If you plan to buy a resale condo in 2023 but don’t know where to start, this guide will help you make this major life decision and navigate the complexities involved.
Have you been eyeing that private property on a real estate portal? Take action now. With just a few simple steps, you can make it yours. These steps will walk you through the entire home-buying process, from starting your financial planning to collecting the keys at the end.
Table of Contents
Step 1: Start Your Financial Planning
Calculate the maximum home loan amount and highest property purchase price you can afford based on your income, age, and loan commitments.
Some financial expenses you need to be aware of:
- Buyer’s Stamp Duty (BSD): Calculated based on the higher of the property’s purchase price or market value.
- Additional Buyer’s Stamp Duty (ABSD): If you are a Singapore Citizen buying your first residential property, you do not need to pay ABSD. However, Singapore Permanent Residents (PRs) and foreigners need to pay ABSD of 5% and 30%, respectively.
- Total Debt Servicing Ratio (TDSR): This determines the maximum loan amount you can get from a financial institution, which must ensure that all your monthly debt repayments (including home loans, credit card bills, car loans, and personal loans) do not exceed 55% of your total monthly income.
- Loan-to-Value (LTV) Ratio: The LTV limit for your first home loan is 75%. If the price you pay for the unit is higher than its valuation, you will need to cover the difference out of your own pocket.
Related Articles:
Find the best mortgage rates from all banks in Singapore on AnjiaSG. We will compare different loan packages for you, all at your service, and recommend loan plans that match your eligibility. We will assist you in obtaining an In-Principle Approval (IPA) for the loan amount from a financial institution.
Obtaining an IPA depends on your financial capacity and credit history. The approval process can take 7-30 days, depending on your financial situation, the accuracy of the information you provide, and whether you have submitted all the required documents.
We recommend applying for a higher IPA amount at this stage because you can request a lower amount after approval. However, once you have paid the deposit, successfully increasing the amount is not guaranteed.
Related Articles:
Doing so ensures you won’t lose the Option Fee, which is typically 1% of the purchase price. You will need to pay the Option Fee once the seller grants the Option to Purchase (OTP).
Step 2: Begin Your Property Search
Conduct market research on property platforms, filtering listings that match your preferences and needs in terms of location, budget, and size. AnjiaSG’s property listing platform also provides detailed filtering options to help you find your dream home.
If you don’t have enough time to browse through thousands of listings, you can contact AnjiaSG’s real estate experts to help you recommend suitable properties.
Step 3: Make an Offer
Make sure you have done your market research, which means checking recent transaction prices and current market rates.
Once you find a property you like at a price you are happy with, you can make an offer!
After negotiating and agreeing on the property price with the seller, the seller will issue an Option to Purchase.
Step 4: Obtain the Option to Purchase (OTP) and Pay the Option Fee
An Option to Purchase (OTP) is a legal agreement between you (the buyer) and the seller regarding the purchase of a private property.
Once the seller grants the OTP, you will need to pay the Option Fee, which is usually 1% of the purchase price. After this, you have successfully expressed your intention to buy this private property, and the seller is not allowed to issue an OTP to other buyers.
Step 5: Engage a Lawyer
At this stage, you need a lawyer to assist you in exercising the Option to Purchase on time and completing the rest of the conveyancing process. This includes legally transferring the seller’s ownership to you, the buyer.
If you will be using your Central Provident Fund (CPF) and/or a housing loan to buy the property, you might consider engaging a law firm from the panel provided by the CPF Board and your bank. Doing so can save you several hundred Singapore dollars in legal fees by ensuring you don’t need to hire two separate lawyers to handle these matters.
Step 6: Exercise the Option to Purchase
You will have 14 days to exercise the OTP and prepare the remaining 4% of the down payment, paid by Cashier’s Order. This process must be completed by your conveyancing lawyer, who will deliver the cashier’s order to the seller’s lawyer.
To avoid delays, we recommend that you hand over the 4% cashier’s order to your lawyer at least one day before exercising the OTP.
If you decide to back out of purchasing the resale condo, you must first inform the seller that you will not be proceeding with the purchase. You can let the OTP expire, thereby forfeiting the 1% Option Fee.
Step 7: Pay Stamp Duties and Legal Fees
The financial expenses mentioned in Step 1, such as Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) (if applicable), are based on the higher of the property’s purchase price or market value.
Your legal representative will inform you when the payment is due. This is usually within 14 days of exercising the OTP. If you fail to pay on time, you will face penalties and enforcement actions from the Inland Revenue Authority of Singapore (IRAS).
Step 8: Complete the Purchase and Collect Your Keys
Once you have made the final payment and your housing loan has been disbursed, you will reach the long-awaited moment—collecting the keys to your new home.
This process will take about 8-12 weeks (depending on the agreement between you and the seller, calculated from the date you exercise the OTP). Your lawyer will inform you when to collect the keys on the completion date.
Frequently Asked Questions (FAQ)
-
When is a good time to buy a condo?
Opportunities exist in any market condition.
-
What are the costs involved in buying a condo in Singapore?
Besides the purchase price, please set aside funds for Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), as well as legal fees and mortgage costs.
-
Can foreigners buy a condo in Singapore?
Yes. Under the Residential Property Act, foreigners can purchase condominium units without prior approval. It is also important to note that being allowed to purchase a condo does not exempt one from paying ABSD.
For further enquiries, please get in touch:
WeChat: sgleokwek
Telegram: sgleokwek
WhatsApp: Message us
