Different stages of the EC Deferred Payment Scheme
| Stage of Construction Completion | % of Purchase Price |
|---|---|
| Booking of Unit | 5% Cash |
| Upon signing S&P Agreement or within 8-weeks from date of Option | 15% Cash or CPF |
| Completion of foundation work | – |
| Completion of reinforced concrete framework | – |
| Completion of partition walls | – |
| Completion of roofing | – |
| Completion of door frames, windows frames, electrical wiring, internal plastering and plumbing work | – |
| Completion of car park, drains and roads serving the housing project | – |
| Obtained Temporary Occupation Permit (TOP) | 5% Cash or CPF 60% Cash or CPF or Loan |
| Obtained Certificate of Statutory Completion (CSC) | 15% Cash or CPF or Loan |
Stage of Construction Completion% of Purchase PriceBooking of Unit5% CashUpon signing S&P Agreement or within 8-weeks from date of Option15% Cash or CPFCompletion of foundation work-Completion of reinforced concrete framework-Completion of partition walls-Completion of roofing-Completion of door frames, windows frames, electrical wiring, internal plastering and plumbing work-Completion of car park, drains and roads serving the housing project-Obtained Temporary Occupation Permit (TOP)5% Cash or CPF
60% Cash or CPF or LoanObtained Certificate of Statutory Completion (CSC)15% Cash or CPF or Loan
Introducing the Deferred Payment Scheme (DPS) for Condominium Properties in Singapore!
Are you looking to purchase a condo but find the upfront payment overwhelming?
The DPS is the perfect solution for you.
Unlike other payment schemes, DPS allows buyers to defer a portion of the price without interest charges.
It’s a flexible option that benefits buyers and developers, giving buyers more time to arrange their finances while helping developers speed up sales.
Key Takeaways
| Key Takeaway | Explanation |
|---|---|
| DPS allows buyers to defer payment without interest | DPS differs from other payment schemes as it allows property buyers to defer payment without incurring interest during the deferred period. This provides greater flexibility for buyers who may not have the financial means to pay the full amount upfront. |
| DPS benefits buyers who need more time or smaller payments | DPS benefits property buyers who require more time to arrange their finances or prefer to make smaller payments over a longer period. It helps reduce the financial burden on buyers and enables them to manage their finances better. |
| DPS benefits developers by speeding up sales process | Developers benefit from DPS as it can speed up the sales process and make their properties more attractive in the market. |
| DPS payment schedule differs from the normal scheme | Under DPS, buyers pay an initial downpayment (usually 20%) and defer the remaining 80% to a later date. The payment schedule starts after the deferred period ends, unlike the normal scheme where full payment is required within a specific timeframe. |
| DPS requires eligibility check for buyers | Buyers must meet certain eligibility criteria, such as not owning other properties and being Singapore citizens or Permanent Residents, to qualify for DPS. Developers must also obtain a Certificate of Statutory Completion (CSC) to offer DPS. |
| DPS may affect property prices and payment obligations | Property prices may fluctuate during the deferred period, potentially resulting in a higher price than anticipated. Buyers should consider the cash outlay required at the end of the deferred period and ensure they can fulfill their financial obligations. |
| DPS is a marketing strategy for developers | Developers use DPS as a marketing tool to attract more buyers and increase sales volume. It provides a unique selling proposition and appeals to buyers who face financial constraints. |
| MAS sets guidelines and safeguards for DPS | The Monetary Authority of Singapore (MAS) establishes regulations and guidelines for developers and buyers regarding DPS offerings. It ensures responsible offering and protects buyers’ interests by setting safeguards and monitoring financial conditions. |
| DPS for Executive Condominiums (ECs) has specific terms | DPS for ECs requires a 5% initial downpayment, followed by another 15% within a specific timeframe. The remaining 80% can be deferred for up to two years. Buyers must fulfill eligibility criteria and manage their existing home loan during the deferred period. |
Introduction to the Deferred Payment Scheme (DPS)
What is the Deferred Payment Scheme?
The Deferred Payment Scheme (DPS) is a payment method for purchasing condominium properties in Singapore.
Under this scheme, buyers can pay a portion of the purchase price upfront (usually 20%) and defer the remaining payment later.
How is DPS different from other payment schemes available?
DPS differs from other payment schemes because it allows property buyers to defer their payment without paying interest during the deferred period.
This provides greater flexibility for buyers needing more financial means to pay the total amount upfront.
Who benefits from DPS?
