One Time Payment (OTP) V/S Construction Linked Plan (CLP): Which One Is Better?

When you buy an under-construction property, the payment plan you choose becomes a major financial decision. It affects how much you pay upfront, how exposed you are to construction delays, and even the final return on your investment. Two of the most widely offered structures are the One-Time Payment (OTP) plan and the Construction Linked Plan (CLP).

At first glance, OTP may look cheaper and CLP may look safer, but the real difference runs deeper. Understanding how each works in practice helps you pick the plan that aligns with your budget, risk tolerance, and purpose of purchase.

What Is a One-Time Payment (OTP) Plan?

In a One-Time Payment plan, the buyer pays 90-95% of the property cost upfront, usually during the early-launch or pre-launch phase of a project. Developers favour OTP because it gives them immediate liquidity to fund early construction and approvals.

To reward buyers for this early commitment, developers typically offer:

• Discounts (often 5% to 15% depending on project stage)
• Priority unit selection (better floors, views, locations within towers)
• Lower base pricing compared to standard payment plans

This makes OTP attractive for investors who want to enter early and exit later with strong appreciation. However, the structure transfers a significant portion of risk to the buyer especially when the project is still in an early stage.

What Is a Construction Linked Plan (CLP)?

A Construction Linked Plan ties payments directly to the project’s actual construction progress. Instead of paying a large chunk upfront, the buyer makes staggered payments at each stage of development.

For example, a typical CLP may look like:

• 10% at booking
• 10% on excavation
• 10% on plinth completion
• 7-10% every few floors
• Final 5-10% at possession

Banks also disburse home loans only as per milestone completion, which reduces financing risk.

CLP gives the buyer time, flexibility, and protection, making it the preferred option for most end-users and salaried buyers.

OTP vs CLP: Key Differences You Should Know

Pros and Cons of OTP (One-Time Payment)

Advantages

OTP has a clear appeal, especially for buyers with strong liquidity:

1. Significant price savings, often the highest discount developers offer
2. Early access to premium units
3. Higher resale returns for investment-led purchases
4. Simplified transaction structure with fewer ongoing payments

Limitations

But OTP requires confidence and risk tolerance:

1. Very high exposure if construction delays occur
2. Funds are locked in for longer periods
3. Difficult to exit or transfer mid-way without penalties
4. Loan financing is complex due to the large one-time disbursal requirement

OTP is essentially a “high-risk, high-reward” strategy suitable only when buyers trust the builder’s delivery record.

Pros and Cons of CLP (Construction Linked Plan)

Advantages

CLP’s biggest strength is risk management:

1. Payments match construction progress
2. Lower initial outflow helps with budgeting
3. Better compatibility with home loans and salaried income
4. Safer for end-users who want assurance before paying

CLP also makes it easier to handle rent + EMI during construction years since payments increase gradually.

Limitations

However, CLP comes with a few trade-offs:

1. Total price is usually higher because there are no early-bird discounts
2. Delays in construction mean buyers may pay rent longer
3. Some developers may slow milestone updates to delay costs

Overall, CLP offers certainty and financial comfort but at a slightly higher cost.