Things to Know When Buying an Apartment with Internal Installment Plan
For most people, purchasing their own residential space is one of the most significant decisions, shaping their financial situation for the next 10-15 years. Buying apartments with internal installment plans is becoming increasingly popular, as for many, it's the only realistic way of avoiding bank mortgages.
In the blog below, we’ll break down the specifics of internal installment plans and analyze how one could benefit you when buying your own apartment.
What is an Internal Interest-Free Installment Plan?
When a development company offers "internal installment plans," it means that you agree to set up a payment plan directly with the company, without involving a bank.
There is no uniform formula for internal installment plans – each company sets the terms at its discretion. Some companies allow contracts without a down payment (this option can be particularly appealing to those who lack initial capital and do not want to take out a bank loan). However, the vast majority require a down payment of 10%-20% (20% is currently considered the standard for Georgia’s real estate market).
When one needs a more flexible schedule and terms than traditional bank mortgages, buying apartments with internal installment plans is often the best solution – the buyer can negotiate the payment period and the monthly installment with the company based on their financial capabilities. However, the ability to negotiate terms does not mean you have complete freedom – the company will likely have minimum monthly installment requirements and a maximum term for the payment plan.
We must also discuss the risks associated with such transactions. First, you should know that companies mainly offer internal installment plans for projects under construction, and they carry certain risks, including delays in construction completion, the government deeming the building operational, and so forth. While internal installment plans are generally beneficial for the buyer in the long run (no need to pay extra interest to the bank), they may also place a greater financial burden on your budget – if a bank loan typically lasts around 15 years, an internal installment plan is usually only for 5-8 years.
And you’ll need to factor in not only regular monthly payments but also all other costs associated with buying an apartment, such as renovations, furnishing, utilities, etc.
So, before purchasing an apartment with an internal installment plan, carefully weigh the risks and check your budget, carefully assessing whether you can manage the monthly payments without disrupting your ability to cover essential expenses.
What to Consider When Buying an Apartment with Internal Interest-Free Installment Plan
Before proceeding with the purchase, thoroughly check the developer’s history and reputation. Gather and study all documents that confirm the construction process is going according to standards, including land ownership documents, building permits, and the architectural project. Pay attention to the quality of construction materials, the functionality of engineering systems, and energy efficiency standards. Seismic stability is a critical factor that directly impacts your safety.
How transparent the developer is will be an essential indicator. A trustworthy developer is always willing to share information about the project and showcase the current construction status. Transparency builds trust and reduces buyer risks in the long term – any reputable company knows this and doesn’t shy away, knowing it is a way to attract clientele.
It’s advisable to consult a professional lawyer – if you are unfamiliar with the legalities, legislation when buying an apartment can be somewhat confusing. Pay close attention to the installment plan agreement - it should clearly outline all terms and obligations.
When looking for apartments with internal installment plans in Batumi, pay due attention to the location – selecting the area is a strategic decision with a long-term impact. The value of your property will depend not only on the existing infrastructure but also on future development prospects. On the one hand, this is good – buying investment apartments in Batumi can be an excellent opportunity to generate additional income in the future. On the other hand, it requires a more comprehensive approach with a detailed financial plan. If you're planning to rent out the apartment, you need to create a financial cushion for unforeseen situations and keep up with the real estate market dynamics.
However, real estate is widely considered a stable investment, even if you intend to use it for long-term residence and not generate immediate income. Study the city’s development plans, transportation infrastructure projects, and prospects for entertainment opportunities. Pay particular attention to rental market trends – examine the average rental rates for similar properties and demand dynamics in the specific area. It’ll help you better assess the potential ROI. Plans may change and the apartment could become a significant financial asset.
If you are looking for apartments under construction with internal installment plans in Batumi, OKTO GROUP offers potential clients a 0% internal installment plan for 40 months after a 20% down payment in a new residential complex in Batumi’s New Boulevard, just 500 meters from the sea. If you are interested in purchasing an apartment in Georgia’s largest seaside city, you are sure to find what you are looking for at OKTO ART HOUSE.
