Getting a BUC Home Loan Before Completion of Your House: What You Need to Know?
By
Amanda Goh
|
Updated 28 Apr 2024
3 minutes
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At a glance...
Buildings under construction (BUC) are projects that have not been completed yet. If you are considering purchasing a BUC property, you should apply for a home loan at the same time. We will help you understand more about BUC home loans and why you should get one before your property is completed.
While BUCs seem self-explanatory, these type of properties only refer to private properties. BUC can come in various forms, whether it is a new launch or a project that is near completion.
There are also various reasons as to why people may choose BUCs over resale properties. These include:
- More modern facilities and features
- Discounts
- Wider choice of units
- More appealing
That said, there may also be risks that come along with purchasing a BUC. One risk would be that the developer may delay the project if sales do not meet a certain threshold. You will also not be able to know how a completed unit will look like, until the project is completed.
Important Information
Note that there is no rule stating whether BUCs are a good or bad choice. This will depend on the individual and the current market conditions.
Before purchasing a BUC, you should also know about the specific home loans that will be required.
Building Under Construction Home Loans
When you purchase a BUC, a Progressive Payment Scheme (PPS) will follow. This scheme works as such:
- Pay a 5% OTP fee in cash
- Sign the agreement and pay off the remaining 15% down payment
- Settle any relevant stamp duties
Once you have completed the relevant steps for this scheme, loan disbursal will then begin. The loan disbursement and repayments typically make up 80% of purchase price.
| Completion of | Repayment (%) |
|---|---|
| Foundation | 10% |
| Concrete framework | 10% |
| Walls | 5% |
| Ceilings | 5% |
| Internal plumbing, door and window frames and wirings | 5% |
| Roads, drains, carpark | 5% |
| Receipt of Temporary Occupation Permit (TOP) | 25% |
| Completion | 15% |
| Total | 80% |
The table above shows that you should be getting your home loan before the TOP date (the date at which residents can move in). This is as the developer would be expecting to receive at least 40% of the loan amount by this time.
This means you should not procrastinate getting a home loan. Fortunately, your monthly instalments during the construction period will be must lower. This is as BUC loans given by banks are usually floating rates — if interest rates decline, monthly instalments will too.
BUC Home Loan Rates
Fixed Rates (HDB Properties)
| Bank | Lock In Period | 1st Yr Interest |
|---|---|---|
| No data found |
*Today's Mortgage Rates - 28 April 2024
Floating Rates (HDB Properties)
| Bank | Lock In Period | 1st Yr Interest |
|---|---|---|
| Maybank | 0 year | 4.11% |
| DBS | 0 year | 4.21% |
| Promotion | 0 year | 4.31% |
| Maybank | 0 year | 4.46% |
*Today's Mortgage Rates - 28 April 2024
Fixed Rates (Private Properties)
| Bank | Lock In Period | 1st Yr Interest |
|---|---|---|
| CIMB | 2 years | 3.80% |
*Today's Mortgage Rates - 28 April 2024
Floating Rates (Private Properties)
| Bank | Lock In Period | 1st Yr Interest |
|---|---|---|
| Promotion | 0 year | 4.11% |
| Maybank | 0 year | 4.11% |
| Promotion | 0 year | 4.16% |
| DBS | 0 year | 4.21% |
| Promotion | 0 year | 4.31% |
| CIMB | 0 year | 4.31% |
| Bank of China | 0 year | 4.31% |
| Bank of China | 0 year | 4.36% |
| Promotion | 3 years | 4.41% |
| Maybank | 0 year | 4.46% |
*Today's Mortgage Rates - 28 April 2024
Using CPF for Property Purchases
Although you may also use CPF to cover the remaining down payment, it is a prerequisite that you get an approved BUC loan first.
Important Information
While the sequence of payment is: OTP fee, remaining down payment, loan disbursement, the prerequisites do not follow this order. Thus, you must get your BUC home loan before you can use your CPF to cover the remaining fees.
Plan Ahead
Getting started on the process of receiving a home loan early is essential, even for a BUC. This will help you increase your chances of getting good deals, further giving you a peace of mind in the long term.
