Construction Loan Progressive Payment Explained: Frequently Asked Questions
The construction loan progressive payment is a staged financing structure where banks disburse loan amounts to developers as construction milestones are reached under Singapore's Progressive Payment Scheme (PPS). This protects buyers by aligning payments with actual progress on Buildings Under Construction (BUC) properties like new launch condos.
Homejourney prioritizes your safety by verifying all property and financing details, helping you navigate construction loan Singapore options confidently. This cluster article answers key FAQs, linking back to our pillar guide on Construction Loan Progressive Payment Explained: Singapore Guide | Homejourney ">Construction Loan Progressive Payment Explained: Singapore Guide for full coverage.
What is the Progressive Payment Scheme in Singapore?
The progressive payment scheme requires buyers to pay in installments tied to construction stages, starting with a 5% booking fee in cash, followed by 15% upon signing the Sale & Purchase (S&P) Agreement.[1][3]
Subsequent payments (typically 5-10% each) occur at milestones like foundation completion, reinforced concrete framework, and Temporary Occupation Permit (TOP).[1][4] This scheme, regulated under Housing Developers Rules, ensures developers only receive funds as work advances, reducing buyer risk.[1]
For example, in a $1.5 million new launch condo at Punggol, you'd pay $75,000 cash to book, then $225,000 (cash or CPF) at S&P signing. Homejourney's tools help calculate these via our mortgage eligibility calculator.
How Does Construction Loan Work with Progressive Payments?
A construction loan Singapore (also called BUC property loan) covers up to 75-90% Loan-to-Value (LTV) depending on your profile, with banks like DBS, OCBC, or UOB disbursing funds progressively to the developer.[1][6]
Monthly installments begin only after the first loan disbursement, which varies by LTV. For a 75% LTV on a $1.2 million unit, repayments start at foundation stage (5% loan portion); for 60% LTV, at partition walls.[1] Use CPF Ordinary Account savings for payments from the second stage onward, subject to CPF rules.[4]
Payments must be made within 14 days of developer notice, or late fees apply. If buying post-launch (e.g., after framework stage), multiple stages may be called at once.[1]
Progressive Payment Schedule Breakdown
Here's a standard PPS table for new launch condos:[1][3]
| Stage | % of Purchase Price |
|---|---|
| Booking Fee | 5% Cash |
| S&P Agreement (within 8 weeks) | 15% Cash/CPF |
| Foundation | 5% Cash/CPF + 5% Loan |
| Reinforced Concrete Framework | 10% Cash/CPF/Loan |
| Partition Walls | 5% Cash/CPF/Loan |
| Roofing | 5% Cash/CPF/Loan |
| Doors/Windows/Plumbing | 5% Cash/CPF/Loan |
| Carpark/Drains | 5% Cash/CPF/Loan |
| TOP | 25% Cash/CPF/Loan |
| Legal Completion/CSC | 15% Cash/CPF/Loan |
Total downpayment is typically 25% (5% cash + 20% CPF/cash), with the rest financed. Insider tip: For ECs like those in Sengkang, HDB rules apply pre-TOP, limiting bank loans.[1]
Benefits of Progressive Payments for Buyers
PPS aids cash flow by spreading payments, with lower initial installments rising gradually.[1][2][4] If delays occur, your repayment timeline shifts accordingly—no extra burden.[1]
- Cash Flow Management: Avoid lump sums; plan around milestones.
- Lower Early Repayments: Starts small, preserving disposable income.
- Developer Accountability: Payments incentivize timely progress.[1][4]
- Capital Appreciation: Potential gains as construction advances.
Compare new launch financing rates from DBS, OCBC, UOC, HSBC on Homejourney's bank rates page to optimize costs.
Key Considerations: TDSR, MSR, and Stamp Duties
All payments factor into Total Debt Servicing Ratio (TDSR) at 55% max and Monthly Servicing Ratio (MSR) for HDB at 30%.[MAS guidelines]. For a $2,000 monthly income buyer, max loan is capped accordingly.
Buyer Stamp Duty (BSD) and Additional Buyer's Stamp Duty (ABSD) apply upfront; use Homejourney's calculator for estimates. Refinance via our multi-bank system post-TOP for better rates.
Disclaimer: This is general advice. Consult Homejourney Mortgage Brokers or financial advisors for personalized guidance, as rates and rules change (current as of 2026).
Frequently Asked Questions
Can I use CPF for all progressive payments?
Yes, from the second stage (S&P), but only Ordinary Account funds, subject to withdrawal limits and accrued interest.[4] Cash is required for booking (5%).
What if construction is delayed?
Payments and loan disbursements shift with milestones—no penalties for you, but developers face incentives to complete on time.[1]
When do monthly installments start?
At first bank disbursement, e.g., foundation for high LTV loans. Use Homejourney to simulate with Singpass for instant eligibility.
Are there penalties for late payments?
Yes, late interest after 14 days. Set reminders or automate via bank.[1][4]
How to finance developer payments?
Apply for BUC property loan via Homejourney—compare DBS, OCBC, UOB rates and submit one application to multiple banks with Singpass auto-fill.
Ready to secure your construction loan progressive payment? Visit Homejourney's bank rates page for verified rates, calculators, and broker support. Search budgeted properties at property search or explore projects in Projects ">projects directory. Trust Homejourney for safe, transparent property journeys.