DPS benefits property buyers who need more time to arrange their finances or prefer to make smaller payments over an extended period.
Developers also benefit from DPS as it can help speed up the sales process and increase the attractiveness of their properties in the market.
Advantages and benefits of the DPS for property buyers
What are some advantages of using DPS for purchasing property?
One advantage of using DPS is that it allows buyers to manage their finances better as they do not have to pay the total amount upfront.
This also enables buyers to invest in other areas with their remaining cash instead of putting it all into the property.
How can DPS help buyers manage their finances better?
As mentioned, DPS enables buyers to spread out their payments over a more extended period, which can reduce the financial burden on buyers.
This can help some buyers who find it challenging to come up with the initial down payment or pay the outstanding home loan while managing other expenses.
What are the risks of using DPS?
While DPS provides benefits for property buyers, there are also risks associated with it.
Property prices may fluctuate during the deferred period, which could result in a higher price than initially anticipated.
Additionally, buyers would need to consider the cash outlay required at the end of the deferred period.
How the DPS works for condominium properties in Singapore
Can DPS be used for purchasing Executive Condominiums (ECs)?
The EC Deferred Payment Scheme is a variant of the DPS for ECs in Singapore.
It was introduced in 2018 to help buyers manage their finances while fulfilling the eligibility criteria for ECs.
What is the process for purchasing a condo using DPS?
The process for purchasing a condo using DPS is similar to that of the normal payment scheme.
Buyers must pay a booking fee and submit an Option to Purchase (OTP) to the developer.
Once the OTP is granted, the buyer must pay the initial 20% downpayment.
How does DPS affect the loan repayment schedule?
DPS changes the loan repayment schedule, as the full payment is deferred later.
Buyers are not required to pay the loan during the deferred period, and the payment schedule will only begin once the deferred period has ended.
Exploring the eligibility criteria for the DPS scheme
Who is eligible for DPS?
Individuals who have not purchased more than one residential property and foreign buyers are eligible for DPS, subject to certain conditions.
Buyers must check with the developer to confirm their eligibility for DPS.
What are the requirements for property developers offering DPS?
Property developers are required to obtain a Certificate of Statutory Completion (CSC) before offering DPS.
Additionally, they must follow specific guidelines set out by the Monetary Authority of Singapore to use DPS.
Are there any restrictions on the purchase price for properties financed with DPS?
There are no restrictions on the purchase price for properties financed with DPS.
However, buyers must ensure they have the financial means to pay the remaining 80% of the purchase price at the end of the deferred period.
Understanding the payment schedule under the DPS
What are the key features of the DPS payment schedule?
The payment schedule under DPS involves an initial downpayment of 20% of the property price.
The remaining 80% will be deferred to a later date, with the exact date and payment method determined by the property developer.
How does the payment schedule differ from the normal payment scheme?
The schedule under the standard payment scheme requires the total payment to be made within two weeks of signing the OTP.
Under DPS, the payment schedule is deferred to a later date, usually within a few years from the initial downpayment.
What are some important factors to consider when using DPS?
When considering the use of DPS for purchasing a property, buyers should evaluate their financial situation and ensure they can pay the outstanding amount at the end of the deferred period.
Buyers should also consider the property investment market and any potential fluctuation in property prices.
Comparing the DPS with other payment schemes in Singapore
What are the different payment schemes available for condo buyers in Singapore?
Before delving into the DPS, it is essential to have an overview of other payment options in Singapore.
One of these payment plans is the “progressive payment scheme.
” Under this plan, buyers are required to make payments at different stages, which are tied to the progress of the construction.
Another option is the “stay then pay” or experiential leasing scheme.
This scheme allows buyers to move into the unit and enjoy rental income before fully paying.
A “reservation scheme” is also available, in which buyers can reserve the unit by paying a reservation fee, followed by the remaining 80% within two to three years.
How does the DPS compare to other payment schemes such as ABSD and property tax payments?
The DPS payment option allows interested buyers to defer payment for up to two years, starting from the temporary occupation permit (TOP) date.
Buyers only need to put down 20% of the property price and pay the remaining 80% two years later.
Compared to the ABSD and property tax payment, which are additional costs on top of the property price, the DPS is a preferential payment plan that eases the financial burden of homeowners.
What are the pros and cons of choosing the DPS?
The DPS has its advantages and disadvantages.
One of its benefits is that it can help buyers save on interest and allow them to prioritize their home loan repayment.
