The trend of investing in new condos in Singapore is on the rise, with people recognizing it as an excellent way to boost their income or secure a private residence. In 2023, more than 30 new projects are set to hit the market. If you’re new to this arena and have the financial capacity to explore new launch properties, you might be curious about the entire process and the associated costs. This step-by-step guide is here to assist you in realizing your dream of owning a private property in a professional and easily understandable manner.
The initial step is to evaluate your financial capabilities and determine the maximum home loan amount and property purchase price that align with your income, age, and existing loan obligations. Two critical factors to consider are the Total Debt Servicing Ratio (TDSR) and the Loan-to-Value (LTV) ratio.
The TDSR ensures that borrowers do not allocate more than 60% of their gross monthly income to repay all their loans, including home loans, car loans, and credit card bills. It is designed to prevent borrowers from accumulating excessive debt.
The LTV ratio allows you to borrow up to 75% of the property’s value for your initial housing loan through a bank loan. However, the LTV for the second housing loan is significantly lower. If you plan to purchase a third property, the LTV limit is 35%.
For property owners intending to use CPF savings for their existing property, they have to put aside half their CPF Minimum Sum before utilizing the excess savings in their Ordinary Account for subsequent properties. Keep in mind that the CPF Minimum Sum is adjusted every July, so it’s advisable to obtain an approval-in-principle (AIP) from a bank at this point.
Before succumbing to the developer’s marketing tactics, it’s crucial to consider various factors to make an informed decision:
When you set an appointment with me, you’ll benefit from a comprehensive tour with professional guidance to ensure your needs are met. My insights are exclusive and unbiased, simplifying the buying process by conducting thorough research and comparisons for your convenience.
Above Payment Schedule is based on $2m Purchase Price, 4% Interest Rate, 75% Loan
When purchasing a new condo in Singapore, a 5% cash deposit is required upon booking and signing on the Option to Purchase (OTP) to confirm the unit. If you choose not to proceed with the purchase, a portion of your booking fee (usually 25%) will be forfeited.
Once you have a copy of the OTP, you can proceed to finalize your loan for the new launch condo. The bank will provide you with a Letter of Offer outlining the loan terms. You’ll also need to engage a solicitor to represent you in the purchase and handle conveyancing matters.
The developer will provide you with the Sales & Purchase Agreement (S&P) within two weeks of receiving the OTP. After you receive the S&P, you’ll need to sign it and exercise the OTP within three weeks.
Following the OTP signing, you have eight weeks to pay the remaining 15% down payment (known as the exercise fee) in cash or CPF. You’ll also be required to pay the Buyer’s Stamp Duty (BSD) within two weeks of signing the S&P.
From this point forward, you’ll need to make payments progressively. The payment plan for purchasing an uncompleted property or BUC is as follows:
You may utilize the funds from your CPF Ordinary Account to cover expenses related to stamp duty and legal fees. However, keep in mind that due to the restricted timeline for payment of BSD/ABSD, the initial payment must be made in cash, with CPF reimbursement afterward. CPF board cannot disburse the funds within the specified timeframe.
After obtaining the Temporary Occupation Permit (TOP), the developer will notify you and set a date for you to collect the keys to your newly purchased property, marking the successful conclusion of the new launch condo purchase process.
By following these guidelines and steps, you now possess all the necessary information to become a well-informed and knowledgeable property investor.
If you’re contemplating your next move in the real estate market, you may be wondering whether it’s the right time to buy or sell. Every individual’s situation is unique, and what works for one person may not necessarily work for you.
I can provide you with valuable on-the-ground experience and a data-driven approach to offer clarity and direction. Whether you’re a beginner or an experienced investor, our top-down, objective approach will guide you on your real estate journey.
shawnteo@shawnteo.com
+6585008808
