set-up or a 3-bedroom, 2-toilet, 1-study combo, or even a 4-bedroom option.

However, the choice comes with certain restrictions as the developer has to consider legal (building bylaws) and structural aspects. This means, for instance, that while you can exchange the location of 'wet' areas (kitchen and bathrooms), you cannot have a wet area anywhere you want in the house. In some localities, local building bylaws do not allow a room without a window.

If you choose a floor plan option with the standard finishing that the developer offers, you may not have to pay extra. However, the cost will vary if you want customisation in terms of the material (flooring, walls, etc) and fittings being used.

Some builders are also offering apartments with an annexe, which can be used as an office. These home-cum-office apartments are targeted at self-employed professionals, who may be willing to pay a marginally higher price because they will not need to rent another place.

Builders are also offering customisable plans to cater to a wider client base. In some locations, as the markets have picked up, developers have been caught off guard by the sudden change in buyers' preferences- from premium to affordable or vice versa.

A flexible floor plan gives them the freedom to make alterations depending on the buyer's preference. So in some locations low-end apartments are becoming smaller to accommodate value-seeking buyers, while in others, builders are combining two apartments to create bigger space for larger families. These plans are also helping developers to court the clients who prefer independent houses.

The choices are many, the time ripe to take the plunge. So you don't really have to wait for your next increment to pick a house.