Step-By-Step Guide To Buying A Condo
- Pick your people
The first step to take in your home-buying process is to hire not just a real estate agent but a lawyer, so you have the assurance of professional guidance. If you take a bank loan, the bank will assign a lawyer to you.
You can look for an agent via the Council of Estate Agents (CEA), the governing body for property agents in Singapore; the council does not charge any fees for this.
- Pick a property
Now that you’ve assembled your house-hunting team, you are ready to shop for a new home.
Bear in mind that newer condos tend to be smaller than most four- to five-room HDB flats. If you have no problem with that and would prefer a brand new condo, you can check out any of the recent or new launches in the areas you would like to live, or read some of our reviews of new condos.
However, if you prefer to have more living space and do not mind an older resale condo, it’s easy to find one via our online listings. In general, older condos have larger living spaces and could potentially cost more than a newer condo.
- Mortgage stage
When you have picked a condo, you can “hold” it for two weeks so other potential buyers are not allowed to view it. This entails an option fee of one percent of the agreed upon price.
Within a month, you must secure your financing and pay a second option fee of four percent; failure to do so will see the first option fee you paid forfeited. Once you pay the second fee, a down payment of 15 percent (on your first property) or 45 percent (on your second property) is required. The rest will be loaned to you by the bank. Do note that both option fees must be paid in cash, while the down payment can be paid using a combination of cash and CPF funds.
You are allowed a maximum loan of 80 percent of the condo price if it is your first property, and 50 percent if it is your second. However, the Loan-To-Value limit has been changed as of July 2018. Please look at the table below for the revisions:
Updated as of July 2018 (Click for a bigger image)
There is also the Total Debt Servicing Ratio (TDSR). This means you can spend a maximum of 60 percent of your monthly income on repaying debts. However, if you are buying an Executive Condominium (EC), this figure is capped at 30 percent of your monthly income (inclusive of CPF contributions).
Depending on the length of your mortgage, you will repay your loan at a fixed amount every month, subject to your bank’s interest rate. This could take a maximum of 30 years, though your loan tenure depends on your age.
- Beyond the mortgage
Apart from your mortgage and TDSR, there are additional fees. There is the Buyer’s Stamp Duty (BSD), a compulsory fee for Singapore citizens buying their first, second and third homes, PRs buying their first, second and subsequent homes, and foreigners buying any home in Singapore.
This entails one percent stamp duty on the first $180,000 of the house price, two percent on the next $180,000 and three percent on the remainder of the price.
If you are a Singaporean buying your second residential property, you will be subject to 12 percent Additional Buyer’s Stamp Duty (ABSD); this rises to 15 percent if you are buying your third residential property.
PRs are subject to five percent ABSD on their first homes, and 15 percent ABSD on their second and subsequent homes. For foreigners, this figure stands at 25 percent. (Updated ABSD rates to reflect July 2018’s revisions)
- Final fees
To top it all off, you must settle your legal and agent fees. As per industry practice, if you have bought a resale unit, the seller will pay his agent, who will split the payment between himself and your agent. If you have bought a unit at a new condo launch, the developer will pay your agent.
As for legal fees, they do not comprise only payment to your lawyer, but also to the Singapore Land Authority (SLA), and mortgage duty to the Inland Revenue Authority of Singapore (IRAS). Your legal fees should not set you back more than $2,500, barring requests and requirements outside the norm.
- Awaiting the keys
Once you’ve settled the relevant payments and paperwork, you can take a breath and look forward to collecting your keys and moving into your new home. If you have bought a unit at a new development, you may have to wait two years or more before it is ready for occupation.
However, if you have bought a unit in a development that will soon achieve its Temporary Occupation Permit (TOP), you can move in as soon as a month after its TOP.
If you have bought a resale unit, chances are you can move in as soon as its previous owner has signed it over to you and given you the keys. Of course, if you choose to renovate it, you will have to wait a few months to a year before you can move in, depending on the extent of the renovations.
- Makeover time
If you choose to renovate your new home, you will have to either stay in your current home while waiting for renovations to be complete. If you have already sold your previous home and handed the keys over to its new owner, you will have to choose whether to live with family temporarily, or rent a place.
Of course, you also need to get in touch with contractors and interior designers, and shop for furniture. While consulting an interior design firm is not a must, it can help if you are lacking inspiration, or are unsure how to execute your ideas.
In any case, be sure to do your research beforehand, and stick to contractors and interior design firms that have a good reputation and track record. They may cost more, but will save you money on repairs in the long run.
- Moving in
Ensure you are prepared to move in before the day itself. Make a list of all the items you want to move into your new house, categorise them and pack them accordingly so you will have an easier time unpacking. Packing materials like newspaper, bubble wrap, boxes and tape are essential, as are trustworthy movers.
Many people prefer to save money and seek help from their friends to move, but otherwise, you can hire professional movers. If you are doing the latter, contact a few reputable moving companies and have its movers assess the items you are going to move so they can give you a quote.
Good movers will not only transport your belongings to your new home in a timely fashion, they will also treat them with care and help you pack and unpack the heavy, bulky items.
Are you Investing or Gambling?
Property Investment is never about luck or emotional buying. On many occasions, we see consumers hopping from different new project show units just to find “the Right One”. But how exactly will this “Right one” presents itself in the face of consumers?
If you had answered “Ambience” and “Feel” of the unit, you are emotional buying. Many times, these feelings have clouded the analytical skills of the consumers, making them overlook other critical aspects such as the land appreciation, location, sensitive pricing/discounts and market sentiments. By the time when the consumers are prospecting for new house, they will themselves in situation where their current property is not fetching the desired price and they have missed the opportune time to enter the market.
Real investors are clear with their goals and what they want out of their property investments. They do not rely on hope that the market will one day, change in their favour. Rather, they are aware of the cycle and when to make the “Right move”.
So, are you an investor or gambler? If you are determined to be a savvy investor, you will definitely be interested in the following.
How do you Determine the Right Cycle, the Right Time and Right Price to Enter?
At the first, second and even third glance, you may not be able to figure out all the information which this chart is trying to convey. However, if you study in detail or with some guidance, you will be able to mark out a certain trend that is brewing in the market.
Based on this cycle, you can also identify the best opportune time and price to enter the market.
So the Question now is:
Is This the Right Time to Buy in Today’s Market?
Just understanding the cycle is not sufficient.
Here are the 5 Essential Elements which you Must Know in order to build Successful Investment Portfolio in CCR Segment:
1. What are the Impacts of the Latest Announcement of the Reduction in Government Land Sale?
2. Supply vs Demand
Should we buy when the supply is plenty in the market?
3. Location vs Entry Price
Which is more important? Many always think that buying a good location near MRT is the safest bet as it is easier to rent out. However, is that really true?
4. New Launch vs Resale Property
Are you aware which one is likely to drive higher profit margin?
5. How can we secure the First Mover Advantage?
