Understanding the Progressive Payment Scheme for New Launch Condos
Introduction
The Progressive Payment Scheme (“PPS”) fundamentally changes how you pay for property under construction in Singapore. Instead of paying $2 million upfront on purchase day, you spread payments over three to four years as construction progresses. For most buyers, this difference between paying everything now versus paying gradually determines whether a new launch is affordable or financially impossible.
Understanding PPS isn’t optional if you’re considering new launches. It affects your cash flow for years, determines when you start paying full mortgage installments, and influences whether you can manage holding two properties simultaneously during your HDB-to-condo transition. Get this wrong, and you’ll face financial stress when large payments hit. Get it right, and PPS becomes your biggest advantage over buying resale properties.
What is the Progressive Payment Scheme?
PPS is a government-mandated payment structure for uncompleted properties. When you buy a new launch condo, you don’t hand over the full purchase price at signing. Instead, you pay in stages tied to construction milestones—foundation completion, structural framework, roofing, and finally when you collect keys at Temporary Occupation Permit.
Here’s the critical insight: your bank loan is also disbursed progressively, not all at once. If you’re taking a $1.5 million loan, the bank only releases $150,000 when the foundation is completed, another $150,000 when the framework is done, and so on. This means your monthly mortgage payments stay low in the early years because you’re only servicing a small loan balance. Payments increase gradually as more loan is disbursed, reaching full monthly installments only after you receive keys.
This progressive structure creates breathing room. Most buyers can’t comfortably pay $8,000 to $10,000 monthly installments immediately after purchase. But they can manage $1,500 to $2,000 initially, then $3,000 to $4,000 as construction progresses, especially if their income grows or their current housing situation changes during the construction period.
PPS applies to all new launch private condominiums and Executive Condominiums purchased before completion. It does not apply to resale properties. Those require the full payment at completion, with full mortgage installments starting immediately.
Why PPS Matters for New Launch Buyers
The progressive nature of PPS creates four distinct financial advantages that resale purchases cannot match.
First, lower upfront cash requirements. You pay only 5 percent in cash at booking, then another 15 percent within eight weeks—20 percent total downpayment. The remaining 80 percent is paid progressively over three to four years via cash, CPF or loan drawdowns. Compare this to resale properties where you must have the full 25 percent downpayment ready on completion day, plus immediate ability to service full monthly installments. For buyers with limited cash savings but strong CPF balances and income, PPS makes new launches more accessible than resale despite higher unit prices.
Second, time to prepare for full mortgage payments. When you buy a $2 million new launch with a $1.5 million loan, your eventual monthly payment will be around $7,500 to $8,000. But in Year 1, you might only pay $1,500 monthly because only $300,000 of loan has been disbursed. This gives you three years to adjust your lifestyle, increase income, or restructure other financial commitments before the full payment burden hits. Families expecting career progression, upcoming bonuses, or changes in household income particularly benefit from this runway.
Third, flexibility for HDB upgraders managing dual properties. Many buyers purchase new launches while still living in their HDB flats. PPS allows you to buy the condo now, continue living in your HDB for three to four years while construction proceeds, then sell your HDB flat only when the new condo is nearly ready. This avoids the chicken-and-egg problem of needing to sell first to afford the downpayment, then scrambling to find temporary housing while waiting for your new property to complete. With PPS, you can time the HDB sale for just before TOP, avoiding rental costs and double housing payments.
Fourth, protection against construction delays. If the developer encounters delays, your payment timeline extends automatically because payments are tied to milestones, not calendar dates. If foundation completion takes 12 months instead of 9 months, you simply pay 3 months later. Your cash remains in your account earning interest rather than sitting with the developer. This shifts construction risk from buyer to developer—something resale purchases don’t offer since you pay everything regardless of any issues.
The Complete PPS Payment Timeline Explained
Understanding exactly when you pay each installment helps you budget accurately and avoid surprises. Here’s the typical timeline with actual dollar amounts for a $2 million purchase.
