Construction-Linked Payment Plan
Compute milestone-based payment schedule for under-construction properties.
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- Standard milestones: Booking (10%), Foundation (20%), Structure (40%), Finishing (20%), Handover (10%).
- Each milestone is due 3 months after the previous.
- Adjustable for project-specific plans.
Frequently Asked Questions
What is a construction-linked payment plan (CLP)?
A Construction-Linked Payment Plan ties your payments to the construction progress of the project. Instead of paying the full amount upfront, you pay: 10-15% at booking, then instalments as construction milestones are completed (e.g., 10% on completion of foundation, 10% on each floor slab, etc.), with the final 5-10% at possession. This protects buyers because you only pay as the developer actually builds, reducing risk of delays or abandonment.
How does a construction-linked plan differ from a down payment plan?
In a Down Payment Plan (DPP), you pay 90-95% of the property value upfront at booking, receiving a discount of 5-10% on the base price. In a CLP, you pay gradually as construction progresses, but typically receive no or minimal discount (0-3%). DPP offers better pricing but higher risk - if the developer delays or abandons the project, your money is stuck. CLP offers safety but costs more due to price escalation and inflation during the construction period.
What are the payment milestones in a typical CLP?
A typical CLP for a G+20 tower project in Kolkata follows: 10% at booking, 10% at agreement registration, 10% on completion of foundation, 5% on completion of each floor slab (ground floor through 20th floor = 20 × 5% = 100% of construction payments), and 5% at possession. Variations exist - some projects use percentage-based milestones (10% at 30% construction complete, 10% at 60% complete, etc.). Always get the exact payment schedule in writing before booking.
What are the risks of a construction-linked payment plan?
Even with CLP, risks include: (1) Developer delays construction milestones artificially to collect payments earlier; (2) Quality compromise to reach milestones faster; (3) Interest cost on your loan if you're paying EMIs on disbursed amounts; (4) Price escalation clauses that increase the final amount; (5) Changes in layout or specifications during construction. Mitigate by choosing a RERA-registered project with a good developer track record and ensuring all milestones are clearly defined in the agreement.
How does a CLP affect my home loan disbursement?
With a CLP, your home loan is disbursed in tranches matching the construction milestones - not as a single lump sum. You pay EMI only on the disbursed amount (pre-EMI interest) until full disbursement, after which full EMI begins. Some banks offer "EMI holiday" or "pre-EMI interest waiver" schemes for under-construction properties. The advantage of tranche disbursement is that you pay interest only on funds actually utilised, not the full loan amount from day one.
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