New Launch vs Resale Mortgage: The Complete Financing Guide for Singapore Property Buyers

Choosing between a new launch and resale property is one of the biggest financial decisions you'll make. But the decision doesn't end with the property itself—how you finance it matters equally. The mortgage structures, payment timelines, and loan mechanics differ significantly between new launches and resale properties, and understanding these differences can save you tens of thousands of dollars and years of financial stress.

This comprehensive guide breaks down the mortgage landscape for both property types, helping you understand progressive payment schemes, valuation risks, CPF usage rules, and how to calculate your true borrowing capacity. Whether you're a first-time buyer, upgrader, or investor, Homejourney's research-backed insights will help you navigate this complex decision with confidence.

Table of Contents

• Executive Summary: Key Differences at a Glance
• How Mortgages Differ: New Launch vs Resale
• Progressive Payment Schemes Explained
• BUC Loans: The New Launch Advantage
• Resale Property Loans: Immediate Full Mortgage
• CPF Usage: Timing and Strategy
• Valuation and COV: Understanding the Risks
• TDSR and MSR Requirements
• Interest Rates: SORA, Fixed, and Your Options
• Total Cost Analysis: Beyond Unit Price
• Decision Framework: Which Is Right for You?
• Frequently Asked Questions
• Next Steps with Homejourney

Executive Summary: Key Differences at a Glance

The fundamental difference between new launch and resale mortgages lies in payment timing and valuation certainty. New launches use a progressive payment scheme (PPS), where you pay in stages as construction progresses. Resale properties require full mortgage commitment from day one, with payment due at completion.

For most buyers, the choice comes down to this: Can you afford full mortgage payments immediately (resale), or do you prefer staged payments with time for CPF to accumulate (new launch)?

How Mortgages Differ: New Launch vs Resale

The mortgage structure for new launches and resale properties reflects the fundamental difference in how you acquire the property. Understanding this difference is crucial because it affects your cash flow, borrowing capacity, and financial flexibility over the next decade.

New Launch Mortgages: The Staged Approach

When you purchase a new launch property, you're not buying a completed home. You're buying a property under construction, which means the developer controls the payment timeline. Most new launches follow a progressive payment scheme (PPS), typically structured as follows:

• Initial Payment (5-10%): Due upon signing the Option to Purchase (OTP), usually within 7 days
• Stage Payments (70-80%): Paid in installments as construction milestones are reached (foundation, structural completion, TOP, etc.)
• Final Payment (10-15%): Due at Temporary Occupation Permit (TOP) or completion

The key advantage: Your mortgage loan is drawn down in stages, matching the construction timeline. This means you don't pay interest on the full loan amount from day one—you only pay interest on the amount you've actually borrowed.

Resale Mortgages: The Full Commitment

Resale properties are completed and ready for occupation. When you purchase a resale property, you must secure full financing immediately because the seller expects payment at completion (typically 4-8 weeks after signing the contract). Your mortgage is fully drawn down on the completion date, and interest accrues on the entire loan amount from that point forward.

This creates a fundamental cash flow difference: with resale, you're committed to full monthly mortgage payments immediately, whereas with new launches, your initial payments are lower because you're only borrowing against the construction stage you've reached.

Progressive Payment Schemes Explained

The progressive payment scheme is the cornerstone of new launch financing. Understanding how it works—and how it affects your mortgage—is essential for accurate financial planning.

How PPS Works in Practice

Let's use a concrete example. Suppose you purchase a new launch property for $800,000 with a 25% down payment ($200,000) and a $600,000 mortgage. The developer's PPS might look like this:

• Upon OTP signing: 5% ($40,000) - typically paid from your own cash or CPF
• Upon Excavation: 15% ($120,000) - mortgage drawn down for this portion
• Upon Structural Completion: 25% ($200,000) - additional mortgage drawdown
• Upon TOP: 35% ($280,000) - larger drawdown as project nears completion
• Upon Completion: 20% ($160,000) - final payment

Notice that your mortgage isn't fully drawn on day one. Instead, it's drawn in stages. This has a significant impact on your total interest paid over the loan tenure.

The Interest Calculation Advantage

With staged drawdowns, you're not paying interest on money you haven't borrowed yet. If your mortgage rate is 3.5% per annum, and your loan is drawn over 3 years instead of being fully drawn on day one, you save a substantial amount in interest.

Example calculation: On a $600,000 mortgage at 3.5% over 25 years, staged drawdown could save you $15,000-$25,000 in total interest compared to full upfront drawdown, depending on the exact payment schedule.