Stage 1: Booking the Unit (Day 1) — 5% Cash = $100,000
You pay 5 percent ($100,000) as booking fee when reserving the unit. The developer will then issue an Option to Purchase. This entire 5 percent must be cash—CPF cannot be used.
Stage 2: Signing Sale & Purchase Agreement (Within 8 Weeks) — 15% = $300,000
After exercising the OTP, you have 8 weeks to complete the full 20 percent downpayment. You’ve already paid 5 percent cash, so you owe another 15 percent ($300,000). This amount can come from CPF, cash, or combination. Most buyers use CPF heavily here. You must also pay Buyer’s Stamp Duty within 14 days of signing, which is roughly $69,600 for a $2 million property (assuming Singaporean 1st property with no ABSD). This is paid in cash separately from the downpayment.
Stage 3: Foundation Completion (Months 6-9) — 10% = $200,000
When the developer completes and certifies the foundation, they notify you. Your bank then disburses 10 percent of the purchase price ($200,000) directly to the developer. You will have to prepare another $100,000 in cash or CPF and the remaining $100,000 using bank loan. Your monthly payment increases because you’re now servicing a $100,000 loan instead.
Stage 4: Structural Framework Complete (Months 12-18) — 10% = $200,000
When the building’s structural framework is completed, another 10 percent is paid. Your loan balance is now $400,000, and monthly payment increases. This is still manageable for most buyers.
Stage 5-8: Various Construction Milestones (Months 18-36) — 5% each = $100,000 each
Over the next 18 months, you’ll hit multiple milestones: walls and brickwork completion (5%), roofing completion (5%), windows and fittings (5%), and external works like car parks and driveways (5%). Each triggers a $100,000 payment, gradually increasing your loan balance. By the time external works are completed, your loan stands at $700,000.
Stage 9: Temporary Occupation Permit (Month 36-48) — 25% = $500,000
This is the largest single payment. When the developer obtains TOP and you collect keys, 25 percent of the purchase price ($500,000) becomes due. Your loan balance jumps from $700,000 to $1.2 million.
Stage 10: Certificate of Statutory Completion (12-18 Months After TOP) — 15% = $300,000
The final payment occurs when the building receives its Certificate of Statutory Completion, confirming it meets all regulations. This typically happens 12 to 18 months after TOP. The last $300,000 is disbursed, bringing your total loan to the full $1.5 million. Monthly payments reach their final level around depending on prevailing interest rates.
From this point forward, your payments remain stable and you’re servicing the full loan amount like any completed property.
| Milestone | % of Price | Approx. Timeline |
|---|---|---|
| Foundation | 10% | ~6–9 months from start |
| Reinforced Framework | 10% | +6–9 months |
| Walls / Brickwork | 5% | +3–6 months |
| Roofing | 5% | +3–6 months |
| Windows & Basic Fittings | 5% | +3–6 months |
| Carparks / Drains / Roads | 5% | +3–6 months |
| TOP (Temporary Occupation Permit) | 25% | +3–6 months |
| CSC (Completion) | 15% | ~12 months after TOP |
PPS vs Deferred Payment Scheme (DPS)
Some developers offer a Deferred Payment Scheme (“DPS”) alongside PPS. Understanding the trade-off helps you choose correctly.
DPS varies from condo to condo. For the ease of understanding, let’s look at the DPS for Executive Condominiums. You still pay the 20 percent downpayment upfront but the remaining 80 percent is deferred until TOP. During construction, you pay nothing—no progressive installments, no monthly mortgage payments. Only when you collect keys does the bank disburse the full loan and monthly payments begin.
The advantage is obvious: maximum cash flow flexibility during construction. You can continue servicing your HDB loan, save aggressively, or wait for bonuses and income increases before taking on the full mortgage burden. For buyers with uncertain income timing or those managing complex transitions between properties, DPS eliminates payment stress during the waiting period.
