What are the upfront payments?
Before the loan commencement, you will be required to stump up 5-25% [depends on the loan-to-value (LTV) limit and if there is any outstanding mortgage] of the transacted price in cash. The remaining difference between the loan amount and purchase price can be paid for with cash and/or CPF fund. As for the buyer's stamp duty and additional buyer's stamp duty (ABSD), they can be paid for with cash and/or CPF fund as well. The below flowchart outlines the payment at the different stages. This payment schedule also applies to completed new private properties. Here, we assume it is the first property purchase. In addition, do note that for permanent residents (PRs), and foreigners & non-individuals ABSD is payable. Figure 1: Payment Schedule for Private Property Purchase from DeveloperWhat is a BUC loan?
Since 26 October 2007, the deferred payment scheme (which defers payment till a later date) was disallowed, so buyers have to rely on the standard payment scheme (Urban Redevelopment Authority, “Progress Payments”) in which payments have to be made at different stages of the property construction. Thus a BUC loan also follows this payment schedule. Unlike a loan for a completed property which is 100% disbursed at one time, a BUC loan has a progressive disbursement schedule. In other words, a certain percentage of the loan is disbursed at each stage of the property construction. The following example illustrates this. Example 1 Purchase Price: S$2,000,000 Loan Quantum: S$1,600,000 Table 1: Disbursement Schedule for a BUC Loan
Stage |
Month |
Disbursed Ratio |
Interest Rate |
Disbursed Balance |
Monthly Installment |
Completion of Foundation |
1 |
10% |
1.250% |
S$200,000.00 |
S$666.50 |
Completion of Superstructure |
7 |
10% |
1.250% |
S$397,243.81 |
S$1,342.32 |
Completion of Brick Wall |
13 |
5% |
1.450% |
S$491,658.14 |
S$1,731.45 |
Completion of Ceiling/Roofing |
17 |
5% |
1.450% |
S$587,100.42 |
S$2,086.91 |
Completion of ElectricalWiring/Plumbing |
21 |
5% |
1.450% |
S$681,580.43 |
S$2,445.75 |
Completion of Roads/CarsParks/Drainage |
25 |
5% |
1.450% |
S$775,079.97 |
S$2,808.04 |
Issuance of Temporary OccupationPermit (TOP) |
29 |
25% |
1.450% |
S$1,267,580.46 |
S$4,637.19 |
Certificate of Statutory Completion |
40 |
15% |
2.750% |
S$1,534,842.41 |
S$6,759.05 |
What are the types of BUC loans?
Similar to the loan for a completed property, a BUC loan comes in the usual types:- Fixed Rate Package
- Variable (Floating) Rate Package
Previously, interest-only loans were popular among buyers of BUC projects because this type of loans allows them to defer principle repayments till a later date. This makes monthly installment much lower as it consists only of interest repayments. However, this fuelled property speculation, causing the Government to cancel interest-only loans since 14 September 2009. For the existing loan types (ie. fixed rate or variable rate package), conversion if allowed is usually after TOP.
- Board rate (bank’s internal reference) - pegged
- SIBOR-pegged
- SOR-pegged
- Combo SIBOR/SOR [recently introduced by Australia and New Zealand Banking Group Limited (ANZ)]
Things to take note of
As BUC loans are disbursed progressively, full repayment will be subjected to a cancellation fee, normally 1.5 - 2.0% of the un-disbursed amount. If the repayment is during the lock-in period, you will have to bear the cancellation fee on top of the lock-in penalty. Please note that interest rates for BUC loans are not necessarily higher than loans for completed properties. Consequently, it well may be more worthwhile to buy a property while still under construction as the loan quantum is smaller, and hence interest payment, during the initial few years.About Property Buyer http://www.PropertyBuyer.com.sg/mortgage We are a research-focused Singapore mortgage consultancy which helps you compare Singapore home loans either for new loans or refinancing. We use loan reports from Singapore's best loan analysis system (exclusive to us) at http://www.icompareloan.com/consultant/ to serve our customers. Our services are completely FREE to you as the banks pay us a referral fee upon loan disbursement. SMS: (65) 9782 8606 Email: loans@PropertyBuyer.com.sg