What is the 10:90 payment plan while purchasing a property in India?

You must have seen the term “10:90” plan come across multiple times if you are in the process of exploring or buying a new property. What does it actually mean, and is it a legit scheme or a ponzi scheme?

Let us help you debunk some of the myth and shed light on the pros and cons of this payment plan.

Simply explained, in the 10:90 plan, the buyer has to contribute 10% amount of the total cost of the property from their pocket at the time of booking and pay the rest at the time of possession of the property. This plan is ideal for making real estate investment in India.

Traditionally, CLP has been the most commonly offered payment plan by builders. CLP stands for Construction linked plan, which requires buyers to make payments after the construction reaches specific milestones. For example, you might have to put in 15% while booking, 20% when construction starts, 20% when elevators and stairs are done and rest during possession. There are no standard milestones and each builder can define their own payment milestones.

10:90 plan example for under construction property

How does 10:90 plan work?

  1. Select properties with 10:90 payment plan 
  2. Book a property by paying 10% of the total price.
  3. No payments or loan EMI until possession.
  4. Your Property price appreciation until you get possession. 

What are the benefits of 10:90 plan?

  • You can purchase property with minimal investment. E.g. if the property costs Rs 70 lacs, you can book with just Rs 7 lacs.
  • Get up to 220% ROI on the property at the time of possession.
  • You can resale the property even before you take possession, so you would never have to pay the rest of the 90%, and you can just take the profit due to price appreciation.
  • Since you do not need to make any payments or home loan EMIs, you save interest rates. As an example, if you took a home loan at 7.5% interest rate for an amount of 70 lac, you will pay Rs 5.25 lacs in interest each year. With 10:90, you easily save Rs 5-15 lacs based on the cost of your property.
  • Most builders offer online booking options for the 10% booking amount, which is very convenient.
  • Reduces hassle and paperwork as there is minimal documentation and no need for going through painful home loan application process.

What are the drawbacks or risks associated with 10:90 plan?

  • You should always make sure that the builder you are purchasing with is legitimate and both the builder and project are Rera Verified. Do not fall prey to Ponzi schemes and unregistered builders. It is the safest to invest in properties from reputed builders such as Godrej Properties, Embassy Edge
  • 10:90 plan is typically offered for new launch and under-construction properties, which means if you are looking for a near possession or ready to move in property, you may not see this offer
  • Not many developers offer this plan, and prefer to offer construction linked plans (CLP) where you need to make payments based on progress in construction.

Comparison of 10:90 plan vs CLP

Imagine you intend to purchase a property costing Rs 60 lacs which will be ready for possession in Dec 2023. Let’s see what it would look like if you went ahead with the traditional payment model.

Money lost with traditional payment plans

Traditional payment plans require you to apply for a home loan and you need to pay interest EMI per month which can cost you lacs of rupees.

  1. Home Loan Interest Rate
  • The current home loan interest rate is ~7.5%, which means in 2-3 years until possession, you may have to pay up to Rs 10 lacs in interest.
  • That’s already 15% of the property cost you are paying as interest.
  • You are essentially losing this money and it’s a negative investment.

2. Lost opportunity cost due to payments made

  • You will pay upto 80% of the amount before possession
  • Which means, you invest utp Rs 39 lacs and cannot even live in the property or rent it out!
  • If you keep these 39 lacs in a fixed deposit at 7%, you will earn ~Rs 3 lacs in interest each year.
  • You are not only losing this potential return but also paying home loan interest rate as mentioned above.

3. No Rent Income until possession

  • Rent income is a great way to subsidize your EMI payments.
  • With no possession of the property, you have no rent income
  • You might lose ~Rs 1.8 lacs of annual income, based on the location and size of the property.

Imagine, the property price appreciates by 15% in 2 years. Your actual and effective price appreciation is zero or negative on day 1 of possession, because of the cumulative amount lost due to interest paid for a home loan, lost rental income, and lost ROI opportunity if you had invested the money elsewhere.

Purchasing using 10:90 plan

  • You will pay approx Rs 6 lacs for booking the property.
  • That’s it.
  • No home loan, No EMI, No partial payments until possession.

Comparison of cost – 10:90 Plan vs traditional CLP

For our hypothetical property costing ₹60 Lacs, lets compare how much money it will actually cost you and how much return on investment you will get.

Property Cost₹60 Lacs₹60 Lacs
Number of years until possession3 years3 years
Upfront payment during booking₹6 Lacs (10%)₹9 Lacs (15%)
Additional Payment Until PossessionZero₹30 Lacs (65%)
Loan Amount before possessionZero₹51 Lacs
(85% loan amount)
Interest paid until possessionZero₹11.4 Lacs
(7.5% for 3 yrs)
Total Investment before possession6 Lacs39 Lacs
Effective Cost of Property on Day of possession60 Lacs
(₹6L booking +₹54L due)
71.4 Lacs
(₹39L paid + ₹21L due + ₹11.4L Interest)
Property price in 3 years ₹73 Lacs₹73 Lacs
PROFIT₹13 Lacs₹1.6 Lacs
(at the time of possession)
(₹13L return after investing Rs ₹6L)
(₹1.6L return after investing Rs ₹39L)
10:90 vs CLP8X better return than CLP

Detailed Breakdown of Payment Slabs for 10:90 vs CLP

Note: Payment slabs for CLP plans vary for each builder, this table shows representative slabs.

Property Cost₹60 Lacs₹60 Lacs
Number of years until possession3 years3 years
Upfront payment during booking₹6 Lacs (10%)₹9 Lacs (15%)
1st Payment slab (~6 mnths)0₹9 Lacs (15%)
2nd Payment slab (~12 mnths)0₹12 Lacs (20%)
3rd Payment slab (~18 mnths)0₹18 Lacs (30%)
Final Payment (at possession)Rest amount₹12 Lacs (20%)

Conclusion: Which plan is better?

Every property is different, and you can decide for yourself based on the information above. Regardless of what plan you choose or what property you purchase, make sure to do due diligence on the builder and the property and beware of the risks we mentioned in this blog post.

If you are looking to buy Real Estate Investment properties in India, you can search hand-selected apartment and villas on GlobalHome.

If you are interested, you should probably hurry as these offers are typically very time sensitive.

get exclusive property deals