Should you buy under-construction or ready-to-move? A clear look at risks and costs

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For most homebuyers, the decision between under-construction and ready-to-move property feels straightforward — one is cheaper, the other offers instant possession. But the real difference lies in how each option affects your cash flow, tax burden, and delivery risks. With rising interest rates and stricter RERA norms, the gap between the two has narrowed, yet the trade-offs remain significant.

Price and payment structure

Under-construction homes usually come with lower base prices and flexible payment schedules linked to construction stages. Developers often throw in early-bird discounts or freebies to attract buyers. However, the final cost can creep up due to delayed possession, loan pre-EMIs, and price escalation clauses. Ready-to-move homes, on the other hand, come at a premium — typically 10–20 percent higher — but what you see is what you get. You start paying EMIs only after possession, avoiding the double burden of rent plus pre-EMI.

Timeline and delivery risks

The biggest uncertainty in under-construction projects remains the timeline. Even with RERA oversight, many projects face delays due to funding issues, material shortages, or regulatory clearances. Each month of delay means you continue paying rent while also servicing a home loan — a hidden cost most buyers underestimate. Ready-to-move homes eliminate this risk entirely. You know the property, see the amenities, and move in immediately after purchase, making it a safer bet for families who can’t afford long waits.

GST and tax impact

One of the biggest cost differentiators today is GST. Under-construction homes attract 5 percent GST (without input tax credit) for regular housing and 1 percent for affordable housing. Ready-to-move properties are exempt from GST, as they’re considered “complete.” This makes ready homes financially more attractive in markets where base prices are already high. On the flip side, buyers of under-construction units can claim certain tax deductions on home loan interest (Section 24) only after getting possession, delaying the benefit.

Financing and cash flow

Under-construction projects allow staggered payments — typically 10 percent on booking and the rest as construction progresses — which can suit buyers building savings alongside. However, you’ll likely pay pre-EMI interest during the construction period without gaining possession. Ready-to-move homes demand higher upfront payment but ensure your EMI starts adding to ownership from day one. If your income is stable and you don’t want prolonged uncertainty, ready properties align better with predictable cash flow.

Hidden and all-in costs

With under-construction homes, advertised rates often exclude charges for parking, club membership, floor rise, and power backup. There may also be interim maintenance fees until the society is formed. Ready homes have fewer surprises, but older units may require renovation or higher registration costs depending on stamp duty rules in your state. When comparing, add everything — base cost, GST, stamp duty, registration, maintenance, and pre-EMI — to find your true all-in price.

Which is better for you

If you’re looking to save upfront, have a longer investment horizon, and trust a reputed builder with strong project funding, an under-construction property can still be a good deal. But if you prioritise certainty, quick possession, and transparent costs, ready-to-move homes remain the safer and often more tax-efficient choice.

The takeaway The cheapest property isn’t always the most affordable in the long run. Factor in time, tax, and total spend — not just the headline price — before deciding which home truly fits your financial comfort zone.