What is Progressive Payment Scheme?
Purchasing a new launch property in Singapore involves a progressive payment scheme, where buyers make payments at different stages of the construction process. This payment structure ensures that the developer receives the necessary funds to complete the project while providing buyers with a manageable payment plan. In this guide, we will explore the details of progressive payment and the timeline associated with purchasing a new launch property.
Progressive Payment & Timeline Table
Here is an overview of the progressive payment scheme:
| Initial Payment | ||
| Stage & Payable Fees (%) | Timeline | Mode of Payment |
|---|---|---|
| Booking of Unit: Option to Purchase (5%) | Day 1 | Cash Only |
| Engage a Solicitor & Mortgage Banker Delivery of Sale & Purchase Agreement |
Next 2 Weeks | Cash / CPF |
| Exercise Sale & Purchase (15%) | Within 3 Weeks | Cash / CPF |
| BSD / ABSD | Within 14 Days | Cash / CPF |
| Legal Fees: $2500 ~ $4000 | Cash / CPF | |
| Progressive Payment Based On Construction Stage | ||
| Stage 1: Foundation (10%) | Est. 6 ~ 9 months from launch | Cash / CPF / Loan |
| Stage 2: Unit Concrete Framework (10%) | Est. 6 ~ 9 months | Cash / CPF / Loan |
| Stage 3: Brick Walls (5%) | Est. 3 ~ 6 months | Cash / CPF / Loan |
| Stage 4: Ceiling/Roofing (5%) | Est. 3 ~ 6 months | Cash / CPF / Loan |
| Stage 5: Door/Window/Plumbing/Wiring (5%) | Est. 3 ~ 6 months | Cash / CPF / Loan |
| Stage 6: Carparks/Roads/Drains (5%) | Est. 3 ~ 6 months | Cash / CPF / Loan |
| Stage 7: TOP (25%) | Next 1 year | Cash / CPF / Loan |
| Stage 8: Cert. of Completion (15%) | Up to 27 years or your Loan Tenure |
Cash / CPF / Loan |
See also: Progressive Payment Calculator, Buyer’s Stamp Duty, Additional Buyer’s Stamp Duty, Stamp Duty Calculator
Understanding Progressive Payment for New Launch Properties
Progressive payment consists of two main components: the initial payment and the progressive payment based on construction stages.
Initial Payment
The initial payment includes the booking of the unit, often known as the Option to Purchase (OTP). This payment typically amounts to 5% of the property’s purchase price and is payable in cash only. After the initial booking, buyers engage a solicitor and a mortgage banker, which can be paid using cash or CPF funds. You may have a quick access an indicative loan amount using our financial tool, Affordability Calculator or engage a mortgage banker for a more through assessment or with In-Principle Approval (IPA).
Progressive Payment Based on Construction Stages
The progressive payment structure is designed to align with the construction progress of the property. The payment percentages and corresponding stages are as follows:
Stage 1: Foundation (10%)
Stage 2: Unit Concrete Framework (10%)
Stage 3: Brick Walls (5%)
Stage 4: Ceiling/Roofing (5%)
Stage 5: Door/Window/Plumbing/Wiring (5%)
Stage 6: Carparks/Roads/Drains (5%)
Stage 7: TOP (Temporary Occupation Permit) (25%)
Stage 8: Certificate of Completion (15%)
The developer may request the next payment based on the construction progress, taking into account factors such as construction speed and stages. However, delays can occur due to various reasons such as adverse weather conditions, material shortages, a high-risk dengue environment, or a shortage of manpower. A recent example of such a delay is the Covid-19 lockdown, which resulted in the temporary suspension of construction activities.
Timeline of New Launch Property Payments
Understanding the timeline of payments is crucial for buyers to plan their finances effectively.
- Initial Payment Timeline
The initial payment is typically made within the first few weeks of purchasing a new launch property. The booking of the unit, or Option to Purchase, is made on Day 1, and the engagement of a solicitor and mortgage banker occurs within the next two weeks. - Progressive Payment Timeline
The progressive payment timeline is estimated based on the construction stages of the property. The duration for each stage can vary, but typically ranges from 3 to 9 months. The last two stages, TOP and Certificate of Completion, have longer timelines, with the latter potentially extending up to 27 years or the loan tenure.
Modes of Payment
Buyers have different options for making payments at each stage of the progressive payment schedule.
- Cash
Cash payments involve using personal funds for the payment. It is a common mode of payment for the initial payment and can also be used throughout the progressive payment stages. - CPF (Central Provident Fund)
CPF funds, a social security savings scheme in Singapore, can be utilized for certain payments. However, there are restrictions on the use of CPF funds, such as limitations on the payment of land-related costs. CPF can be used for both the initial payment and progressive payment stages, subject to CPF Board guidelines. - Bank Loan
Buyers can also make payments using a loan from a financial institution. Loans are often used in conjunction with cash or CPF funds to fulfill the payment requirements. Loan options should be explored with banks or mortgage bankers.
When purchasing a property, it is crucial to understand the sequence of payment modes and avoid mixing or jumping between different modes. Home buyers should be aware that the recommended sequence of payment is Cash > CPF > Bank Loan. Therefore, it is essential for home buyers to thoroughly plan their finances, considering factors such as whether to utilize more cash or CPF funds, before committing to a purchase. By carefully strategizing their financial resources, buyers can ensure a smooth and well-organized payment process throughout the property acquisition journey.
This comprehensive guide provides an overview of progressive payment and the timeline associated with purchasing a new launch property in Singapore. It is crucial for buyers to understand these details to plan their finances effectively and ensure a smooth transaction. Always consult with the developer, financial institutions, and legal professionals for accurate and up-to-date information regarding specific properties and payment arrangements.
