Understanding Developer Interest Bearing Scheme (DIBS)
Recently more and more developers are offering DIBS for their new development to customer and buyer. Some even giving option to the buyer to choose either a package with DIBS of no-DIBS. In an nutshell, DIBS means developer will bear the home loan interest of the buyer during the construction period.
In conventional way, when you purchase a property, you would need to pay 5% – 10% of downpayment and to borrow from a bank for the remaining property price. During the construction period, you pay only on the interest and not the principal of the loan. So all payment throughout the construction period (24-36 months) are gone without reducing your loan principal.
Under DIBS, developer will pay the monthly interest until completion of the property. This means buyer do not have to serve and pay home loan interest, and that excess money can be utilised in different ways, such as putting the money into fixed deposit or unit trust to generate interest or dividend until the property completed.