Additionally, the DPS is also an option for investors looking to purchase more than one property simultaneously, as they can take out several loans simultaneously.
However, buyers need to consider the potential risks of the DPS, such as an increase in the property price and the additional costs of the security deposit, which is 2.5% of the property price.
The role of property developers in offering the DPS
Why do property developers offer the Deferred Payment Scheme?
The DPS contributes to the marketing and sales strategy of property developers in Singapore.
Developers can attract more buyers by offering DPS, easing their financial constraints and encouraging them to invest in more properties.
Additionally, the DPS provides developers with a competitive advantage by enabling them to have a unique selling proposition that most developers do not have.
What are the requirements for property developers to offer the DPS?
The Singapore government regulates and oversees the property market, including DPS offerings from property developers.
To qualify for offering the DPS, developers need to apply for a license from the Singapore government’s regulatory body.
They must follow guidelines and rules the Monetary Authority of Singapore (MAS) set regarding DPS offerings.
How does the DPS contribute to the marketing and sales strategy of property developers?
The DPS is an effective marketing tool for developers to attract buyers.
It is an option that enables buyers to purchase a property without a large upfront payment.
Developers can also use the DPS to increase their sales volumes, particularly during the launch of new properties.
The promotion of DPS will capture a larger audience who may have yet to consider purchasing a parcel due to financial constraints.
Examining the impact of the DPS on property prices
How does the DPS affect property prices in the Singapore market?
The DPS has been known to influence property prices in the Singapore market.
Initial costs of properties that offer DPS are typically higher than properties with different payment schemes.
Additionally, buyers should consider that a longer deferred payment period would equate to higher overall payment, as the unit price will likely increase during the deferment period.
What is the correlation between DPS offerings and new launch condo developments?
The DPS is commonly associated with new launch properties, typically executive condominiums (EC).
The rate of developers offering the DPS has become increasingly prevalent in new launch EC developments.
Investors looking to invest in these properties should consider the payment option that best suits their financial capability and predict market trends to determine which option will result in significant gains.
What are the factors that determine the final price of the unit with DPS?
The final price of the unit with DPS is affected by several factors, which include market demand, the initial purchase price of the property, and the payment scheme.
Additionally, buyers must pay 2.
5% of the property price as a security deposit, which will be returned upon completion of the cost.
Maintenance fees are also required to be paid by buyers upon moving into the unit.
The regulations and guidelines set by the Monetary Authority of Singapore (MAS) for the DPS
What are the guidelines and rules set by MAS for property developers and buyers regarding DPS?
The MAS provides regulatory safeguards and guidelines to protect buyers under the DPS.
Property developers are required to provide full transparency to buyers, monitor the financial condition of buyers, and not offer DPS to buyers who might face financial difficulties.
On the other hand, buyers should only purchase a property they can afford and avoid making impulsive purchases.
What are the regulatory safeguards put in place to protect buyers under the DPS?
The DPS comes with regulatory safeguards to ensure buyers are not exploited or face financial issues.
Buyers must pay a security deposit of 2.
5% of the property price, which acts as a safety net in the event of default.
Developers are also required to monitor the financial health of buyers and ensure that buyers avoid incurring further debts across several diverse DPS schemes.
How does MAS ensure that property developers offer DPS in a responsible manner?
MAS ensures that property developers responsibly offer DPS by providing regulatory measures against DPS schemes.
Developers are required to follow the guidelines that MAS sets.
This includes undertaking purchaser assessments to ensure buyers can afford the property, monitoring financial status, and promoting DPS only as an option, not as a deal breaker.
Additionally, developers are required to provide full disclosure of relevant terms and risks to buyers, including their financial obligations as buyers under the DPS payment scheme.
Case study: The OUE Twin Peaks development and its DPS offering
What is the OUE Twin Peaks development, and how does its DPS offering work?
The OUE Twin Peaks development is a luxury condominium along Leonie Hill Road in District 9.
The developer, OUE, offers a “normal DPS” payment scheme in which buyers can defer payment for a maximum of two years after the TOP.
Buyers need only put down a 10% deposit and pay the remaining 90% two years later.
How has the DPS influenced the sales and marketing of the OUE Twin Peaks development?
Offering the DPS as a payment option for OUE Twin Peaks has proven to be an effective marketing strategy as it attracts diverse buyers interested in the property.
The DPS has contributed to the high sales volume of the development, with more than 400 units sold within two weeks of its launch.
What have been the reactions of property buyers to the DPS in the OUE Twin Peaks development?
