When you purchase a new launch, you will be paying via the progressive payment scheme.
The progressive payment scheme allows buyers to pay a fraction of installments during the period between the purchase date and the TOP date.
The progressive payment scheme offers more flexibility for buyers to save up to pay the full installment.
The new launch market is experiencing high supply, demand and transaction volume. For prospective buyers of condos, understanding how progressive payments work for new launch condos will help you choose between whether to invest in a new launch condo or a resale condo.
Upon signing the agreement when you purchase a new launch condo, you will pay a booking free of 5% and your remaining down payment. Then, the progressive payment kicks in such that you do not have to initially pay the whole instalment on the remaining. On the other hand, for resale property, you will have to pay the full amount of installments from the day you take your key.
For new launches, the timeline to completion may take a few years before you take your keys. The progressive payment scheme allows you to pay for your new home in stages instead of all at once. The installment you pay will be pegged according to the stage of construction the project is at. For example, during the stage of foundation work, you will be charged the interest and instalment payment of 10% of the purchase price. This amounts to about a few hundred dollars if your loan is S$500,000. As the project progresses along subsequent stages like the completion of reinforced concrete framework and partition walls, the interest and instalment payment will increase incrementally as well. Once TOP date is reached, your instalment payment will be higher.
During the years between your purchase and the TOP date, you will not be paying the full amount of your installment. This is not only more affordable, but also provides you the flexibility to save up for the future when full instalment payments have to be made. The further the TOP date from your purchase date, the longer the time frame you have to start saving. On the other hand, the gap between the date of purchase and completion for resale property is usually around 2 to 3 months. This means you will have less time to save up for full installment payments when you purchase resale property.
Buyers of new launch property do not need to opt for the progressive payment scheme as it is the default option. However, buyers should take note of the stage of development as this will affect how much they pay in installments during this period.