Construction Loan Progressive Payment Explained: How to Improve Approval Chances
To improve your chances of approval for a construction loan Singapore under the progressive payment scheme, maintain a debt servicing ratio (DSR) below 55%, secure an in-principle approval (IPA) early, and use Homejourney's multi-bank application to compare offers from DBS, OCBC, UOB, and more.
This cluster article dives deep into the construction loan progressive payment explained, focusing on actionable steps for new launch financing and BUC property loans. It builds on our pillar guide, Construction Loan Progressive Payment Explained: Homejourney Guide, by providing tactical advice to boost your approval odds while prioritizing safety and trust—core to Homejourney's mission.
What is the Progressive Payment Scheme in Singapore?
The progressive payment scheme (PPS) structures payments for under-construction properties like new launch condos or ECs in stages tied to construction milestones, typically 5-10% of the purchase price per stage.[1][2][4]
Buyers pay an initial 5% booking fee (cash) and 15% downpayment (cash or CPF) within 8 weeks of the Option to Purchase (OTP). Banks then disburse loan portions progressively, starting from foundation works, aligning with your construction loan Singapore.[1][2]
This scheme benefits cash flow management, as monthly repayments begin only after the first loan disbursement—often at 55-75% loan-to-value (LTV) depending on your profile.[1][3]
Typical Progressive Payment Schedule for New Launch Properties
Here's a standard breakdown for a new launch condo under PPS, based on Singapore norms:[1][2][4]
| Stage | % of Purchase Price | Payment Mode |
|---|---|---|
| Booking Fee | 5% | Cash |
| Downpayment (S&P signing) | 15% | Cash/CPF |
| Foundation | 10% (5% Cash/CPF + 5% Loan) | Cash/CPF/Bank Loan |
| Reinforced Concrete Framework | 10% | Bank Loan |
| Partition Walls | 5% | Bank Loan |
| Roofing | 5% | Bank Loan |
| Windows/Plumbing | 5% | Bank Loan |
| TOP | 25% | Bank Loan |
| Legal Completion (CSC) | 5-15% | Bank Loan |
Payments must be made within 14 days of developer notice, or fees apply. For BUC property loan, disbursements start post-downpayment.[1][2]
How Construction Loans Work with Progressive Payments
A construction loan Singapore (or BUC loan) covers 55-75% LTV for new launches, disbursed progressively to the developer. Monthly interest-only payments apply until TOP, then principal repayments begin.[2][5]
Banks like DBS and OCBC assess based on MAS Total Debt Servicing Ratio (TDSR) ≤55% and Mortgage Servicing Ratio (MSR) ≤30% for HDB/EC. Approval hinges on stable income, low existing debts, and project credibility.[2]
The chart below shows recent interest rate trends in Singapore, critical for timing your new launch financing:
As seen in the chart, SORA rates influence your effective rate—use Homejourney's real-time tracker at https://www.homejourney.sg/bank-rates.[5]
Step-by-Step: Securing Approval for Your Progressive Payment Loan
Follow these actionable steps to navigate developer payment and boost approval:
- Calculate Eligibility First: Use Homejourney's calculator at https://www.homejourney.sg/bank-rates#calculator to check borrowing power instantly.
- Gather Documents: Prepare NRIC, income proof (last 3 months payslips/ tax assessments), CPF statements, and S&P details.
- Apply via Homejourney: Submit one Singpass-enabled application to DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more—auto-fills data for speed.
- Secure IPA Pre-OTP: Get in-principle approval before booking to confirm CPF usage.[2]
- Compare Offers: Track status and side-by-side rates on Homejourney; choose the best.
Timeline: IPA in 1-3 days, full approval 2-4 weeks. Avoid pitfalls like high credit card balances.[1][2]
Pro Tips to Improve Construction Loan Approval Chances
- Lower DSR: Pay down debts; aim for <40% for stronger apps. Banks scrutinize progressive disbursements under TDSR.
- Stable Employment: 6+ months with employer boosts odds—freelancers need 2 years' history.
- Choose Credible Projects: Opt for URA-approved launches; check via Homejourney projects directory.
- Time Applications: Apply post-S&P signing but pre-foundation for best rates.
- Leverage Homejourney: Multi-bank submission increases offers by 30%; get WhatsApp support for queries.
Real example: For a $1.8M condo at 75% LTV, foundation disbursement ($90K loan) starts repayments at ~$400/month interest-only (3M SORA +1.2%).[1]
Disclaimer: Rates fluctuate; this is not financial advice. Consult professionals and verify with MAS guidelines.
Documentation Checklist for BUC Progressive Loans
- NRIC (front/back)
- Latest payslips (3 months)
- Form B/ IR8A (2 years)
- CPF statements (6 months)
- S&P Agreement
- OTP copy
- Bank statements (3-6 months)
Upload via Singpass on Homejourney for instant processing—safer and faster than individual bank visits.
FAQ: Construction Loan Progressive Payment Explained
Q: When do loan repayments start under PPS?
A: After first disbursement, typically foundation stage for 75% LTV loans.[1][3]
Q: Can I use CPF for progressive payments?
A: Yes, post-downpayment, but loan confirmation is needed first.[2]
Q: How to handle delayed construction?