Property buyers in the OUE Twin Peaks development have received the DPS positively.
The option to defer payment has allowed many buyers to afford the luxurious property, which would have been impossible under other payment schemes.
Buyers with stable financial status also recognize the benefits of the DPS in terms of saving on interest rates.
What is the DPS for Executive Condominiums in Singapore?
Understanding the concept of deferred payment
The deferred payment scheme is a payment arrangement where homebuyers pay only a portion of the purchase price upfront, and the remaining sum is deferred until later.
Under the DPS for ECs in Singapore, homebuyers must pay a 5% initial down payment, followed by another 15% within nine weeks of issuing the Qualifying Certificate (QC) or the Sale and Purchase Agreement (SPA).
The remaining 80% can be deferred for up to 2 years after getting the keys to the EC.
Eligibility criteria for the DPS
To qualify for the deferred payment scheme, homebuyers must fulfill several conditions:
- They must not own any other property, be it local or overseas.
- They must have not disposed of any property within the last 30 months.
- They must be Singapore citizens or Permanent Residents who form a family nucleus with at least one other Singapore Citizen or Permanent Resident.
Benefits of opting for the DPS
One of the main advantages of the DPS is that it allows homebuyers to stay in their current property while waiting for the EC to be ready.
This can be especially beneficial if the homebuyer has an outstanding home loan, as they can continue to service the loan while saving up for the down payment on the new property.
Furthermore, unlike the Stay Then Pay scheme, where interest accrues on the outstanding sum, homebuyers can save on interest repayments by opting for the DPS.
What are the considerations for buyers with an outstanding home loan when opting for the DPS?
Impact of outstanding home loan on Eligibility for DPS
Homebuyers with outstanding home loans may still be eligible for the DPS, subject to certain conditions:
- They must have stayed within the maximum borrowing limit of 30% of their gross monthly income.
- Their loan tenure must extend up to the deferred payment period.
- They must be able to pay the adjusted purchase price of the EC in cash (i.e.)
- , 20% plus stamp duties and fees) up front.
Stamp duties and fees for DPS
Homebuyers who opt for the DPS must pay the same stamp duties and fees as those who opt for the average DPS scheme.
This includes Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), and conveyancing fees.
However, these fees are paid pro-rata, with only the initial down payment (i.
e., 5%) subject to the total stamp duties and fees.
Calculation of upfront cash payment and monthly installments
Homebuyers who opt for the DPS must pay 90% of the purchase price within the deferred payment period.
This means they must pay a 1% booking fee, a 9% exercise fee at the end of the first year, and another 10% at the end of the second year.
In addition, they will need to pay monthly installments based on the deferred sum on a graduated schedule.
The exact amount of upfront cash payment and monthly installments will vary depending on the purchase price and deferred payment period.
How to manage the repayment of a home loan during the deferred period?
Importance of financial planning during the deferred period
During the deferred payment period, homebuyers must ensure sufficient cash flow to manage their existing home loan and the monthly payments under the DPS.
This requires careful financial planning, including setting aside a contingency fund and budgeting for unexpected expenses.
It may be helpful to seek the advice of a financial advisor or planner to ensure that you are on track to meet your financial goals.
Tips for managing cash flow during the deferred period
There are several strategies that homebuyers can use to manage their cash flow during the deferred payment period:
- They can use budgeting apps and spreadsheets to track their income and expenses.
- They can consider making lifestyle adjustments, such as cutting back on discretionary spending or downgrading their home.
- They can explore refinancing options to reduce their existing home loan repayments.
Risks associated with the deferred payment scheme
While the DPS can provide flexibility in managing cash flow, there are also risks associated with this payment scheme.
One of the main risks is the potential for the property value to decrease during the deferred payment period, which could lead to negative equity if the buyer needs to sell the property.
Additionally, the buyer may need help securing financing for the remaining 80% of the purchase price after the deferred period, mainly if their financial circumstances have changed.
What are the alternative payment schemes, and how suitable are they for buyers?
Understanding the different payment schemes available
Aside from the DPS, several other payment schemes are available for ECs in Singapore.
These include the average DPS scheme, the Stay Then Pay scheme, and the Mortgage Servicing Ratio (MSR) scheme.
Each project has advantages and disadvantages, and buyers should carefully consider which method best suits their financial circumstances.
Comparing the DPS with other payment schemes
Compared to the standard DPS scheme, the DPS for ECs offers more flexibility in managing cash flow, as buyers can defer payment for up to 2 years after getting the keys to the property.
