When you purchase an under-construction flat, the payment plan can matter as much as the advertised base price. A **construction-linked payment plan** divides the amount due according to building milestones instead of demanding the entire purchase amount immediately. That sounds straightforward, but buyers need to understand what proves completion of a stage, when their lender will release funds and how delays affect cash flow.
What a typical milestone schedule looks like
A developer may request a booking amount followed by instalments at foundation, certain slabs, brickwork, finishing and possession. The exact milestones and percentages are **contract-specific**. Never assume a marketing leaflet is the binding schedule: it should match the executed agreement for sale and applicable rules.
Under Section 13 of the Real Estate (Regulation and Development) Act, the promoter cannot accept more than 10% of the cost of the apartment, plot or building as advance or application money **without first entering into a written agreement for sale and registering it**. Before paying a large deposit, check the contract and registration requirements with an independent lawyer.
How a home loan interacts with the stages
A lender may approve a total loan amount but disburse it in parts after paperwork, legal verification and inspection of the construction stage. Your own contribution is often required before or alongside disbursements. Ask the lender how it verifies work and what happens if the developer requests payment before the bank accepts the claimed milestone.
**Pre-EMI** generally refers to interest paid on the disbursed amount before regular principal-and-interest repayments begin, where a loan product uses that arrangement. Paying interest without reducing principal can increase the effective ownership cost if construction lasts longer than planned. Compare a full EMI plan and any pre-EMI option using lender-issued illustrations.
A worked example—not a current project quote
Imagine a flat with a contract price of ₹80 lakh and a milestone calling for 10% at a defined stage. That milestone amounts to ₹8 lakh, but it does not mean the lender automatically pays all ₹8 lakh or that the same stage appears in every project. GST, stamp duty, registration, parking and other charges must be checked separately in the official cost sheet. Keep these components distinct.
What can go wrong?
- A milestone is vaguely worded, leaving room for disagreement about when payment becomes due.
- A builder raises a demand without producing engineer certification or other agreed evidence.
