A Deferred Payment Scheme refers to a payment arrangement offered by many developer where the buyer forks out only a certain percentage (usually 20% to of the purchase price) as a down payment and reserves the unit.

After the initial payment, the next payment is deferred. Depending on the developer’s rules, the next payment usually comes two or more years later once your unit obtains TOP (Temporary Occupancy Permit). There is no need to pay anything during the build period (typically the next two or three years).

This means the Executive Condo buyer could pay the downpayment and then have some time to save up for the remaining payment.

With this flexibility, most Deferred Payment Scheme usually comes with an added interest of 3-4% on top of the selling price depending on the developer.

Pros:

1. 20% Downpayment to secure a unit
2. Delayed payment for the next 2-3 years

Cons:

1. Added 3-4% interest on top of the selling price

Here’s a breakdown on how deferred payment for a EC works:

1. You need to pay 5% of the purchase price when you secure a unit on booking day.
2. Submit your HDB Application and get approval (usually within 2 weeks upon submission of all documents)
3. Exercise the OTP and sign the S&P Agreement (15% of the purchase price) within eight weeks;
4. Pay nothing – no home loan instalment, no property stamp duties and so forth – till your unit TOP

So, instead of the usual 25% downpayment, your initial outlay is much lower.