You’ve found your dream Executive Condominium in Singapore, but your existing HDB flat hasn’t sold yet. Your CPF is tied up, your savings are stretched thin, and the developer wants progressive payments starting next month. The financial juggling act feels overwhelming, right?

That’s where Deferred Payment Scheme comes in – a financing option that’s been gaining attention among property buyers looking for breathing room. This payment structure allows you to defer a massive 80% of your EC purchase price until 24 months later. So you have time to manage your cashflow and only commence monthly payment when your executive condominium is about to complete.

But here’s the catch most buyers miss: what looks like financial relief today can become a heavier burden tomorrow. While the Deferred Payment Scheme eliminates those construction-stage payments, it comes with premium pricing, accumulated interest, and a significantly larger lump sum due when your keys are ready. Some buyers save tens of thousands in cash flow stress, while others end up paying that much extra in total costs.

This guide walks you through seven critical aspects of the deferred payment scheme that developers won’t necessarily highlight during sales pitches. We’ll break down the real costs, compare it against the standard progressive payment scheme with actual numbers, and help you identify whether your financial profile aligns with this payment structure. Whether you’re a young couple building your first property portfolio, an upgrader managing multiple mortgages, or an investor looking for strategic flexibility, you’ll learn exactly when the deferred payment scheme makes sense and when it’s a costly mistake.

Understanding the mechanics of this scheme could mean the difference between smart property financing and financial strain. Let’s get into it.

What Exactly Is the Deferred Payment Scheme and How Does It Work?

The deferred payment scheme is a specialized financing arrangement available exclusively for new launch Executive Condominiums in Singapore. Think of it as a “pay later” structure where you secure your EC unit with minimal upfront payments, then settle the bulk amount when construction wraps up and you’re ready to move in.

Booking and Purchasing

You’ll need to put down 20% of the purchase price upfront, split into two chunks. First comes the 5% booking fee in cash when you reserve your unit. Then you pay another 15% when signing the Sales and Purchase Agreement, which you can cover using cash, your CPF Ordinary Account savings, or a combination of both.

During Construction

You pay nothing. Payments during this stage are deferred, so there are no progressive payments at all.

Interest, however, doesn’t take a break. It accumulates on that deferred 80% throughout the construction timeline, compounding quietly in the background.

Completion

When the project receives its Temporary Occupation Permit (TOP) and Certificate of Statutory Completion (CSC), that’s when payment triggers again. The bank will disburse the remaining loan amounts at the TOP and CSC stages to the developer, and you will start your regular monthly mortgage repayments.

Deferred Payment Scheme Is Not For Every New Launch Project

Here’s a common misconception to clear up: the deferred payment scheme isn’t some universal option available across Singapore’s property market. Since October 2007, government regulations have prohibited this arrangement for uncompleted private residential properties. You’ll only find it for new launch ECs and completed private developments. Resale ECs or a resale condo? These are not eligible.

DPS is not without its downsides too

We’ve just mentioned that despite deferring your monthly mortgage payments, the interest continues to compound over the entire duration of the construction period.

Developers also charge a premium on units sold under the deferred payment scheme, increasing the base purchase price above what you’d normally pay for an identical unit under the Standard Progressive Scheme payment structure. This premium compensates them for delayed revenue and ties up their capital longer.

(Quick point out: It’s also worth noting that the deferred payment scheme differs completely from HDB’s Staggered Downpayment Scheme and Deferred Downpayment Scheme. Those are separate programs with their own eligibility criteria and mechanics)

The Real Cost: Premium Pricing and Accumulated Interest

Now let’s talk about what the Deferred Payment Scheme can actually cost you, because the numbers reveal a story that sales brochures tend to gloss over.

Developers aren’t offering deferred payments as a charitable service. They’re running businesses that need cash flow to fund construction. When they allow you to defer 80% of the purchase price, they’re tying up significant capital that could otherwise generate returns. To compensate, they typically charge a premium ranging from 2% to 5% above standard pricing for identical units under the progressive payment scheme. For a $1,000,000 EC, a 3% premium means you’re paying an extra $30,000 before interest even enters the picture.

