BUC Loan – Progressive Payment Scheme (Milestone Payment) 

Purchasing a Building-Under-Construction (BUC) property is a nuanced journey. It involves financing that aligns with construction stages, interest rates that change over time, and exit strategies that accommodate varying timelines. 

BUC loans mirror the structure of construction. Banks disburse funds progressively, in tandem with developers completing each construction milestone. These milestones typically include the signing of Sales & Purchase (S&P) agreements, foundation work, structural phases, roofing, internal works, and finally TOP and CSC stages.

The result is dual: borrowers pay less interest early (because the loan balance is still low) and developers receive funds aligned with their progress, a design that mitigates risk for all parties.

Which also explains why Banks only offer floating rate for BUC developments. 

Moreover, securing the BUC loan early ensures that CPF funds can be allocated properly, and that buyers maintain access to down payment strategies without delay

SORA Rates in 2025

SORA (Singapore Overnight Rate Average) is now the primary benchmark for variable home loans in Singapore. It is derived from actual overnight interbank borrowing transactions and published daily and in compounded form for 1-month and 3-month. The compounded versions offer more stability compared to the daily rate. (Read more on SORA here)

By August 2025, SORA rate levels continued to slide: 1-month compounded SORA hovered around 1.44% and 3-month compounded SORA around 1.60%. (MAS Data)

In response, banks introduced BUC floating packages like 3-month SORA + 0 percent for Year 1, effectively locking a near-market rate for early stages. This makes timing more critical: securing financing under a low-rate structure early, which includes interim interest savings, especially as SORA continues to fall.

Why TOP and CSC Are Central to Financing Strategy

Temporary Occupation Permit (TOP)

TOP signals that core living spaces are completed and structurally safe for occupation. However, facilities such as pools or gyms may still be under development.

Certificate of Statutory Completion (CSC)

CSC follows when full legal and facility completion is achieved, typically around one year after TOP. CSC triggers final payments, confirms legal handover, and concludes developers’ liability periods.

In financing terms, banks often schedule major disbursements around TOP and CSC. More importantly, these milestones influence penalty waivers, loan conversion eligibility, and refinancing options.

Matching Bank Packages to Your BUC Plan

If you intend to resell (Subsale) or refinance before or around TOP, your mortgage package must allow for:

• Cancellation waiver at TOP, enabling sale or refinancing without penalty on undisbursed loan portions.
• Free loan conversion: some banks offer two conversions, for example, some banks offer two conversions, before TOP and again within six months after TOP.
• Sustainability-linked perks: DBS provides better rates on “Green Home Loans” if the BUC is Green Mark certified.

When SORA falls, these features allow borrowers to capture lower rates dynamically while controlling financing costs.

Brief Timeline of BUC purchase

Week 0–2: Speak with Us

• Get a tailored list of recommended mortgage packages suited to your BUC purchase.

Week 2: Grant Option to Purchase (OTP) & Pay Initial Downpayment

• Secure your unit by paying a 5% booking downpayment.
•  Let us help arrange your mortgage package.

Week 3: Receive the Sales & Purchase (S&P) Agreement

• The developer will provide the S&P, typically within a few weeks of OTP.

Continue to Week 8: Exercise Your S&P at the Law Firm

• Have your mortgage documents signed.
• Pay Buyer’s Stamp Duty (BSD) and any Additional Buyer’s Stamp Duty (ABSD), if applicable, within two weeks.
• Cover legal fees involved.

Around Week 8: Completion of Sale

• Pay the remaining 15% downpayment (cash or CPF).
• From this point forward, your Progressive Payment journey begins, when the developer starts to call for funds.

Progressive Payment Scheme (By Construction Stage)

Below is an example of the a BUC/New launch priced at $2 mil (Sora rate at 1.5%, Y2-Y4 spread at 0.28%) 

A Real Example of Strategy in Action

Imagine you purchase a BUC condo in late 2025:

• You lock in a 3-month SORA rate pegged to near 1.5% with 0 spread.
• Banks allow two rate conversions.
• At mid-construction, the new package has a lower spread and you convert to a new SORA-linked package before TOP.
• You decide to resell (Subsale) at TOP, no penalties apply on the remaining 15% disbursement.(except for Seller stamp duty SSD, if applicable)

Before you decide to buy that New launch (Skye at Holland, perhaps) 

In 2025 and beyond, BUC purchases are well supported by low and flexible mortgage structures anchored to SORA benchmarks. However, besides locking in a low spread, you must align your choice of bank and package features with your construction timeline, sale or hold intentions, and risk preferences.

Should you like a personalised loan modelling, comparison of bank packages, or tailored strategy aligned to your timeline, feel free to reach out. We can run a break-even analysis, simulate interest payments across TOP/CSC event horizons and recommend packages that align with your goals.

FAQs

1. What is a Progressive Payment Scheme and how does it work for BUC properties?

A Building Under Construction (BUC) typically employs a Progressive Payment Scheme (PPS), where payments and corresponding loan disbursements are staggered according to construction milestones instead of being front-loaded. You begin with a small percentage on the Option to Purchase (OTP) and Sales & Purchase (S&P), followed by additional payments at stages like foundation, framework, roofing, TOP (Temporary Occupation Permit), and finally CSC (Certificate of Statutory Completion). This structure eases early cash flow and aligns with actual project progress.

2. What are the key differences between buying a BUC property and acquiring a completed or resale unit?

While both types of purchases require similar eligibility checks, including income, loan-to-value (LTV), and Total Debt Servicing Ratio (TDSR), BUC financing differs significantly due to its progressive payment system and their lower stress test (meaning higher loan approved, capped at 75% LTV). Unlike completed or resale units where the full loan is disbursed upfront, BUC loans are released across construction milestones. As a result, your initial monthly repayments are typically much lower, with repayments increasing later as more loan tranches are disbursed.

3. What roles do Temporary Occupation Permit (TOP) and Certificate of Statutory Completion (CSC) play in BUC financing?

The TOP allows partial occupancy when key structural elements are completed—allowing residents to collect keys and move in, though communal facilities may still be under construction. 

The CSC, typically issued about one year later, confirms full legal completion and statutory compliance. CSC often triggers completion of final loan disbursement and marks the end of developer’s liability periods.

4. How can I tailor my bank loan package to suit my BUC plans, especially if I plan to resell or refinance early?

Selecting the right mortgage package is vital when the loan structure needs to accommodate construction timelines and exit strategies. Key features to look for include:

• Cancellation or conversion waivers at TOP, to avoid hefty penalties if you plan to sell or reprice before completion.
• Flexible financial terms, including interest-only during early loan stages or sustainability-linked perks for eco-certified developments.