However, the DPS requires a higher upfront cash payment (i.e., 20% plus stamp duties and fees).
The Stay Then Pay scheme may be more suitable for buyers with outstanding home loans, as interest accrues on the deferred sum.
Lastly, the MSR scheme is ideal for buyers who do not have an exceptional home loan and can make a 5% down payment upfront.
Which payment scheme is the most suitable for you?
To determine the most suitable payment scheme, assessing your financial circumstances, including your existing home loan, monthly income, and expenses, is essential.
Consider your short-term and long-term financial goals, such as building savings or investing in other assets.
Consultation with a financial advisor or mortgage broker can help you make an informed decision.
What does the future hold for the DPS and its impact on the Singapore property market?
Current market trends and future outlook of the DPS
The DPS for ECs has gained popularity among homebuyers in recent years, with several projects offering this payment scheme.
However, the government has implemented measures to moderate the property market, including tightening borrowing limits and cooling measures.
It remains to be seen how these measures will impact the adoption of the DPS.
The potential impact of the DPS on the property market
The DPS for ECs may impact the property market in several ways.
Firstly, it could increase the demand for ECs, particularly among buyers looking for more flexible payment options.
This could lead to further tightening of measures to prevent property market overheating.
Secondly, the DPS could potentially increase the risk of negative equity for buyers if the property value decreases during the deferred payment period.
Conclusion and final thoughts on the future of the DPS
Overall, the deferred payment scheme offers flexibility in managing cash flow for homebuyers looking to purchase an executive condominium in Singapore.
However, buyers should carefully consider the eligibility criteria, upfront cash payment, and potential risks of this payment scheme before deciding.
As with any investment, it is essential to conduct due diligence and consult with a financial advisor to ensure you make an informed decision that aligns with your financial goals.
Conclusion
In conclusion, the Deferred Payment Scheme (DPS) offers property buyers in Singapore a flexible payment method for purchasing condominium properties.
With the ability to defer a significant portion of the payment to a later date, DPS provides buyers with more financial flexibility and the opportunity to invest their remaining cash in other areas.
By spreading out payments over a more extended period, DPS helps buyers better manage their finances, especially if they face challenges with the initial down payment or balancing other expenses.
However, buyers must consider the risks associated with DPS, such as potential price fluctuations during the deferred period and the cash outlay required at the end.
Frequently Asked Questions
What is a deferred payment scheme?
A deferred payment scheme is a property payment plan that allows homebuyers to pay a portion of the property cost upfront and postpone the rest of the payment for a specified period.
How does a deferred payment scheme work for a condo?
With a deferred payment scheme for a condo, buyers typically put down 20% of the property purchase price and can defer the remaining 80% for some time.
During the deferral period, the buyer may pay a small amount of the property purchase price, usually around 2.
5%, due to construction periods and other charges.
What happens after the deferral period?
After the deferral period, buyers must pay the remaining 90% of the property purchase cost either in whole or with mortgage loans.
What is the advantage of a deferred payment scheme for a new launch condo?
A deferred payment scheme for a new launch condo provides buyers with an alternative payment plan to help them manage their finances better.
The system offers a discount on the property purchase price and ample time for buyers to care for their initial cash outlay.
What are the key terms of a deferred payment scheme for an executive condo?
With a deferred payment scheme for an executive condo, buyers typically put down 20% of the property purchase price and can defer the remaining 80% for some time.
The system allows buyers to pay the remaining 90% only when the property is ready, and they do not need to pay a 1.
5% interest cost during the deferral period.
What is the deferral period for a deferred payment scheme?
The deferral period for a deferred payment scheme usually ranges from 12 to 24 months but can vary according to property type, builder, and agreement between the buyer and seller.
Is a deferred payment scheme available for HDB?
No, a deferred payment scheme is unavailable for HDB flats as the government owns them.
It is only available for private condo and executive condo units.
What happens if I need to sell my property during the deferral period of a deferred payment scheme?
If the property is sold during the deferral period of a deferred payment scheme, the outstanding loan will be paid off from the sale proceeds.
In such cases, the buyer may get less or more than the original purchase price, depending on the rental market and property taxes.
Are there any additional charges for a deferred payment scheme?
Yes, under certain circumstances, there may be additional charges for a deferred payment scheme, such as late payment or prepayment fees.
Buyers should examine the contract’s fine print and discuss all the relevant details with their lawyer before signing the agreement.