Now let’s examine the interest accumulation, which is where costs can spiral quietly. This article here explains how deferred financial obligations impact both borrowers and lenders over time. The deferred 80% isn’t sitting idle. Interest compounds on it throughout the entire construction period. Assuming a construction timeline of four years and an interest rate of 3%, you’re looking at roughly $96,000 in accumulated interest on an $800,000 deferred amount. This interest gets added to your principal, meaning you’ll be servicing a loan of $896,000 instead of $800,000.

Here’s a concrete example. You purchase a $1,000,000 EC under the deferred payment scheme. You’ve paid the 3% premium, so your actual purchase price is $1,030,000. Your deferred amount is $824,000 (80% of $1,030,000). After four years of construction at 3% annual interest, you owe approximately $926,720. Your monthly mortgage payment on a 25-year loan at 3% interest? Around $4,400.

Compare that to a buyer who chose the progressive payment scheme on the original $1,000,000 EC. Their monthly payment starts around $1,800 during construction and reaches approximately $4,200 by completion, but they’ve been paying down debt progressively rather than watching it accumulate.

The total cost comparison gets even more revealing when you calculate the full loan tenure. The deferred payment scheme buyer pays approximately $1,320,000 over 25 years ($926,720 at completion + $393,280 in loan interest), plus the $30,000 premium and $96,000 construction interest already paid. Total cost: roughly $1,446,000. The progressive payment scheme buyer pays approximately $1,260,000 over the same period. That’s a $186,000 difference.

These numbers assume stable interest rates. If rates increase during your construction period, your accumulated interest climbs higher. If construction delays occur (and they often do), you’re accumulating interest for even longer. Each additional year of delay at 3% adds roughly 3% to your total deferred amount.

The psychological trap is real. Minimal payments during construction makes a purchase tempting. You maintain cash flow, manage other obligations, maybe even invest that money elsewhere. But you’re borrowing from your future self at compound interest rates. When completion arrives, you face the full financial reality: a larger loan amount, higher monthly payments, and a longer path to build equity in your property.

When does this cost structure make sense? If property values appreciate significantly during construction, your capital gains might offset the interest costs. If you’re generating returns above 3% annually from alternative investments using that deferred money, you could come out ahead. If you’re managing a complex property transition where cash flow flexibility is worth paying a premium for, the deferred payment scheme might provide the breathing room you need.

Conclusion

The Deferred Payment Scheme is a powerful financing tool, but its value depends entirely on your specific circumstances. It’s not universally better or worse than the progressive payment scheme—it’s strategically superior for some buyers and financially damaging for others.

Remember the core trade-off: you gain significant cash flow flexibility during construction but pay for it through premium pricing, accumulated interest, and limited unit selection. Your total cost of ownership will almost certainly be higher under the deferred payment scheme. The question is whether the construction-period liquidity provides value that justifies those extra costs.

If you’re managing the sale of an existing property, juggling multiple mortgages, or confident in your future earning power, the deferred payment scheme might provide the breathing room that prevents forced financial decisions. If you’re prioritizing absolute lowest cost, need stable and predictable payment obligations, or require specific unit characteristics, the progressive payment scheme serves you better.

Before committing to either structure, run detailed calculations specific to your purchase price and construction timeline. Model different scenarios: what happens if interest rates rise? What if construction delays stretch another year? What if property values don’t appreciate as expected? Understanding these variables helps you make informed decisions rather than emotional ones.

FAQs

Can I Switch From Deferred Payment Scheme to Progressive Payment Scheme After Booking?

Your payment scheme typically locks in when you book your unit and gets formalized in your Sales and Purchase Agreement. Most developers don’t allow switching after this point, though policies vary by developer and project. Some may permit changes before significant construction milestones, usually with administrative fees or penalties. The challenge is that switching often affects unit availability and pricing since each payment scheme applies to specific units. Confirm switch policies directly with your developer during the booking appointment before signing anything. Review your S&P Agreement terms carefully to understand exactly what flexibility exists and what it costs. Once construction begins, expect switching opportunities to disappear completely.

