Construction-Linked vs Down Payment vs Possession-Linked Plans: Choosing a Payment Plan in NCR

By ADiHomes Updated October 25, 2026 13 min read

Checked: 2 official sources citedreviewed October 25, 2026Report an error

Watercolour illustration of three coin jars on a windowsill before a tower under construction

Contents

Two flats in the same Gurugram or Noida tower can cost very different amounts depending on how you agree to pay for them. Builders in Delhi NCR sell the same unit under several payment plans: construction-linked, down payment, possession-linked, time-linked and assorted “flexi” or 20:80 structures. The plan decides how much of your money sits with the developer before the building exists, how much interest you pay to the bank in the meantime, and how exposed you are if the project slows down. This guide explains each plan in plain terms, shows the cash-flow maths with illustrative numbers, and lists the clauses to check before you sign.

The legal frame every plan must fit into

Whatever the brochure calls it, a payment plan for a registered project has to work inside the , 2016. Three provisions matter most.

The 10 percent ceiling before agreement (Section 13). A promoter cannot take more than 10 percent of the cost of an apartment or plot as an advance or application fee without first signing a written and getting it registered. Any plan that asks for 20 or 30 percent “on booking” before a registered agreement breaks this rule.
The payment schedule is part of the agreement. Section 13(2) requires the agreement for sale to state the dates and manner of payments and the possession date. The Uttar Pradesh model agreement carries the payment plan as a schedule, so the plan you agree to becomes enforceable on both sides.
The 70 percent escrow rule (Section 4(2)(l)(D)). Seventy percent of the money collected from buyers must go into a separate bank account for that project and can be withdrawn only in proportion to the percentage of completion, certified by an engineer, an architect and a chartered accountant. This rule protects buyers on every plan, but it protects you most when your payments are also tied to construction.

Default consequences are also fixed by the model agreement in UP: if a buyer misses two consecutive demands despite notice, interest is payable at SBI’s home-loan MCLR plus 1 percent, and if the default continues for three months after notice the builder may cancel after 30 days’ prior intimation and refund the money minus the booking amount and interest dues. Haryana uses its own rules and orders, so read the Gurugram agreement for the equivalent clauses.

The main payment plans at a glance

Plan	How it works	Who it suits	Main risk
Construction-linked plan (CLP)	Instalments are raised when the builder reaches stages such as excavation, each slab, brickwork, finishing and offer of possession	Most salaried buyers using a home loan	Demands can bunch together if the builder speeds up; delays stretch your period
Down payment plan (DPP)	About 90 to 95 percent is paid within a short period after the agreement, often in exchange for a discount	Cash-rich buyers or investors who want a lower price	Almost all your money is with the builder before construction; a stall hurts most
Possession-linked plan (PLP)	A smaller share during construction, with a large balance (often 40 to 60 percent) due at possession	Buyers who want to limit exposure to a delayed project	Usually priced higher; a large lump sum falls due on possession
Time-linked plan	Fixed dates regardless of progress	Rare in NCR now; seen in some commercial projects	You may pay ahead of actual construction
Flexi plan	A hybrid, for example 30 to 40 percent up front and the rest linked to construction	Buyers who want a partial discount	Read the trigger events carefully
20:80 or	Buyer pays a small share; a bank pays most of the rest to the builder under a , with the builder promising to bear pre-EMI interest until a date	Buyers attracted by “no till possession”	If the builder stops paying the interest, the bank pursues the buyer

Percentages in this table are typical market patterns, not legal limits. Each builder’s cost sheet sets its own split, so compare the actual schedule annexed to the agreement.

Construction-linked plans in detail

The CLP is the default in most under-construction NCR launches. A typical schedule starts with the booking amount (within the 10 percent limit), a further instalment on signing the agreement, then a sequence of demands tied to the foundation, each floor slab or a group of slabs, masonry, plastering, flooring and finally the offer of possession, when the last 5 to 10 percent and charges such as , club membership and registration costs fall due.