CPF Usage During Construction

One of the most significant advantages of new launches is that your CPF contributions continue accumulating during the construction phase. This means:

• Your CPF balance grows for 3-4 years while you're paying the down payment and stage payments
• You can use this accumulated CPF to pay subsequent stage payments or reduce your mortgage at completion
• For younger buyers with stable income, this can make a more expensive new launch affordable compared to a resale property requiring full payment immediately

This CPF accumulation advantage is particularly valuable for first-time buyers in their 30s who have 20-25 years until retirement. The compounding effect of CPF contributions over 3-4 years can add $30,000-$60,000 to your available funds.

BUC Loans: The New Launch Advantage

BUC stands for Building Under Construction. A BUC loan is a specialized mortgage product designed specifically for properties that don't yet exist. Understanding the mechanics of BUC loans helps you appreciate why new launch financing is structured differently from resale financing.

What Makes BUC Loans Different

A BUC loan has several distinctive features:

• Staged Drawdowns: The bank releases funds in stages, matching the developer's payment schedule. You don't receive the full loan amount upfront.
• Valuation Based on Completion Value: The bank values the property based on its estimated value upon completion (TOP), not the purchase price. This protects the bank's interest.
• Loan-to-Value (LTV) Limits: Banks typically cap BUC loans at 75-80% LTV for condominiums, meaning you need a larger down payment (20-25%) compared to resale properties.
• Interest-Only Phase: During construction, you typically pay interest-only on the drawn-down amount. Full principal-and-interest payments begin after TOP.

The Interest-Only Advantage

During the construction phase (typically 3-4 years), you pay only the interest on the amount you've borrowed so far. This significantly reduces your monthly mortgage payments while the property is being built.

Example: If you've paid 40% of the purchase price ($320,000 on an $800,000 property), your mortgage might be $240,000 (after accounting for your down payment). At 3.5% interest, you'd pay approximately $700/month in interest-only payments during construction. After TOP, this converts to a full principal-and-interest payment of approximately $1,100-$1,200/month, depending on your tenure.

This lower payment during construction is crucial for cash flow management, especially if you're holding onto your previous property or paying rent while waiting for the new launch to complete.

Valuation and LTV for BUC Loans

Banks assess BUC loan valuations based on the property's estimated completion value, not the purchase price. This is important because it means:

• If the market appreciates during construction, your property might be worth more than you paid—but the bank's valuation determines your LTV, not market appreciation
• If the market depreciates, the bank's valuation might be lower than your purchase price, but you're still obligated to pay the full purchase price to the developer
• The bank's valuation is typically conservative, based on comparable completed properties in the area

This is why new launch buyers don't face the Cash Over Valuation (COV) risk that resale buyers face. Your purchase price is already locked in with the developer, and the bank's valuation is separate from this agreement.

Resale Property Loans: Immediate Full Mortgage

Resale property mortgages operate on a fundamentally different principle: the property is completed, and you need full financing immediately. This creates both advantages and challenges compared to new launch financing.

Full Drawdown at Completion

When you purchase a resale property, your mortgage is fully drawn down on the completion date. If you're borrowing $600,000, the bank releases the entire amount to the seller's solicitor on completion day. This means:

• You begin paying full principal-and-interest from day one (or the first month after completion)
• You're paying interest on the entire loan amount immediately, not in stages
• Your monthly mortgage payments are higher than the equivalent new launch property during its construction phase

Completed Property Loan Valuation

Resale property valuations are based on the actual completed property and comparable sales in the area. The bank's valuation determines your maximum borrowing capacity through the Loan-to-Value (LTV) ratio.

Here's where the Cash Over Valuation (COV) risk emerges: If you agree to purchase a resale property for $800,000, but the bank's valuation comes back at $750,000, you have a $50,000 valuation shortfall. You must either:

• Pay the $50,000 difference in cash (Cash Over Valuation)
• Negotiate the purchase price down to $750,000
• Walk away from the purchase (though this may have legal consequences)

This valuation risk is one of the most significant differences between resale and new launch financing. New launch buyers don't face this risk because the developer's price is fixed, and the bank's valuation is separate from your purchase obligation.

Immediate Rental Income Potential

One significant advantage of resale properties is that you can generate rental income immediately. After taking possession (typically within 8-12 weeks of completion), you can rent out the property to offset your mortgage payments.

For investors, this is a major advantage. A resale property can start generating positive cash flow within months, whereas a new launch property won't generate any rental income for 3-4 years until completion.

CPF Usage: Timing and Strategy

CPF (Central Provident Fund) is a critical component of property financing for most Singapore buyers. Understanding how CPF usage differs between new launches and resale properties can significantly impact your purchasing power and long-term financial position.

CPF Usage Rules: The Basics

You can use your CPF Ordinary Account (OA) to:

• Pay the down payment for a property purchase
• Pay mortgage installments (for new launches) or full mortgage payments (for resale)
• Pay stamp duties and legal fees related to the purchase

The key constraint: You can only use CPF that's available in your OA at the time of each payment. You cannot borrow against future CPF contributions.

