One of the frequently misunderstood aspects of new launch property purchases is how payments are actually made. Unlike a resale property — where the full purchase price is paid at completion — new launch payments follow a Progressive Payment Scheme (PPS) tied to construction milestones. Understanding this structure is important for cash flow planning.
How The Progressive Payment Scheme Works
Under the PPS, payments are made in tranches as the development reaches specific construction stages. The typical schedule looks like this:
On booking day: 5% of the purchase price (the booking fee, paid in cash). Within 8 weeks of the Option being issued: a further 20% (of which 15% can be paid using CPF or the bank loan, leaving 5% as the mandatory cash component under the housing loan framework). These two tranches — totalling 25% — constitute the downpayment.
Subsequent tranches are released as construction milestones are certified by the developer's qualified person: typically 10% on foundation completion, 10% on reinforced concrete framework, 5% on brick walls, 5% on ceiling, 5% on electrical, and so on. The final 15% is payable on the issuance of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion.
How The Bank Loan Works With PPS
Once the downpayment tranches are cleared, your bank loan begins disbursing progressively to cover each subsequent construction payment. You start servicing the loan on the amount disbursed — not the full loan quantum — which means monthly repayments start small and increase as more of the loan is drawn down over the construction period.
Why This Matters For Planning
The progressive payment structure significantly reduces the immediate cash outflow compared to a resale purchase, which is one of the core financial arguments for new launches. It also means your full mortgage repayment commitment only kicks in at TOP — giving you time to wind down rental commitments, plan the move, and adjust your monthly budget before the full repayment begins.