The construction linked a payment plan is a payment option in which the bank disburses installments to the developer on the owner’s behalf for pre-decided construction milestones. At every stage of development, the bank would release some percentage of the loan amount.
In the construction linked plan, every stage is paid for until about 95% of the cost is released to the developer or builder. The remaining 5% is demanded for from the intending owner or buyer when the possession is handed over to him. Once the 5% is paid to the developer, the owner starts paying back the loan back to the bank. His first EMI begins right after the possession of the building. Though there is not a single relief for the buyer seeing that during the construction period of the loan, he is paying both rent and interest on the loan.
A keynote in this payment plan is that the builder enjoys
uninterrupted and timely cash disbursal for the building project.