New Launch: CPF Accumulation Advantage

With new launches, your CPF contributions continue accumulating during the 3-4 year construction phase. This creates a compounding advantage:

• Year 1: You pay the initial down payment (5-10%) from CPF or cash. Your CPF balance continues growing.
• Year 2-3: As stage payments come due, you've accumulated additional CPF. You can use this for stage payments, reducing the amount you need to borrow or pay from cash.
• Year 4: By TOP, your CPF balance might be $50,000-$80,000 higher than it was at purchase. You can use this to reduce your mortgage or pay the final installment.

For a 35-year-old buyer with stable income, this CPF accumulation during construction could mean the difference between being able to afford a property or not.

Resale: Immediate CPF Commitment

With resale properties, you need your full down payment (typically 20-25%) available immediately. Most buyers use CPF for this down payment, which means your CPF balance is reduced right away.

This creates a different dynamic: You're using your accumulated CPF immediately, leaving less buffer for future needs. However, if your income is stable and you have significant CPF contributions ongoing, this might not be a major concern.

CPF Withdrawal Limits and Restrictions

Important CPF rules to remember:

• You can only withdraw CPF for a property purchase if you're a first-time buyer or upgrading to a larger property
• The property must be in Singapore and held under your name or joint names
• You must be at least 21 years old
• After withdrawal, your CPF balance must not fall below the Minimum Sum (currently around $175,000 for those born in 1971 or later)
• Any CPF used for the mortgage must be refunded to your CPF account when you sell the property (with accrued interest)

This last point is crucial: CPF used for mortgages is a loan from your CPF account, not a gift. When you sell the property, the outstanding mortgage balance and accrued CPF interest are deducted from your sale proceeds before you receive your profit.

Valuation and COV: Understanding the Risks

Valuation is one of the most misunderstood aspects of property financing. Understanding the difference between purchase price, bank valuation, and Cash Over Valuation (COV) is essential for protecting yourself.

How Bank Valuations Work

When you apply for a mortgage, the bank conducts an independent valuation of the property. This valuation is based on:

• Recent comparable sales: Prices of similar properties sold in the same area within the last 3-6 months
• Property condition: Age, maintenance, renovations, and any defects
• Location factors: Proximity to MRT, schools, amenities, and market demand
• Market trends: Whether prices are appreciating or depreciating in the area

The bank's valuation is conservative by design. Banks want to ensure that if they need to foreclose and sell the property, they can recover their loan amount.

Cash Over Valuation (COV): The Resale Risk

COV occurs when your purchase price exceeds the bank's valuation. Here's a real-world example:

• You agree to purchase a resale condo for $850,000
• The bank's valuation comes back at $800,000
• You have a $50,000 valuation shortfall
• If you want to proceed, you must pay this $50,000 in cash (COV)

This is a significant risk for resale buyers because:

• You don't know the valuation until after you've signed the purchase agreement
• Walking away might result in losing your option fee (typically 1% of the purchase price)
• The COV is not part of your mortgage—it's pure cash outlay
• Your effective purchase price becomes $850,000, but your mortgage is only based on the $800,000 valuation

Why New Launches Don't Have COV Risk

New launch properties don't face COV risk because:

• The developer sets a fixed price, and you're committed to that price regardless of bank valuation
• The bank's valuation is separate from your purchase obligation—it only determines your LTV (how much you can borrow)
• If the bank's valuation is lower than your purchase price, you simply need a larger down payment; you don't face a valuation shortfall to pay in cash

Example: You purchase a new launch for $800,000 with a 25% down payment ($200,000). The bank's valuation comes back at $750,000. This affects your LTV (you're now borrowing 80% instead of 75%), but you don't face a COV because your purchase price is fixed with the developer.

Strategies to Minimize COV Risk

If you're buying resale, you can reduce COV risk by:

• Get a pre-valuation: Before making an offer, ask the agent for an estimated valuation range
• Negotiate strategically: Offer a price that's realistic based on recent comparable sales, not emotional attachment
• Budget for COV: Set aside 5-10% of the purchase price as a buffer for potential COV
• Use a mortgage broker: Homejourney's mortgage brokers can guide you through the valuation process and help you understand realistic valuation ranges before you commit

TDSR and MSR Requirements

TDSR (Total Debt Service Ratio) and MSR (Mortgage Service Ratio) are regulatory requirements set by the Monetary Authority of Singapore (MAS) that determine how much you can borrow. Understanding these limits is crucial for both new launch and resale financing.

What Is TDSR?

