The Deferred Payment Schemes allows purchase based on an interest free loan where the borrower commits to paying the required principal amount or part of it at a decided date in the future. In deferred payment in real estate, the buyer lives in the purchased house after a small down payment and commits to the lender to pay the remaining cost at a later date. If the borrower moves out or the house is sold, the entire payment is made by the borrower. This scheme, after being abolished in 2007, has been reintroduced and thereafter proven beneficial to both the seller and the buyer. Benefits of buying a house on deferred payments are as follows:
Less financial burden
Typically, the borrower is required to pay 20% of the total amount when first purchasing the property along with the stamp duties before the end of two weeks. After this, progressively increasing payments need to be made until the full loan is returned. The percentage of loan granted, whether for example 50% or 80%, varies from seller to seller. This makes schemes like The Florence Residences Floor Plans available to people of different financial backgrounds. With no requirement of bulk payment at once, financial burden is significantly reduced. Students are often allowed to continue their education alongside this scheme so that they can live in their house before the principal amount has been paid.
Choice is open to the buyer
The buyer often has the opportunity of deciding terms that are then to be approved by the seller. This means that the buyer can exercise a degree free will. He can put forward a demand of the amount of loan he needs and this might make purchase more feasible for the borrower should the seller accept the demand.
The loan is often interest free or has a below market interest rate
Usual loans set an annual interest rate which often proves problematic if the loan is not returned as soon as possible. Interest free loan in real estate purchases using Deferred Payment Schemes minimize this problem. In case of interest-free loan, no matter how long after the initial payment the principal payment is to be made, the borrower will not have to fear an increase in the amount that he needs to pay. Lower-than-usual interest rate also proves financially beneficial to the borrower.
It adds flexibility to the purchase
The Deferred Payment Scheme allows greater flexibility for the purchaser who can pay for the house over a period of time. The flexibility of this arrangement makes it easier for a potential-buyer facing a financial crisis.
The Deferred Payment on the purchase of houses thus, is a beneficial scheme increasing opportunity for purchase to a greater number of potential-buyers. Buying houses on deferred payment, for the above mentioned reasons, is a good decision if a satisfying agreement is struck off with the seller. The fact that bulk payment does not need to be made, prove this to be a good option for those who cannot gather that amount all at once.