Whether you are first timer, upgrader or buying your second or third property in Singapore, you will be faced with a number of questions regarding financing and stamp duty/tax for the property. In addition, you still need to follow certain steps and submit necessary documentation in order to complete the purchase. In this discussion, we will breakdown the purchase in the following category to map out the finance need and steps in order to complete the purchase in Singapore.
- Buying HDB (BTO or Resale)
- Buying Executive Condominium (EC)
- Buying Private Property
1.A Purchasing new BTO is pretty straight forward base on quarterly release of BTO flats by HDB. Alternatively, one can also look up for sale of balance flats (SBF) provided by HDB that buyer let go or those remains unsold via https://homes.hdb.gov.sg/home/landing
HDB-EC MSR Loan Table
Before submit application in step 2 above, you need to check your eligibility to buy, loan from HDB/Bank and the Mortgage Servicing Ratio (MSR) base on the price quoted that you can pay for the HDB flat. You can reference the table above for the loan you can purchase base on your household income.
1.B For resale flat, the flow is a bit different and buyer may need to do a bit work to look for the HDB flat they want in the open market.
Do refer to the eligibility and grants to calculate the amount of money need to pay using CPF, Cash and monthly instalment for the HDB flat. https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/
If you are taking a loan from HDB, you only need to pay 10% using CPF and Cash. However if you are taking a loan from Finance Institution, you can only loan up to 75% of LTV and the other 25% pay using CPF and Cash. So after settling the loan, it is just a matter to ensure that the MSR (30% of Household Income) is sufficient to pay for the monthly instalments. To note that for resale flat, there is currently a practice of COV (cash over valuation) that you need to pay for some premium flats with better amenity and location. However you may need to do your due diligence on the property prior to making your purchase.
2. For those with a bit more budget and looking for a better lifestyle living, buying a executive condominium (EC) is a good choice. This is especially if you are buying a new executive condominium where the price is generally 20% cheaper than a condominium nearby and there is also CPF grants provided depending on your household income level.
Like a HDB flat, where you only need to make a downpayment (in Cash/CPF) of as little as 10%, you will need to make a downpayment of 25% when buying an EC. In addition, you need to ensure the MSR imposed by HDB (not TDSR) is sufficient to pay for the monthly instalments.
However there are limited new ECs and units in the market that are launched by Developers. In fact there is about 630 balanced EC units left as of 30 May 2021 from the 4 launched ECs ( Sumung Piermont Grand, Sengkang OLA, Tampines Parc Central and Sembawang Provence) recently. You may like to refer to Provence Residence (launched in May 21) via https://mindnwealthbuilder.com/is-new-executive-condominium-a-good-buy/ in Sembawang or Parc Central Residences (left about 20% unsold as on 30 May 2021) in Tampines.
Similarly you may refer to the HDB link for the eligibility to buy a new EC. https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/new/eligibility/executive-condominiums . For resale EC, the approach and way to purchase is similar to resale private property. You may refer to the goggle link for a more detailed perspective of buying an EC: https://drive.google.com/file/d/1DWgAWRSLq1jmsLzuftdjnFYA4Dco1lj8/view?usp=sharing
3. Lastly is the purchase of residential private property. Buying a new private property from Developer is quite a breeze with so many choices in the current market. You may refer to Propnex Realty Executive Director Kelvin Fong’s post below on the current private property market and if this the right time to made property purchase. https://drive.google.com/file/d/1z7SWDlP_RGOyYrjnvTXJgALuJXCpfkOG/view?usp=sharing
For buying a new private property, you can start by contacting the developer directly or any marketing agents for the property. It is quite similar to buying a resale property as follow, the main difference is the progressive payment involved for new private property beside resale property generally can be viewed on site while a new launched property generally is selected base on seeing the floor plan and renovated show-flats.
A the point of time, I need to stress the important of calculating your finances properly, whether you are first time home buyer or second time home buyer with/without resales of existing property. There is timing issue in term of payments, ABSD involvement etc that need to be calculate and times well. As such, it is important to seek out a experienced real estate agent that can help you did your finance calculation which go through your existing finances and work out the affordability and the CPF/cash needed to fund the purchase, including plan whether you intend to sell your existing property or not. The agent may advice you the timeline when you need the cash ready to pay for the various progressive down payment for new property too. A good agent will be able to recommend you solutions like Trustee, different share via Tenancy in Common (TIC) without decoupling or use of pledging/unpledged fund to purchase a private property.