TDSR is the maximum percentage of your gross monthly income that can go toward servicing all your debts (mortgage, car loan, credit card, personal loan, etc.). The MAS limit is:

• 60% TDSR for most borrowers
• 45% TDSR for borrowers aged 55 and above (stricter requirement for older borrowers)

Example: If your gross monthly income is $10,000, your maximum total debt service is $6,000 per month. If you have a $500/month car loan and $300/month credit card payments, your maximum mortgage payment is $5,200/month.

What Is MSR?

MSR is a stricter measure that applies only to mortgage payments (not other debts). The MAS limit is:

• 30% MSR for most borrowers
• 25% MSR for borrowers aged 55 and above

Using the same example: If your gross monthly income is $10,000, your maximum mortgage payment is $3,000/month (30% of $10,000). This is more restrictive than the TDSR calculation in this case.

How TDSR/MSR Affects New Launch vs Resale Financing

The key difference: During the construction phase of a new launch, your mortgage payments are lower (interest-only), so you might pass TDSR/MSR requirements more easily. However, banks will stress-test your ability to pay the full principal-and-interest payment after TOP.

This means:

• New Launch: You need to qualify based on your ability to pay the full mortgage after TOP, even though you're paying less during construction
• Resale: You need to qualify based on immediate full mortgage payments

In practice, this means the maximum you can borrow is similar for both new launch and resale properties, assuming the same purchase price and tenure. The difference is in when you start paying the full amount.

Calculating Your Maximum Borrowing Capacity

To calculate your maximum mortgage payment:

• Take your gross monthly income
• Multiply by 30% (MSR limit)
• Subtract other debt payments
• The result is your maximum mortgage payment

Then, to convert this to a maximum loan amount, you need to know your mortgage rate and tenure. Homejourney's mortgage calculator does this automatically, accounting for current SORA rates and your preferred tenure.

Use Homejourney's mortgage eligibility calculator at Bank Rates to instantly determine your maximum borrowing capacity based on your income, debts, and preferred tenure.

Interest Rates: SORA, Fixed, and Your Options

Interest rates are the single biggest factor affecting your total mortgage cost. Understanding the difference between SORA (Singapore Overnight Rate Average), fixed rates, and how to choose between them is essential.

Understanding SORA Rates

SORA is the benchmark interest rate used by most Singapore banks for floating-rate mortgages. It's the average rate at which banks lend to each other overnight, and it fluctuates daily based on market conditions.

Most mortgages are structured as SORA + a margin (typically 1.5-2.0%). This means your interest rate moves up and down with SORA, and your monthly payment adjusts accordingly.

The chart below shows recent SORA trends to help you understand how rates have moved:

As you can see from the chart above, SORA rates have fluctuated based on monetary policy and economic conditions. Understanding this volatility is crucial for planning your mortgage payments.

Fixed vs Floating Rates

Most Singapore banks offer both options:

• Floating Rate (SORA + margin): Your rate moves with SORA. When SORA rises, your payment increases. When SORA falls, your payment decreases. Currently, floating rates are typically 3.0-3.5% depending on the bank and your profile.
• Fixed Rate: Your rate is locked in for a fixed period (typically 1-3 years), then converts to floating. Fixed rates are currently around 3.5-4.0% depending on the lock-in period.

Which is better? It depends on your risk tolerance:

• Choose floating if: You believe rates will stay stable or fall, and you can afford payment increases if rates rise
• Choose fixed if: You want payment certainty, believe rates will rise, or prefer predictable budgeting

How Interest Rates Differ for New Launch vs Resale

Interest rates are typically similar for new launch (BUC) and resale mortgages, but there are subtle differences:

• BUC Loans: May have slightly higher rates (0.1-0.2%) because the property doesn't yet exist and there's more risk for the bank
• Resale Loans: May have slightly lower rates because the property is completed and the risk is lower

However, these differences are minimal. The bigger factor is your personal profile (income, credit score, employment stability) and the bank you choose.

Comparing Bank Rates

Different banks offer different rates for the same mortgage product. The difference between banks can be 0.1-0.3%, which translates to $5,000-$15,000 in total interest over a 25-year mortgage.

Compare current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major banks on Homejourney's bank rates page at Bank Rates . You can see live rates, calculate your eligibility, and apply to multiple banks with one click.

Total Cost Analysis: Beyond Unit Price

Many buyers focus solely on the unit price when comparing new launch and resale properties. This is a mistake. The total cost of ownership includes the purchase price, financing costs, renovation, and other expenses. Understanding the full picture is essential for making the right decision.

New Launch Total Cost Breakdown

For a new launch property purchased at $800,000 with a 25% down payment and 25-year mortgage at 3.5% SORA + 1.75% margin:

• Purchase Price: $800,000
• Down Payment (25%): $200,000
• Mortgage Amount: $600,000
• Total Interest Over 25 Years: ~$380,000
• Stamp Duty: ~$15,600
• Legal and Conveyancing: ~$2,500