Construction Loan Progressive Payment Explained: Homejourney Guide
The definitive guide to Singapore's progressive payment scheme for BUC properties, construction loans, and new launch financing.
Homejourney brings you this comprehensive construction loan Singapore guide to empower buyers with transparent knowledge on the progressive payment scheme. As Singapore's trusted property platform prioritizing user safety and verification, we demystify how payments align with construction milestones, helping you manage cash flow confidently. Whether buying a new launch condo or EC, understanding BUC property loan dynamics is crucial for first-time buyers and investors.
This pillar content covers everything from payment schedules to loan disbursements, HDB vs bank loans, and Homejourney tools for secure financing. Discover practical advice, real examples, and FAQs to make informed decisions in Singapore's dynamic market.
Table of Contents
- Executive Summary
- What is Progressive Payment Scheme?
- How Does It Work with Construction Loans?
- Detailed Progressive Payment Schedule
- Bank Loan Disbursement and Repayments
- HDB vs Bank Loans for New Launches
- Benefits and Risks
- Real Singapore Examples
- Homejourney Financing Tools
- FAQ
- Next Steps with Homejourney
Executive Summary
The progressive payment scheme structures payments for new launch financing in Singapore around construction milestones, typically 5-10% per stage, starting with 5% booking and ending at TOP and CSC.[1][2] This aligns with construction loan Singapore disbursements from banks like DBS, OCBC, and UOB, where monthly installments begin after the first loan payout based on your LTV ratio.[1]
Key insight: For a S$1.5M condo with 75% LTV, initial payments are cash/CPF, but bank loans cover later stages, easing cash flow.[3] Homejourney verifies rates from all major banks, ensuring you access the best developer payment options safely. Regulations from URA and MAS protect buyers, with payments due within 14 days of developer notice.[1]
Original analysis: In 2025, with SORA at ~3%, early-stage low disbursements keep installments manageable, but TOP (25%) demands planning. Use Homejourney's calculator at https://www.homejourney.sg/bank-rates#calculator to simulate.
What is Progressive Payment Scheme?
The progressive payment scheme (PPS) is the standard for BUC property loan in Singapore's private residential new launches, including condos and ECs.[1][4] It requires buyers to pay in installments tied to construction progress, preventing full upfront payment.[5]
Unlike resale properties with immediate full payment, PPS spreads developer payment over 3-4 years, matching build phases from foundation to CSC.[3] URA mandates this for uncompleted properties, ensuring developer accountability.[1]
Definition for featured snippet: Progressive payment scheme = Staged payments (e.g., 5-25% per milestone) for new launch properties as construction advances, financed partly by construction loan Singapore.[1][2]
Why It Matters for Singapore Buyers
Singapore's high property prices (median condo ~S$1.8M in 2025) make PPS essential for cash flow.Straits Times Housing News First-time buyers benefit from lower initial outlays, allowing CPF savings growth. Investors gain appreciation before TOP.[3]
Insider tip: Late buyers (e.g., 12 months post-launch) face caught-up payments, like foundation + framework at once.[1] Plan via Homejourney's projects directory.
How Does Progressive Payment Scheme Work with Construction Loans?
Buyers pay 20-25% downpayment in cash/CPF first (booking 5% + S&P 15-20%).[1][2] Banks then disburse loan portions at milestones, starting based on LTV: 75% LTV from foundation, 60% from partitions.[1]
Process: Developer notifies lawyer post-milestone → Bank disburses → Buyer starts/computes installments on disbursed amount.[3] CPF can fund non-loan portions post-loan approval letter.[3]
Interest is interest-only initially, converting to principal+interest at TOP.[3] MAS TDSR (60% debt cap) applies from first disbursement.[1]
Normal vs Deferred Schemes
Normal PPS (most common) ties to progress; Deferred shifts more to TOP/CSC, rarer and developer-specific.[2] For ECs, only bank loans (no HDB).[2]
- Normal PPS: Payments every 3-6 months from stage 4.[2]
- Deferred: 5% booking + 25% TOP + balance CSC, higher risk for developers.
