When making such a significant purchase as buying an apartment, it would be worthwhile to consider several payment options. In this article, we want to take a closer look at how staged payments differ from installments...
Currently,
staged payment is the most common scheme for purchasing new construction. It involves the buyer (investor) gradually paying for the apartment while the building is still under construction. By the time the construction is completed, the investor must have paid the full price. Each developer offers their own staged payment terms, usually with the option to choose 50%, 40%, 30%, or 25% of the apartment's value as the initial down payment. Some offer a lower "entry threshold" - 10%, 4%, or even 0%. Often, the larger the initial down payment - the lower the apartment price. With 100% payment - the price is the lowest. Conversely, the smaller the initial down payment, the higher the apartment price.
The remaining balance is divided into monthly or quarterly payments, usually until the construction completion date. Sometimes the construction company sets a different deadline for the final payment. If the final payment deadline is specified before the announced construction completion date - the object may be handed over earlier. Sometimes, as a gesture of client loyalty, the developer allows full settlement several months after the complex is handed over. The apartment is transferred to the investor upon completion of the full settlement.
Objects with Minimum Initial Down Payment
In the Odessa new construction market, for example, objects with a low initial down payment include:
Let's calculate using a specific example, if we purchase now in December 2017:
| Apartment Price |
40,000 USD |
| Initial Down Payment Size, % |
25% |
| Initial Down Payment Amount |
10,000 USD |
| Remaining Balance |
30,000 USD |
| Final Payment Deadline (coincides with construction completion date) |
June 2020 |
| Number of Months Until Final Payment Date |
30 |
| Monthly Staged Payment Amount |
1,000 USD |
Often with staged payments, the apartment price is "tied" to the US Dollar. Staged payments increase proportionally to changes in the US Dollar rate at the time of payment compared to the rate fixed on the day the apartment investment agreement is signed. Usually, developers use the official exchange rate of the National Bank of Ukraine, sometimes the commercial selling rate of a certain commercial bank (the rate at which the bank sells, and we buy).
Some developers also offer a staged payment option where a significant portion of the payment (sometimes up to 50%) is due at the time of building handover. This purchase scheme is in demand, for example, by those who already have real estate that they plan to sell in the future. That is, the buyer makes the first payment, then pays small monthly amounts and settles at the time of object handover.
Installment when purchasing real estate
What does installment mean when purchasing real estate?
In broad terms,
installment refers to the possibility of paying in parts for goods or services after receiving them. Additional interest may be applied to the remaining balance. Regarding new construction, when the developer provides
installment after handover, it works as follows: during the construction phase, an investment agreement is signed which outlines the initial and staged payments until the building handover date, and it is specified that additional interest is applied to the remaining balance that will be unpaid at the time of handover.
Let's use the previous example, but assume the building is handed over 1 year earlier and the developer offers installment for 1 year after handover:
| Apartment Price |
40,000 USD |
| Initial Down Payment Size, % |
25% |
| Initial Down Payment Amount |
10,000 USD |
| Remaining Balance |
30,000 USD |
| Final Payment Deadline Including 1-Year Installment |
June 2020 |
| Number of Months Until Final Payment Date |
30 |
| Monthly Staged Payment Until Construction Completion |
1,000 USD |
| Unpaid Balance at Building Handover |
12,000 USD |
| Installment Interest Rate After Handover |
9% per year |
| Interest Amount for One Year |
1,080 USD |
| Remaining Balance on Installment Including Interest |
13,080 USD |
| Monthly Installment Payment |
1,090 USD |
Among the new buildings in
Primorsky district of Odessa, you can purchase an apartment on installment in the following objects:
Regarding new buildings in
Tairov area, these are:
In
Malinovsky district:
In
Suvorovsky district:
- "Yakorya" - individual installment terms + possibility of credit for up to 20 years.
- "New Europe" - up to 12 months.
Thus, you can see that
the main difference between buying a new building in stages versus buying on installment is that in the second option, the buyer pays additional interest on the remaining balance.
But at the same time, in the case of installment, there is a possibility to delay the payment moment for longer.
Each person in this case chooses the option that will suit them better financially.
If you have questions related to installment or staged payment, our specialists will be happy to consult you on these matters at
tel. (094) 952-30-42 and tell you in detail which of
Odessa new buildings can be purchased in one way or another!
