Construction Loan Progressive Payment Explained: Homejourney FAQs
Construction loan progressive payment in Singapore ties your payments to a property's construction milestones, allowing buyers to spread costs via the Progressive Payment Scheme (PPS) rather than paying upfront.
This protects cash flow for new launch condos and Executive Condominiums (ECs), with banks disbursing funds like DBS, OCBC, or UOB only at key stages. Homejourney verifies these details to ensure you make confident, safe decisions in Singapore's property market.
What is Progressive Payment Scheme in Construction Loans?
The progressive payment scheme structures payments for Buildings Under Construction (BUC) properties, aligning them with stages like foundation, framework, and TOP (Temporary Occupation Permit).[1][2]
Buyers pay 5-25% of the purchase price at each milestone, starting with 5% booking fee (cash) and 15% downpayment (cash or CPF) within 8-9 weeks of option exercise. Banks then cover loan portions, disbursing to developers upon verification.[1][3]
For a $1.5 million condo, you'd pay $75,000 booking + $225,000 downpayment first, then smaller amounts progressively. This is standard for new launch financing in Singapore, regulated by the Council for Estate Agencies (CEA) and Monetary Authority of Singapore (MAS).[1]
Homejourney's platform helps you calculate these via our eligibility tools, ensuring transparency and user safety.
How Does Progressive Payment Work with Bank Loans?
Under construction loan Singapore rules, banks disburse based on your Loan-to-Value (LTV) ratio. For 75% LTV, first disbursement hits at foundation (5-10%), triggering monthly installments on that amount only.[1][3]
Payments accelerate post-partition walls, but early stages offer lower repayments. If buying late in launch (e.g., 12 months post-launch), developers may demand multiple stages at once, like foundation + framework (15-20%).[1]
- Stage 1: Booking – 5% cash
- Stage 2: S&P signing – 15% cash/CPF
- Foundation: 5-10% cash/CPF/loan
- Framework/Bricks: 10-15% loan
- TOP: 25% loan
- CSC: 15% loan[1][2]
Interest is interest-only until TOP for most BUC loans. Use Homejourney's mortgage calculator to model payments for properties in Projects Directory .
Singapore-Specific Rules: CPF, TDSR, and Stamp Duties
CPF Ordinary Account (OA) funds cover downpayments from stage 2, but need bank loan approval letter first for CPF Board release. Total Debt Servicing Ratio (TDSR) at 55% and Mortgage Servicing Ratio (MSR) at 30% for HDB apply, impacting loan quantum.[3]
Buyer's Stamp Duty (BSD) is due within 14 days of S&P, payable via cash/CPF. Additional Buyer's Stamp Duty (ABSD) hits non-first-timers (e.g., 17% for citizens buying second property in 2026).[MAS guidelines]
For ECs, normal PPS mirrors condos but starts bank repayments at foundation for 75% LTV.[2] HDB projects use similar but with HDB loans offering fixed 2.6% rates vs bank variability.
Insider tip: Monitor URA's construction progress reports for delays – payments halt until verified, protecting you. Homejourney prioritizes this transparency for trusted transactions.
Benefits and Risks of Progressive Payments
Benefits: Manages cash flow with low initial outlay; installments rise gradually; motivates developers via timed payments; potential appreciation before TOP.[1][5]
Risks: Construction delays extend holding period (3-4 years to TOP); opportunity cost on tied funds; if rates rise (track via SORA), later installments hurt. Late buyers face 'catch-up' payments.[1][3]
Compare BUC property loan options from DBS (often competitive SORA +0.5%), OCBC, UOB on Homejourney's bank rates page. Apply via Singpass for multi-bank offers instantly.
To mitigate risks, factor TDSR buffer and use property search for ready properties if urgency matters.
Actionable Steps for Securing Construction Loan Progressive Payment
- Secure OTP: Pay 1% option fee, exercise within 14-21 days.
- Apply for loan early: Get quotes from DBS, HSBC, Standard Chartered via Homejourney – need within 21 days for CPF use.[3]
- Sign S&P: Pay downpayment, BSD.
- Monitor stages: Bank disburses on developer notice (14-day payment window).[1]
- Plan CPF/liquidity: Retain 20% cash for fees/delays.
Example: $1.8M EC at 70% LTV ($1.26M loan). Foundation disbursement: $90K (5%), monthly ~$400 interest-only initially. Scale up via Homejourney's tools for your scenario.
Refinance post-TOP? Homejourney simplifies with multi-bank comparisons. See full details in our pillar: Construction Loan Progressive Payment Explained: Homejourney Guide .
Frequently Asked Questions on Construction Loan Progressive Payments
1. When do monthly repayments start for progressive payment loans?
Repayments begin after first bank disbursement, tied to LTV – e.g., foundation for 75% LTV. Interest-only until TOP.[1][3]
2. Can I use CPF for all progressive stages?
Yes from downpayment onward, post-loan approval. Booking is cash-only.[1][2]
3. What if construction is delayed?
Payments pause until milestone verified; no penalties on you, but holding period extends. Check developer track record via Homejourney.[1]
4. Normal PPS vs Deferred for ECs/new launches?
Normal ties to progress (cheaper upfront); Deferred demands 25%+ upfront for discount. Choose via cash flow needs.[2]
5. How to calculate my payments?
Use Homejourney's free calculator at bank-rates#calculator. Input price, LTV for stage-by-stage breakdown.
Disclaimer: This is general guidance; consult Homejourney Mortgage Brokers or financial advisors for personalized advice. Rates as of 2026; verify TDSR eligibility.
Ready to finance safely? Compare live rates from DBS, OCBC, UOB and more on Homejourney bank rates, calculate affordability, and apply securely with Singpass. Trust Homejourney for verified, transparent property journeys.