The cost is equally clear: DPS units price 2 to 3, some even up to 5 percent higher than identical unit on PPS. On a $2 million property, you’re paying an extra $40,000 to $60,000 for payment flexibility. Developers charge this premium because they receive the bulk of payment later, affecting their cash flow and financing costs. They pass this cost to buyers choosing DPS.
When DPS makes sense: You’re waiting for a major liquidity event—selling another property, receiving inheritance, vesting stock options, or collecting a substantial work bonus. You want to lock in the unit today but know a large sum is arriving before TOP. The premium is worthwhile because the alternative is missing the unit entirely or struggling financially for years.
When PPS makes sense: You have stable income, can manage gradually increasing payments, and would rather save $50,000 than pay it for convenience. Most buyers should choose PPS because the payment structure naturally aligns with income growth and property transition timelines. The premium for DPS rarely justifies the cost unless you have specific circumstances requiring maximum flexibility.
The hidden risk of DPS: If your financial situation deteriorates during construction—job loss, business failure, unexpected expenses—you still owe the full balance at TOP. Banks don’t grant extensions because you’re unprepared. With PPS, you’ve been paying incrementally and building equity gradually, making it easier to manage if circumstances change. DPS concentrates all financial risk at the TOP date.
Common PPS Mistakes That Cost Buyers Thousands
Assuming early low payments will continue. The most common error is budgeting based on Year 1 payments, forgetting that by Year 3 you’ll be paying substantially more monthly. Buyers lock in long-term commitments assuming the early payment level is sustainable, then scramble when reality hits at TOP.
Not accounting for stamp duty separately. Stamp duty is due within 14 days of signing. Many buyers focus entirely on the 20 percent downpayment and forget about the additional funds needed for BSD and potential ABSD. This creates immediate cash flow stress right after purchase.
Overestimating income growth during construction. Many buyers justify stretching financially by assuming promotions or income increases during the 3-4 year construction period. If that growth doesn’t materialize—economic downturn, company restructuring, career stagnation—you’re locked into payments based on optimistic projections. Budget based on current income with modest adjustments, not best-case scenarios.
Ignoring interest rate risk. Your loan calculations are based on current rates around 1.8 percent. If rates above 1.8 percent during construction, your eventual monthly payment could increase by 15 to 20 percent or even more. This doesn’t affect progressive payments much (loan balance is still small), but it hits hard at TOP when the full loan is disbursed. Stress-test your budget at a higher interest rate, not just current rates.
The Bottom Line: Is PPS Right for You?
The Progressive Payment Scheme makes new launches accessible to buyers who couldn’t afford lump-sum payments required for resale properties. It provides runway for income growth, flexibility for property transitions, and natural protection against construction delays.
However, PPS also creates a false sense of affordability. Early payments of $1,500 to $2,000 monthly feel manageable, lulling buyers into thinking the property is comfortably within budget. The reality check comes at TOP when payments triple and renovation bills arrive simultaneously. Buyers who coast through construction without planning for this inevitably face financial stress.
The key is honest assessment of your financial trajectory. If your income is stable and growing, if you have disciplined savings habits, and if you’re realistic about the full payment timeline, PPS is an excellent tool. If you’re already stretching to afford the downpayment, if your income is uncertain, or if you tend to spend available cash rather than save it, PPS can trap you in an unsustainable situation.
Before committing to any new launch purchase, run the full payment schedule with actual dollar amounts. Calculate what your monthly payment will be at each stage. Ensure you can afford the TOP-stage payment comfortably, not just the early installments. Factor in stamp duty, renovation, furnishing, and a 6-month emergency buffer. If the numbers work even under conservative assumptions, proceed. If they only work under optimistic scenarios, reconsider.
Need help calculating your specific PPS payment timeline? Use our Progressive Payment Calculator to see exactly when each payment hits and what your monthly obligations will be at every construction stage. Or contact us for personalized guidance on whether a new launch or resale property better suits your financial situation and timeline. The right answer depends on your specific circumstances—let’s work through the numbers together.
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