FAQ: What Is the Difference Between a Subvention Plan and a CLP?
Both defer payments, but the mechanics and costs are very different. Here's a clear comparison to help you choose the right plan.
Subvention and Construction-Linked Payment (CLP) plans are both designed to defer payments during construction, but they work very differently and suit different investor profiles.
Subvention Plan:
- You pay a small percentage at booking (typically 10–25%). - You pay nothing more until possession. - The builder carries the balance interest-free. - No bank loan, no EMI, no interest during construction. - At possession, you pay the remaining 75–90% — either from your own funds or by taking a home loan at that point.
The advantage: minimal capital outflow during construction, zero interest cost, and maximum ROI on invested capital. The disadvantage: the full balance falls due at possession, which requires a large lump-sum payment or a home loan at that time.
Construction-Linked Payment (CLP) Plan:
- You pay 10–15% at booking. - The remaining amount is paid in installments tied to construction milestones — typically 10 payments of ~8–10% each, triggered at excavation, foundation, each floor slab, brickwork, plastering, flooring, fittings, and possession. - If you're self-funding, you pay each installment from your own pocket as construction progresses. - If you're taking a home loan, the bank disburses each installment directly to the builder, and you pay pre-EMI (interest only on the disbursed amount) until full disbursement.
The advantage: payments are spread across the construction period, so the cash outflow is gradual. The disadvantage: you're paying throughout construction (not deferring to possession), and if you're using a loan, you're paying interest from the first disbursement.
Key comparison:
| Feature | Subvention | CLP | |---|---|---| | Upfront payment | 10–25% | 10–15% | | Payments during construction | None | Milestone-based | | Interest cost during construction | Zero | Pre-EMI on disbursed amount (if loan-funded) | | Balance at possession | 75–90% | 10–15% | | Best for | Investors who want to minimize capital outflow and maximize ROI on invested capital | Investors who want to spread payments and are comfortable with gradual outflow |
Which to choose? For investors focused on maximizing ROI on invested capital, subvention is superior — your money at risk is minimal, the interest cost is zero, and the appreciation accrues on the full property value. For investors who prefer gradual payment and don't want a large lump-sum at possession, CLP is the safer, more predictable option.
Our recommendation: if you qualify for a subvention plan on a RERA-registered, tier-1 developer project, take it. The ROI advantage is significant. Use CLP as the fallback if subvention isn't available.
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