Construction Loan Progressive Payment Explained: Homejourney Guide
This definitive Homejourney guide explains construction loan progressive payments for Singapore buyers, covering BUC property loans, new launch financing, and developer payments. Understand how to manage cash flow safely while prioritizing trust and transparency in your property journey.
Homejourney verifies every detail to help you make confident decisions on construction loan Singapore options. From first-time buyers to investors, master the progressive payment scheme with real examples and actionable advice.
Table of Contents
- Executive Summary
- What is Progressive Payment Scheme?
- How Construction Loans Work with Progressive Payments
- Standard Progressive Payment Schedule
- Loan Disbursement and Monthly Installments
- HDB vs Private Property Differences
- Benefits and Risks
- Real Singapore Examples
- Practical Tips from Homejourney
- FAQ
- Next Steps with Homejourney
Executive Summary: Why Progressive Payments Matter
The progressive payment scheme structures payments for under-construction properties in Singapore, aligning them with building milestones. This protects buyers by spreading costs over 3-4 years, reducing upfront financial strain.[1][2]
For a S$1.5 million condo, initial payments are cash or CPF, with banks funding later stages via construction loan Singapore or BUC loans. Homejourney's tools help you compare rates from DBS, OCBC, UOB, and more at https://www.homejourney.sg/bank-rates.[1]
Key insight: Monthly installments start only after the first bank disbursement, often at foundation stage for 75% LTV loans. This guide equips you with schedules, calculations, and safety tips for new launch financing.[3]
What is Progressive Payment Scheme?
The progressive payment scheme (PPS) requires buyers to pay in stages as construction advances, typically 5-10% per milestone.[1][4] It applies to new launch condos, Executive Condominiums (ECs), and BUC properties, ensuring developers fund work progressively.[2]
Unlike resale properties with immediate full payment, PPS starts with 5% booking fee (cash), followed by 15% downpayment within 8 weeks of Option to Purchase (OTP). Payments use cash, CPF Ordinary Account (OA), or bank loans.[1]
Regulated by the Council for Estate Agencies (CEA) and Monetary Authority of Singapore (MAS), PPS offers transparency: developers notify lawyers upon milestone completion, triggering payments within 14 days.[1] Delays incur charges, protecting timelines.
PPS vs Deferred Payment Scheme
Normal PPS ties payments to progress; Deferred Payment Scheme (DPS) requires 25% upfront, balance at TOP—less common due to higher initial outlay. Choose PPS for better cash flow in developer payment plans.[2]
How Construction Loans Work with Progressive Payments
A construction loan Singapore, or BUC loan, finances up to 75-90% LTV for under-construction properties.[3] Banks like DBS, OCBC, UOB disburse funds directly to developers at PPS stages, not to buyers.[5]
Buyers secure loans pre-OTP expiry for CPF usage approval. First disbursement aligns with LTV: 75% LTV starts at foundation (5-10%), 60% at later stages like partition walls.[1][3]
Interest is interest-only until TOP, then principal + interest. Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator shows your borrowing power under TDSR/MSR.[3]
Standard Progressive Payment Schedule
Here's a typical schedule for new launch condos, totaling 100% of purchase price.[1][4]
| Stage | % of Price | Payment Source |
|---|---|---|
| Booking Fee | 5% | Cash |
| OTP/S&P Signing (within 8 weeks) | 15% | Cash/CPF |
| Foundation | 5-10% | Cash/CPF/Loan |
| Reinforced Concrete Framework | 10% | Cash/CPF/Loan |
| Partition Walls | 5% | Cash/CPF/Loan |
| Roofing/Ceiling | 5% | Cash/CPF/Loan |
| Windows/Plumbing/Electrical | 5% | Cash/CPF/Loan |
| Car Park/Drains | 5% | Cash/CPF/Loan |
| TOP | 25% | Cash/CPF/Loan |
| CSC/Legal Completion | 15% | Cash/CPF/Loan |
Schedules vary slightly by developer; always check S&P agreement. For late buyers, multiple stages may be called at once.[1]
Loan Disbursement and Monthly Installments
Banks disburse at milestones post-downpayment. For 75% LTV, first payout at foundation triggers installments on disbursed amount only.[1][3]
Example: S$1.5M condo, 75% loan (S$1.125M). Foundation (7.5% or S$112,500) disbursed; monthly interest-only at ~3% p.a. SORA: ~S$281/month initially.[3]
Installments rise progressively. Use Homejourney's calculator for simulations: https://www.homejourney.sg/bank-rates#calculator.