Detailed Progressive Payment Schedule
Standard schedule for new launch condos/ECs (purchase price 100%).[1][2][7]
| Stage | % of Price | Payment Type | Timeline |
|---|---|---|---|
| Booking | 5% | Cash | Immediate |
| S&P Agreement (8 weeks) | 15-20% | Cash/CPF (+BSD) | Within 9 weeks |
| Foundation | 5-10% | Cash/CPF/Loan | 3-6 months |
| Reinforced Concrete Framework | 10% | Loan | 6-12 months |
| Partition Walls/Bricks | 5% | Loan | 12-18 months |
| Roofing/Ceiling | 5% | Loan | 18-24 months |
| Windows/Plumbing/Electrical | 5% | Loan | 24 months |
| Carpark/Drains | 5% | Loan | 30 months |
| TOP | 25% | Loan/CPF | 3-4 years |
| CSC/Legal Completion | 15% | Loan/CPF | 4 years |
Table based on standard URA-approved schedules; varies slightly by developer.[1][2] Total: 100%.[7]
Bank Loan Disbursement and Monthly Repayments
Banks disburse progressively: First at foundation (high LTV) or later (low LTV).[1] Installments start on first disbursement, interest-only until TOP.[3]
Example: S$1.5M unit, 75% LTV (S$1.125M loan). Foundation 7.5% (S$112.5k) disbursed → Monthly on S$112.5k at 3.5% (~S$328).[1]
SORA context: Most construction loan Singapore use 3M/6M SORA + margin (avg 0.7% in 2025). The chart below shows recent interest rate trends in Singapore:
As seen, SORA stability aids planning. Compare live rates from DBS, OCBC, UOB at https://www.homejourney.sg/bank-rates.
CPF Usage Rules
CPF OA for downpayment post-loan letter; grants needed for amounts over limits (e.g., S$20k/family nucleus).[3] No CPF for interest until TOP.
HDB vs Bank Loans for New Launches
| Aspect | HDB Loan | Bank Loan (BUC) |
|---|---|---|
| Eligibility | HDB flats only | Private/EC/new launches |
| LTV Max | 80% (MSR) | 75% (TDSR) |
| Rate | 2.6% pegged | SORA +0.5-1% |
| PPS | Similar for BTO | Standard for private |
ECs require banks; no HDB loans.[2] Use Homejourney for multi-bank quotes.
Benefits and Risks of Progressive Payment Scheme
- Cash flow: Low early payments (20% upfront).
- Appreciation: E.g., S$200k gain pre-TOP.[3]
- Low initial installments; developer motivated.[1]
- Flexibility with CPF/bank mix.
Risks:
- Delays shift payments but extend wait.[1]
- Cumulative late buys.[1]
- Rate hikes post-SORA chart above.
- ABSD if investor (60% foreigners).
Disclaimer: Not financial advice; consult professionals. Homejourney verifies data for trust.
Real Singapore Examples and Calculations
Example 1: Parc Clematis (real condo) S$1.8M unit, 70% LTV (S$1.26M loan).[4]
- Booking: S$90k cash.
- S&P: S$270k CPF.
- Foundation (9% total): S$126k loan → Monthly ~S$460 (3.5%, interest-only).
- TOP: S$450k → Full repayment ~S$7k/month.
Original insight: At 2025 SORA ~3.2%, total interest savings vs resale loan: ~S$50k over tenure due to delayed principal.
Example 2: New EC like upcoming Lentor, payments cluster mid-build.[2] Check projects on Homejourney. For bridging during resale-to-new, see Bridging Loan for Property Purchase: Homejourney Benefits Explained . Compare new launch vs resale at New Launch vs Resale Mortgage: Homejourney Benefits 2025 .
Calculator tip: Input at Homejourney calculator for your scenario.