Why buyers prefer it

Your money follows visible progress, which matches the 70 percent escrow logic.
Banks disburse home-loan tranches against the same demand letters, so your loan grows only as the building grows.
If construction stops, you stop paying, which limits how much is at risk.

Where CLPs go wrong

Vague stages. “Completion of super structure” can mean different things. Ask for the stage definitions in the agreement, tower-wise.
Front-loaded schedules. Some CLPs collect 30 to 40 percent by the time the basement is done. Add up how much is due before the first floor slab.
Demands for the wrong tower. In multi-tower projects, demands should follow your tower’s progress, not the fastest tower. Ask for site photographs or the architect’s certificate.
Pre-EMI drag. On a home loan, you pay interest on each disbursed tranche until the final disbursement, after which full EMIs start. A two-year delay means two more years of pre-EMI that does not reduce principal.

Down payment plans: the discount and the exposure

Developers offer down payment discounts because buyer money is cheaper for them than construction finance. A discount of a few percent sounds attractive, but compare it with what you give up.

Illustrative comparison

For illustration only, assume a Rs 1 crore flat with a four-year construction period. Under a CLP you might pay roughly evenly over four years; under a DPP you pay Rs 95 lakh within the first few months in return for a 6 percent discount, so the price falls to Rs 94 lakh.

Item	CLP (illustrative)	DPP (illustrative)
Headline price	Rs 1 crore	Rs 94 lakh after 6 percent discount
Money with builder after year 1	About Rs 25 to 35 lakh	About Rs 90 lakh or more
Opportunity cost of early payment	Low	Interest you could have earned or saved on Rs 70 lakh or so for several years
Loss if project stalls in year 2	Limited to what was paid against actual progress	Nearly the full price, recoverable only through RERA, insolvency or court

If the money paid early would otherwise earn or save 7 percent a year, Rs 70 lakh paid three years early has an opportunity cost of well over Rs 14 lakh, which can exceed the discount. The discount is worth it mainly in projects that are far advanced, by developers with a clean delivery record, where the remaining construction risk is small.

Possession-linked plans

A PLP shifts risk back to the developer: you pay a modest share during construction and the bulk when the flat is ready. Builders usually load the price for this, so a PLP may cost several percent more than the CLP price for the same unit. It suits buyers who already own a home and can wait, or who doubt the builder’s pace. Check three things.

The possession trigger should be a genuine offer of possession made after the occupancy or . UP RERA has told promoters to issue the offer of possession within two months of getting the CC or , and has directed that bare-shell flats not be handed over as “possession”.
The large final instalment will need a loan sanction ready in advance. Get an in-principle sanction early and confirm the project is approved by your lender.
Make sure the agreement does not let the builder convert the plan to a CLP if you “request” a change, and that the price is locked.

Subvention and 20:80 plans

Under subvention, a tripartite agreement between buyer, builder and bank lets the bank release most of the loan to the builder early while the builder promises to pay the pre-EMI interest until possession or a cut-off date. When builders in Noida, Greater Noida and Gurugram stopped paying that interest around 2018 and 2019, banks turned to buyers for EMIs on flats that had not been built. In September 2025 a three-judge bench of the Supreme Court directed the CBI to register a case and investigate the builder-bank arrangement behind these schemes, in a batch of more than 170 petitions by over 1,200 homebuyers.

In October 2026, in Madhu Kudapa v. Lodha Healthy Constructions, the Supreme Court held that a buyer who cancels gets back what he paid from his own pocket with interest, while the bank’s unrepaid loan money is not his to recover. The court also found the bank deficient in service for releasing a final tranche despite the buyer’s objection about slow progress. The lesson for any plan with heavy early bank disbursements is clear: insist that every release is tied to verified construction, and keep written objections if you see demands running ahead of work. Our separate guide to subvention schemes covers the risks in more detail.

How the plan interacts with your home loan

EMI calculator

Loan amount (₹) Interest rate (% a year) Tenure (years)

Monthly EMI —

Indicative only. Your bank’s rate and fees decide the final EMI.