SORA rates drive costs. The chart below shows recent interest rate trends in Singapore:
Rates have stabilized around 3% in 2026, impacting early disbursements minimally.[5]
HDB vs Private Property: Key Differences
HDB BTO flats use similar PPS but with HDB loans (2.6% fixed) vs bank loans (SORA-based). MSR caps payments at 30% income; TDSR at 55% for private.[3]
Private properties allow higher LTV (up to 75%) but ABSD applies: 17% for second property. CPF usage stricter for non-first-timers.[2]
- HDB: Payments via HDB portal; longer waits (3-5 years).
- Private: Faster launches; bank financing via Bank Rates .
Benefits and Risks of Progressive Payment Scheme
- Cash flow management: Low initial outlay (20% max upfront).
- Potential appreciation: E.g., S$200K gain pre-TOP in hot launches.[3]
- Lower early installments; delays don't accelerate payments.
- Developer incentive for timely completion.
Risks:
- Construction delays extend holding period.
- Rising rates increase installments (monitor via Homejourney).
- Over-commitment if buying multiple units under TDSR.
Disclaimer: This is educational; consult Homejourney brokers for personalized advice.
Real Singapore Examples: New Launches
For a S$1.8M unit in Tengah EC (2026 launch):
- Booking: S$90K cash.
- S&P: S$270K CPF.
- Foundation (Yr1): S$90K loan; ~S$225/month interest-only.
- TOP (Yr3): S$450K; full amortization starts.
Actual: Parc Canberra (2023 data, adjusted 2026): Buyers saw 15% appreciation by TOP. Check Projects Directory for updates.
Investor tip: Time entry post-framework for fewer early payments.[1]
Practical Tips from Homejourney Experts
1. Secure loan early: Get offers from DBS, HSBC via https://www.homejourney.sg/bank-rates using Singpass.
2. Budget CPF + cash: Max OA usage per stage; track via HDB/CPF portal.
3. Monitor progress: Developers must notify within days; engage lawyer promptly.
4. Refinance at TOP: Switch banks if rates drop—Homejourney simplifies.
5. For maintenance post-TOP, see Aircon Services . Search properties at https://www.homejourney.sg/search.
- Calculate total interest: Use our tool for 25/30-year tenures.
- Avoid late buys unless LTV low.
- Joint applications boost eligibility: See Joint Home Loan Bank Rate Comparison: Homejourney Guide 2026 .
FAQ: Progressive Payment Scheme Singapore
What is a progressive payment scheme?
Instalments tied to construction milestones, starting at 5% booking.[1][4]
When do monthly repayments start for BUC loans?
After first bank disbursement, e.g., foundation for high LTV.[1][3]
Can I use CPF for progressive payments?
Yes, from OA after downpayment, subject to limits and grants.
What if construction is delayed?
Payments adjust; no acceleration. TOP/CSC extend accordingly.[1]
How much downpayment for new launch condo?
Typically 20% (5%+15%), rest progressive.[1]
Is PPS available for resale properties?
No, only BUC/new launches.[4]
How to compare construction loan rates?
Visit Homejourney's bank-rates page for DBS, OCBC, UOB, etc.
What LTV for construction loans Singapore?
Up to 75% for age <35; lower for older/second properties.[3]
Next Steps: Secure Your Construction Loan with Homejourney
Start safely: Compare construction loan Singapore rates at https://www.homejourney.sg/bank-rates, calculate eligibility, and apply via Singpass to partners like HSBC, Maybank. Homejourney prioritizes your trust with verified data and multi-bank offers.
Explore Projects for new launches within budget. Our brokers guide you through progressive payment scheme safely. Contact us for personalized new launch financing.
