Answer
Property Loan Grace Period in Singapore
Bought a new launch and not ready to start repaying yet? Or need temporary relief on your existing mortgage? Here's how grace periods (moratoriums) actually work in Singapore.
Answer: A grace period lets you delay mortgage repayments for typically 3–6 months. Most common for new builds (progressive payment) and BTO key collection. Interest still accrues during the deferment — a 6-month grace on a $750,000 loan at 3.5% adds roughly $13,000 to your total cost. It's a convenience, not a freebie.
When Banks Offer Grace Periods
| Scenario | Typical Grace Period | How It Works |
|---|---|---|
| New launch (progressive payment) | 3–6 months per disbursement | Pay interest only on disbursed amount until TOP, then full repayment |
| BTO (bank loan) | 1–3 months from key collection | First repayment starts 1–3 months after completion |
| BTO (HDB loan) | None — starts immediately | Repayment begins from key collection date |
| Resale purchase | Usually none | Repayment starts from completion date |
| Refinancing | Usually none | Repayment continues from new bank's first month |
| Financial hardship | 3–12 months (case-by-case) | Apply to bank, show evidence of difficulty |
Terms vary by bank. Always confirm grace period availability before signing the letter of offer.
The True Cost of a Grace Period
Interest doesn't stop just because payments do. Here's what a grace period actually costs on different loan amounts at 3.5%.
| Loan Amount | 3-Month Grace | 6-Month Grace | 12-Month Grace |
|---|---|---|---|
| $500,000 | $4,375 | $8,750 | $17,500 |
| $750,000 | $6,563 | $13,125 | $26,250 |
| $1,000,000 | $8,750 | $17,500 | $35,000 |
| $1,500,000 | $13,125 | $26,250 | $52,500 |
Approximate additional interest cost at 3.5% p.a. Actual cost depends on when interest is capitalised and the specific disbursement schedule.
Grace Period vs Interest-Only vs Full Payment
| Full Grace (Moratorium) | Interest-Only Servicing | Full Repayment | |
|---|---|---|---|
| Monthly payment | $0 | Interest only (~$2,188/mo on $750,000 at 3.5%) | $3,751/mo (25yr, $750,000) |
| Principal repaid | $0 | $0 | Yes (reduces balance) |
| Interest accrues | Yes (capitalised) | Yes (but paid monthly) | Yes (paid monthly) |
| Loan balance after 6mo | Increases (interest added) | Same (no change) | Decreases |
| Total cost impact | Highest — interest compounds | Moderate | Lowest |
| Best for | Cash flow crunch, short-term | Bridging period, new launch | Normal operation |
If you can afford interest-only servicing instead of a full moratorium, do that. You avoid interest compounding on unpaid interest, which saves money over the loan's lifetime.
Grace Period for New Launch (Progressive Payment)
Under progressive payment, the bank disburses your loan in stages as construction progresses. Most banks charge interest only on the disbursed amount until TOP, with no principal repayment required.
| Construction Stage | Cumulative Disbursed | Monthly Interest ($750,000 loan at 3.5%) |
|---|---|---|
| Foundation | 10% | $219 |
| Reinforced concrete | 25% | $547 |
| Walls & roofing | 50% | $1,094 |
| Finishing | 75% | $1,641 |
| TOP / keys | 100% | $2,188 |
Interest-only during construction is the default for most bank loans on new launches. Full repayment begins at TOP or 36 months, whichever is earlier (varies by bank).
How to Request a Grace Period
For new purchases
Ask during loan application. The grace period terms should be in your letter of offer. Compare between banks — some offer longer grace or lower rates during the deferment. Negotiate.
For financial hardship
Contact your bank's mortgage department. Provide evidence: retrenchment letter, medical bills, income reduction. Banks prefer to work with you rather than deal with a default. Under MAS guidelines, they must consider your request. Don't wait until you miss payments.
See what your actual monthly payment will be.
Model different loan amounts, interest rates, and tenure to understand your commitment after the grace period ends.
FAQ
What is a mortgage grace period?
A grace period (also called moratorium or deferment period) is when you’re not required to make monthly mortgage repayments, even though the loan has been disbursed. Interest usually still accrues during this time. Banks offer grace periods for new launches (progressive payment), BTO key collection, or sometimes during financial hardship.
How long is a typical grace period for new builds?
For new launch condos under progressive payment: you typically get a 3–6 month grace period from the date of each progressive disbursement before repayment starts. Some banks align your first repayment with TOP (Temporary Occupation Permit). For BTO: HDB loan repayment starts immediately at key collection, but some bank loans offer a 1–3 month grace period.
Does interest accrue during the grace period?
Usually yes. During a grace period, the bank has already disbursed funds, so interest accrues on the outstanding amount. You’re just deferring the payment, not avoiding the cost. The accrued interest may be capitalised (added to your loan balance) or paid at the end of the grace period, depending on the bank’s terms.
Is a grace period the same as interest-only servicing?
No. Interest-only servicing (IOS) means you pay only the interest portion each month (no principal repayment). A full grace period means you pay nothing — both principal and interest are deferred. IOS costs you less in total because interest doesn’t compound on unpaid interest. Banks sometimes offer IOS as an alternative to a full moratorium.
Can I request a grace period for financial hardship?
Yes, but it’s not automatic. Under MAS guidelines, banks can offer temporary relief to borrowers facing genuine financial difficulty. Options include moratorium (pause payments), interest-only servicing, or loan tenure extension. Contact your bank early — don’t wait until you miss a payment. Relief was widely offered during COVID-19 and may be available case-by-case.
How does a grace period affect my total loan cost?
It increases your total interest paid. A 6-month grace period on a $750,000 loan at 3.5% costs roughly $13,000 in additional interest (capitalised). You’re effectively borrowing slightly more by the time repayments start. The convenience has a price — always ask the bank to show you the total cost comparison with and without the grace period.
Related
- Progressive Payment Scheme — how staged payments work
- Under-Construction Condo Payment — payment schedule stages
- Property Loan Interest Rates 2026 — current rates
- Repricing vs Refinancing — optimise your rate later
- How to Pass TDSR — qualification math
Last updated Feb 2026. Grace period terms vary by bank and loan type — always confirm with your lender. This is informational, not financial advice.