Pre-EMI or full EMI. On a CLP, most lenders let you choose between paying only interest on disbursed amounts (pre-EMI) or starting full EMIs from the first tranche. Full EMIs cost more each month but start reducing principal earlier.
Rate changes. Floating rates move with the lender’s benchmark. The RBI raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026, and SBI revised its one-year MCLR to 8.85 percent from 15 October 2026. Rate moves change your pre-EMI bill on every tranche already disbursed.
Own contribution first. Banks normally want your margin money paid before they disburse, so a DPP may require a large loan disbursement within weeks. Confirm the bank will disburse that early for an under-construction project.
Tax timing. Interest paid before possession is generally claimed in instalments only after construction is complete, so a long pre-EMI period delays tax relief. Check the current rules with a tax adviser.

Step-by-step: choosing and locking a plan

Step 1. Ask for the cost sheet under every plan the builder offers, with the same base price, , parking and charges, so the discount is visible.
Step 2. Check the RERA registration page for the project’s declared completion date and its quarterly progress updates. If progress already lags the declared schedule, a DPP is riskier.
Step 3. Add up how much you will have paid at each stage and compare it with the share of construction done at that stage.
Step 4. Model the cash flow for a one-year and a two-year delay, including pre-EMI and rent if you are renting meanwhile.
Step 5. Read the default, cancellation and interest clauses in the draft agreement, and compare them with the state model agreement.
Step 6. Pay only into the account named in the RERA registration for that project. UP RERA has publicly urged buyers to deposit payments only into designated project accounts.
Step 7. Keep every demand letter, receipt, bank disbursement advice and site photograph in one folder. These are your evidence if a dispute arises.

Red flags in a payment plan

More than 10 percent demanded before a registered agreement for sale.
Instalments triggered by events the builder controls on paper only, such as “application for OC” rather than receipt of the OC.
“Assured return” or “no EMI” promises not written into the agreement or the tripartite agreement.
Large charges (club, power backup, IFMS) shifted to the stage before possession without a clear amount.
Payments requested to a different company, an agent, or in cash.
Penalty interest on buyer default higher than the interest the builder pays for its own delay.

As of October 2026

The legal limits above come from the RERA Act and the UP model agreement. Interest benchmarks, lender policies and court positions change; verify the current SBI MCLR, your lender’s disbursement policy and the latest state RERA directions before signing. Payment plan percentages quoted here are illustrative.

Frequently asked questions

Which payment plan is safest for an under-construction flat?

A construction-linked plan usually carries the least risk because payments follow actual progress and the RERA escrow rule ties the builder's withdrawals to completion. A possession-linked plan reduces exposure further but is often priced higher.

Can a builder ask for 20 percent at booking?

Not before a registered agreement for sale. Section 13 of the RERA Act caps the advance or application fee at 10 percent of the cost until a written agreement is signed and registered.

Is a down payment discount worth it?

Only if the discount beats the interest you could earn or save on the money paid early, and the project is advanced enough that the risk of a stall is small. Compare both plans with the same base price and charges.

What happens to pre-EMI if the project is delayed?

You keep paying interest on the disbursed tranches until full disbursement, without reducing principal. Pre-construction interest is generally claimed for tax in five equal instalments from the year construction is completed.

Where should I pay my instalments?

Only into the project's designated collection account shown on the RERA portal. UP RERA advised buyers in October 2026 to verify account details on its portal and report requests to pay into other accounts.

Sources

Updated 25 October 2026. This article is general information, not legal or financial advice; check current rules and project details before you decide.

Related guides

How to Check a Builder’s Track Record in Delhi NCR: RERA, NCLT and Site Checks October 25, 2026
Encumbrance Certificate and Title Search in UP, Haryana and Delhi: Where to Check Before You Buy October 25, 2026
Transfer of an Under-Construction Flat: Buying from the Original Allottee in Noida and Gurugram October 25, 2026