Construction-Linked Payment Plan
Compute milestone-based payment schedule for under-construction properties.
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Formula & Assumptions
Source: RERA construction-linked payment guidelines · Effective: 2017-05-01- 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.
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.
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.
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.
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.
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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