Here are the procedures in buying a property in Singapore.
Step 1 : Check your eligibility
Firstly, you have to check if you are eligible to purchase a private property if you currently own a HDB/DBSS or EC. You will need to fulfill the Minimum Occupation Period before you can even book a unit. If you do not own any HDB/DBSS or EC, these rules will not apply to you.
Here, if you are a permanent resident or foreigners. You are not eligible to purchase a landed property in Singapore. As landed property is limited in numbers and are exclusively reserved for citizens.
However, if you are a permanent resident or foreigners, you are eligible to purchase most type of private property in Singapore be it residential, commercial or industrial spaces.
Step 2 : Determine Your Budget
Next, you must decide how much you can afford to spend on your property. This will be assessed through your monthly income after deducting your monthly expenses.
For most property purchases, there is a 25% down payment. The first 5% has to be in cash followed by the remaining 20% which can be either cash or CPF. The remaining 75% will be in loan. Your loan amount will be subjected to a Total to Debt Servicing Ratio (TDSR) regulated by MAS.
If you are a foreigner taking a loan from a local bank. Your Loan to Value (LTV) will be significant lower from 50% to 70% depending on your income. Please check with a mortgage broker for an assessment.
In addition, if you have an existing mortgage loan, your Loan to Value (LTV) will be significantly reduced.
a) For individual borrowers who have no outstanding housing loans, the LTV limit will be 75%, or 55% if the loan tenure exceeds 30 years.
b) For individuals obtaining a second housing loan, the Loan-to-Value (LTV) limits will be 45%, or 25% if the loan tenure exceeds 30 years.
c ) For individuals obtaining third or subsequent housing loans, the LTV limits will be 35% or 15% if the loan tenure exceeds 30 years.
Keep in mind that there are also additional costs associated with buying a home such as stamp duty, legal fees, etc.
It will be advisable to speak to a mortgage broker or us to understand your finances better.
Step 3 : Get An In-Principle Approval
Before you even start viewing houses, it will be advisable to secure a bank’s in-principal approval on your loan. Here, you may need to submit your monthly pay slips, CPF contribution (if applicable) and other documents to a mortgage broker. They will work out the sum that you can borrow. This in-principal approval will give you an idea how much you can borrow and what is the maximum purchase price for your property.
Step 4 : Research The Market
Once you have determined your budget and chosen your ideal property, it is important to research the market in which your property is located. You will need to consider amenities such as public transport, proximity to places of work, schools, markets and shopping centers. Some will consider the tenure, size of the development and facilities. External factors such as noise and smell affecting the property may also be your consideration.
If you are not well versed in any particular area, you may like to consult us for your housing needs. We can help you to shortlist suitable properties based on your budget and provide you with insightful information on the neighbourhoods that are not easily accessible to the general public.
Step 5 : Viewing
House hunting is always fun but also equally stressful. That is why it is important to have a clear approach, or else you will be wasting a lot of time. If you have an ideal location in mind, it will be good to view some of the houses in that locality first. Subsequently, shortlist a few projects that are suitable to your budget and preferences.
If you do not have an ideal location in mind, it will be good to select a few units in the various location to view first. It is important to shortlist a few projects that fit your criteria and slowly zoom in to that location. A rule of thumb is to view appropriate 20 to 30 houses before committing a unit. However, a word of caution – viewing too many properties may lead to viewing fatigue and frustration in the entire property hunting process.
Step 6 : Booking A Unit
If you are buying a new home, you will need to pay a 5% booking fees to the developer. Most new homes have fixed prices although some developers may give a small discount. The space for negotiation is pretty limited. The developer will issue you the Option to Purchase (OTP) in return for your booking fees. In the meantime, you will need to finalise your mortgage and obtain the banks letter of offer. The developer will subsequently send you the Sales and Purchase agreement (S&P) to your mailing address or through your solicitor in the next 2 weeks. You will be granted 3 weeks to sign on the S&P and make payment of the remaining 15% fees within 9 weeks from the booking date.
In any event if you decide not to proceed with the purchase after paying the 5% booking fees, the developer will have the right to forfeit 25% of the booking fees. (1.25% of the purchase price)
You will need to service the mortgage repayment accordingly to the different stage of the construction progress.
Step 7 : Key Collection
Once the development receives its Temporary Occupation Permit (TOP), your solicitor will advise the instruction to collect the keys for your new property.
You may proceed to move in or start finding tenants for your property.