While from a cash-flow perspective, these schemes are great, the catch usually lies in the price you pay, says Sonal Sachdev

With the economy in the doldrums, it isn’t hard to deduce why houses aren’t selling. This has realtors innovating constantly to rope in the few buyers in the market. The latest in the line of home buying innovations is a slower and sweeter “20” in the now quite commonly understood 80:20 home purchase schemes.

What’s on offer is a relaxed payment of the 20% of property value that home buyers are required to cough up at the time of booking. Home builders are now allowing prospective home buyers to spread this payment out over the development period—just like the home buyers who opt for the standard development-linked payment plans. This may be seen as an attractive offer by families looking to keep cash secure in the bank during trying times. It might even prompt reticent buyers waiting in the wings to take the plunge.

So, would this added lure lead hapless buyers down the garden path? A stern warning and some cautionary measures suggested by Reserve Bank of India (RBI) have gone some distance in raising awareness and curbing misselling. Banks too have been advised to proceed with caution on releasing funds to new and under-construction projects. This along with the realisation that the watchdog is keeping an eye on this space has led to some tempering of realtor aggression on sales through the scheme.

What’s notable is that the RBI didn’t completely ban such schemes. That’s most likely because the offer does ease the cash-flow situation for home buyers in a time of uncertainty and economic sluggishness.

So, is this sweeter 20 offer a good deal? Well, if you were considering the 80:20 scheme, it is definitely sweeter from a cash-flow perspective. However, the catch usually lies in the price you pay. Most developers offer cash paying buyers a discounted booking rate. The rate goes up a few notches if you opt for the 80:20 scheme. And if you go for the deferred 20 option, it is quite natural to expect a few more pounds will be extracted for this benefit.

How sweet you can make the deal for yourself ultimately depends on your negotiating skills. Can you swing a sweeter 20 at a sweeter price? Remember it is a buyer’s market.

Formerly Editor, Outlook Business and Executive Editor, NDTV-Profit, the writer is now an entrepreneur and takes keen interest in personal finance. Contact him at hinduhabitat@gmail.com