A Building-Under-Construction (BUC) unit is a unit that is in the course of being constructed.
This means that you’ll have to wait for the property to be fully built before you can truly call the place your home. Nonetheless, the good things in life are always worth the wait.
Here’s our 10-step guide to help you on your journey to purchasing a private BUC.
Step 1: Get an Approval-in-Principle (AIP)
An AIP, sometimes known as In-Principle Approval (IPA) or pre-approval, is a negotiated arrangement with a bank. The bank would do a credit assessment to see how much the bank can lend you when you intend to buy a house.
This statement is usually valid for between two weeks to 30 days, varies among banks.
Step 2: Go house shopping
Visit the show-flats to gain a better understanding of what the apartment has to offer.
This includes the general layout of the house, the range of amenities available in the neighbourhood and most importantly, the price tag.
Step 3: Get an OTP
If you come across a development that’s to your liking and fits within your budget, make a booking on the spot and pay the 5% booking fee.
Once you’ve paid the booking fee, you can take home the Option to Purchase (OTP) and wait for the Sales and Purchase Agreement. You’ll be on your way to becoming a house owner very soon.
Step 4: Receive the Sales and Purchase Agreement (S&P)
While waiting for your S&P to be delivered to you, start researching and applying for a bank loan. The bank will then issue you a Letter of Offer (LO) to forward to your conveyancing lawyer.
Not sure which bank is the right one for you? Let our mortgage brokers at FinanceGuru help you compare loans and interest rates.
Step 5: Exercise the S&P
Once you’ve received your S&P, you’ll have 3 weeks to sign and submit all the documents and payments required to exercise the S&P successfully.
You can choose to go through it on your own, or get your lawyer to go through it with you. It’s preferable to go through it on your own as your lawyer’s law firm may not be in the panel of the bank you’re taking a loan from.
By doing it yourself, you need not restrict yourself to taking out a loan from only a certain number of banks, thus keeping your options open.
Step 6: Pay Stamp Duty
Next, you’ll have to pay the Buyer’s Stamp Duty (BSD), as well as any Additional Buyer’s Stamp Duty (ABSD) if necessary. If you’ve engaged a lawyer, you might also need to pay your legal fees.
Step 7: Pay 15% downpayment
From the date of your OTP, you’ll have about 8 weeks to pay the downpayment of 15%. You can choose to pay off this amount using both cash and CPF.
Step 8: Begin your progressive payment scheme
Once you’ve paid your downpayment and all the necessary fees, and your OTP has been exercised, it’s time to wait while your property is being built.
Your bank will be disbursing your home loan each time a progress payment is called for. This will depend on the stage of construction. The order of disbursement is as follows:
- Bank loan
Here’s a timeline of the order of disbursement based on the following example:
- Ms Low purchases a BUC for $1,000,000.
- She took a 50% loan, and her CPF Ordinary Account has $100,000.
|Amount payable||Payment milestone||Disbursement order|
|10%||Completion of foundation||Cash|
|5%||Roofing / Ceiling||CPF|
|5%||Electrical wiring||Bank loan|
|5%||Car park, roads, drains||Bank loan|
|25%||Temporary Occupation Permit (TOP)||Bank loan|
|15%||Certificate of Statutory Completion||Bank loan|
Step 9: House completion
After the long wait, your TOP will be issued, and it’s time for you to collect your keys and start shopping for your furniture!
Step 10: Inspect your home
Congratulations on your new home! Before you move in, inspect your home thoroughly and look out for any defects. You can get the developer to rectify any defects free of charge as long as it’s within the Defects Liability Period (12 months from the date of TOP).
We hope that this guide has served you well. If you want to know more about the nitty-gritty details involved in purchasing a private BUC that we have not included here, feel free to contact us for a chat.
Read our guide on purchasing an HDB resale flat here.
Read our guide on buying a resale private property here.
Have some mortgage questions? Here at FinanceGuru, we seek to help you better prepare for your finances and the upcoming milestones in your life. Get a non-obligatory assessment and loan product recommendations here.