What Happens If I Can’t Make the Final 80% Payment When TOP Is Issued?

Failure to pay at TOP constitutes a serious breach of your Sales and Purchase Agreement. The developer can forfeit your entire 20% down payment, which could mean losing $200,000 on a $1,000,000 EC. They can also pursue legal action to recover damages, terminate the purchase entirely, and resell the unit. This situation can severely impact your credit rating and affect your ability to secure property financing in the future. Some developers may offer short grace periods, but these are discretionary, not guaranteed rights. Before TOP date approaches, make certain your financing is absolutely secured and you have emergency funds beyond the expected payment. If you’re facing genuine financial hardship, consult a lawyer immediately to explore options and potentially negotiate with the developer before you default.

Is the Deferred Payment Scheme Available for Resale Executive Condominiums?

No. The deferred payment scheme exclusively applies to new launch Executive Condominiums purchased directly from developers. Once an EC completes its five-year Minimum Occupation Period and enters the resale market, it’s treated as a private property with standard condominium payment structures. Resale EC buyers need to make a 25% down payment, with at least 5% in cash and the remaining 20% payable via cash or CPF. The remaining 75% finances through a bank loan, with monthly mortgage repayments starting once the loan disburses. The payment mechanics mirror buying any resale condominium. Shop around and compare different bank loan packages to find terms that suit your financial needs and goals.

How Does the Deferred Payment Scheme Affect My CPF Usage and Housing Grants?

You can use your CPF Ordinary Account savings for the 15% down payment portion of your EC purchase, just as you would under the progressive payment scheme. The key difference is timing: your CPF usage for the deferred 80% occurs at TOP when you make that final payment, whereas progressive payment buyers use CPF throughout construction as installments come due. Eligible CPF housing grants are credited when you sign the Sales and Purchase Agreement, regardless of which payment scheme you choose. If your total grants exceed 95% of the purchase price, regulations require that you pay at least 5% using CPF OA savings or cash. Any excess grant amounts can pay for Optional Component Scheme upgrades, price premiums for certain household compositions, or get credited to your CPF Special Account, Retirement Account, and MediSave Account. CPF withdrawal limits still apply based on your property’s remaining lease and your age at purchase.

What Are the Risks If the EC Construction Is Delayed?

Construction delays directly extend your interest accumulation period on the deferred 80%. Each additional year of delay at 3% interest adds roughly 3% to your total payment amount, potentially thousands of dollars. For a $800,000 deferred amount, one year of delay costs approximately $24,000 in additional interest. The upside? Delays also postpone when your monthly mortgage repayments start, which can be positive or negative depending on whether you’re still managing other properties or obligations. Developers typically pay Liquidated Damages for delays, usually 10% of the purchase price per year of delay, though this is often capped. These LD payments may not fully offset your additional interest costs. Beyond LD, buyers have limited recourse unless delays become excessive. Research your developer’s track record and delivery timelines on previous projects. Recent years have seen increased delays due to COVID-19, labor shortages, and supply chain issues, so factor some buffer into your planning.

Can Foreigners and Permanent Residents Use the Deferred Payment Scheme for ECs?

No. Only Singapore Citizens can purchase new launch Executive Condominiums directly from developers, which means only Citizens have access to the deferred payment scheme for ECs. Permanent Residents and foreigners cannot buy new launch ECs at all during the initial sales period. However, PRs and foreigners can purchase resale ECs after the unit has completed its five-year Minimum Occupation Period, at which point it enters the open market. Since resale ECs don’t offer the deferred payment scheme regardless of buyer citizenship, this becomes a moot point. Be aware of Additional Buyer’s Stamp Duty implications too for PRs and foreigners. For now, Singapore Citizens can view Deferred Payment Scheme access as an exclusive advantage in the EC market segment.