The key to finding your perfect property should be in your hands. We empower you with valuable insights & tools, and let you be in control of your home search.
Buying Building Under Construction (BUC)
Guide on buying BUC, aka new launches
New launches are Building Under Construction (BUC), and there are special payment terms since they will take a few years before you can get your keys. This is an advantage when you can wait, namely:
- your loan is disbursed progressively, which means you repay only a portion of the loan in the beginning
- your 3-years Seller Stamp Duty (SSD) starts right away, so by the time you get your keys you won’t need to pay SSD
Floating Loan for BUC
Most banks only offer floating package (variable loan eg. peg to SORA) for BUC. Depending on current interest environment, this can be higher or lower than fixed loan interest rate. In 2024, interest rate is dropping, so variable is higher than fixed.
But BUC is progressive payment; in the beginning, the disbursed loan amount is lower, so the amount is not as significant.
And before TOP, you can switch to fixed loan package.
Pledging
If you’re pledging (similar for show fund), it depends on the bank when exactly do you need to pledge:
- Upon signing the loan
- Upon first loan disbursement
This can be significant difference because the first loan disbursement is when foundation work is completed, around 6 months after sale.
For Standard Chartered, they are unfavorable because they require the pledge upon signing the loan. A pledge is a lock-in lien in their Fixed Deposit for 4 years.
The Steps
- Find an agent to bring you to showflat
- For preview, bring a cheque to get a queue
- Pay 5% booking fee to get Option to Purchase (OTP)
- Within 2 weeks developer will send you the Sales & Purchase Agreement (S&P)
- Within 3 weeks of receiving the S&P, you have to exercise the S&P. You need to engage a conveyancing law firm to exercise. At the same time, apply for bank mortgage to get a Letter of Offer.
- Within 2 weeks of signing S&P, pay all buyer stamp duties (BSD & ABSD if any)
- Within 8 weeks from OTP issuance, pay 15% downpayment
- Thereafter progressive payment
Example: Timeline
We use an example of a purchase in 2024:
- Booking/OTP = Nov 15
- S&P Received = Nov 25
- S&P Exercise Dateline (received +3wk) = Dec 16
- Exercise on Dec 13 (Fri, on a business working day to be safe)
- Stamp Duty payable dateline (exercise +2wk) = Dec 26
- Completion (OTP +8wk) = Jan 9