What is the interest for a $1.4 million house loan for 3 years on a progressive payment new launch unit?

For a progressive payment new launch unit worth $1.4 million, the interest calculation over the first three years can be complex due to the staggered payment schedule and varying interest rates. Here’s a simplified breakdown:

Interest Rates

As of 2025, fixed rate mortgages for the first two years are around 2.45% to 2.60%. Here are some examples of rates from major banks:

- DBS: 2.50% fixed for the first two years, then 3M SORA + 1.00% thereafter.
- Maybank: 2.45% fixed for the first two years, then 1M SORA + 1.50% thereafter.
- OCBC: 2.60% fixed for the first two years, then 3M SORA + 0.50% thereafter.

Progressive Payment Schedule

In a progressive payment scheme, payments are made at various stages of the property's construction. Here is a general outline of the payment stages:

- Option to Purchase (5%): Paid upfront.
- Sales and Purchase (15%): Paid after signing the Sales and Purchase Agreement.
- Foundation (10%): Paid after 6 months.
- Unit Concrete Framework (10%): Paid after 1 year.
- Brick Walls (5%): Paid after 1 year 6 months.
- Ceiling / Roofing (5%): Paid after 1 year 9 months.
- Door / Window / Plumbing / Wiring (5%): Paid after 2 years.
- Carparks / Roads / Drains (5%): Paid after 2 years 3 months.
- TOP (25%): Paid after 2 years 6 months.
- Cert. of Completion (15%): Paid after 3 years 6 months.

Interest Calculation

Given the staggered payments, the loan amount drawn down at each stage will accrue interest. Here’s a simplified example using a fixed rate of 2.50% for the first two years:

Year 1

• Assume 20% of the loan ($280,000) is drawn down in the first year.
  • Interest for the first year = $280,000 * 2.50% = $7,000

Year 2

• Assume another 20% of the loan ($280,000) is drawn down in the second year.
  • Total loan drawn down = $560,000
  • Interest for the second year = $560,000 * 2.50% = $14,000

Year 3

• Assume another 20% of the loan ($280,000) is drawn down in the third year.
  • Total loan drawn down = $840,000
  • Interest rate switches to floating rate, e.g., 3M SORA + 1.00% = approximately 4.02% (using the current 3M SORA rate).
  • Interest for the third year = $840,000 * 4.02% = $33,768

Total Interest for 3 Years

• Year 1: $7,000
• Year 2: $14,000
• Year 3: $33,768
• Total interest for the first three years = $7,000 + $14,000 + $33,768 = $54,768

This is a rough estimate and actual interest may vary based on the exact payment schedule and the specific loan package chosen. It's advisable to consult with a mortgage specialist or use a detailed mortgage calculator to get a more accurate figure.