#215 Things I Wished I Knew Before Purchasing a Home in Singapore
Friday 11 June 2021
Friday 11 June 2021
[edit] Also, disclaimer that my agent did his due diligence to present to me the market direction etc. so this spur of the moment purchase is just because of who I am by nature and not because I was coerced or pressured into buying the place, LOL.
For context, I'm a first time home buyer, purchasing a new condo launch (so this won't cover the process for resale/BTO - which I believe differs slightly). I am also by no means an expert in this field. These are just bits and pieces of information I've accumulated through some research but mostly through the incessant hounding of my housing agent, legal team and bank representative.
Yellow = key terms/documents to note; Orange = additional costs to consider beyond just the price of the home.
THINGS TO KNOW AT THE START
Bank Loans:
Administrative Payment Details:
Renovation:
TO END OFF
THINGS TO KNOW AT THE START
Everyone knows the basics right, but I'm going to cover it anyway.
5% cash downpayment + 20% cash/CPF downpayment = total 25% downpayment required (when purchasing a new launch).
• First 5%: this has to be paid before the developer grants you the option to purchase (OTP) - a document you'll need for housing bank loans (you'll exercise the OTP at the law firm thereafter).
• Subsequent 20%: 15% has to be paid ~8 weeks after you receive (not exercise) the OTP + first 5% of your progressive payment
Earliest Milestones:
• You should receive your sales and purchase (S&P) agreement from the developer ~2weeks after your OTP is granted.
• You'll need to sign the S&P ~3weeks after, once your legal team has reviewed the document. During this time is also when you'll need to pay your legal fees (amount depends on the firm you go with and the type of housing you purchase). At this stage, you can consider issuing a cheque for the 15% downpayment, but backdate it (for another 3 weeks) to avoid multiple trips to the law firm.
• However, it is usually advised that you go down to the law firm within a week (instead of 3 weeks) to sign the S&P if you're using CPF to finance the 15% downpayment as there is lead time required for the CPF to be disbursed.
• It's best to get a law firm that falls under both panels (CPF + the bank you're taking a loan from). Otherwise, there may be additional handling fees incurred from both CPF and the bank. You should negotiate for a flat fee that covers all of these if the law firm isn't on either or any of the panels.
• Your buyer stamp duty is due ~2weeks after you've signed the S&P - this can be calculated by your agent/do it yourself by googling
Bank Loans:
• Figure out which bank you want to take your housing loan from.
• There'll be a lot of new acronyms/terms to familiarise yourself with, don't be shy to ask for the bank representative to speak to you first to address all your questions (I had a lot to ask).
• Things to ask: partial repayment arrangement, conversion options, fire insurance waiver (only for condos), valuation fee
• Fixed vs Floating: for new launches, you can only do a floating rate until the development reaches TOP. Thereafter, you can consider switching to a fixed rate if the rates are low at the time of TOP. Check with your bank for the duration of the fixed rate.
• Once you've applied for the loan, the bank will review the application and approve it before you can receive your letter of offer, which you need to share with your lawyer.
• The maximum loan amount is determined by your monthly gross salary (+ a bunch of other factors) so you'll need to have documentation like your last drawn salary and CPF contribution on standby.
• There is also something called mortgage stamp duty to take note of (different from buyer stamp duty), this is commonly pegged with your legal fees, but it's always best to clarify.
Administrative Payment Details:
• CPF: the first lump sum deduction (for the downpayment) should be handled by your lawyer. You'll manage all subsequent deductions that goes towards your monthly mortgage. Your agent should guide you on this. I believe that there's a link for you to login to the CPF website and determine the monthly amount you'll like to deduct from your CPF contributions to finance your mortgage.
• Progressive Payment (for new launches): depending on when you make your purchase, you'll need to check which portions of the progressive payment has already been called for - the amount that has been called for will be due for payment already. Why this matters - the stage of the progressive payment determines how much your monthly mortgage is, and will continually increase until the certificate of statutory completion (CSC) - usually a year after the development TOPs.
• Monthly Mortgage: the bank should issue you a monthly email informing you of the total amount due (this fluctuates depending on the market interest rate, as long as you're still on the floating package). Depending on how much of your CPF will be used to finance your monthly mortgage, the outstanding amount (if any) will be paid off in cash. I believe that a separate account will be set up by the bank for the payment scheduling. You'll have to deposit/transfer money into that account to manage the payment.
Renovation:
This is a tad premature considering I still have 18 months before TOP. From what I've gathered, you can start speaking to IDs 3 months before TOP. It's good to start thinking about the kind of work you want to get done (as I'm sure most people naturally would) because the extent of work will help you estimate your renovation budget (and hence help you start mapping out a savings roadmap).
I might do a separate post on renovation, but a tip that a lot of friends shared is to live in the space first before determining if certain features are a necessity. Personally, this will be to see if an automated drying rack needs to be installed in the balcony (cause I have no yard and I'm not sure if everything can be solved by the dryer), if I want 3M window films to block out heat/UV rays, and the types of kitchenware I'll need.
Things you might want to consider ahead of time: rough layout of the space, electrical points/cable management, the kind of furniture you want (including light fixtures) and overall storage solutions (especially if you're going to live in a shoebox like myself).
I hope this has been helpful for at least one person to go through. Please know that not everything will be 100% accurate.
You might want to speak to other people as well to get a different perspective on things.
If you just so happen to be looking for an agent, you can consider working with mine. He did a really good job explaining the current climate and logic behind purchasing and housing prices in SG etc. I appreciated the fact that he let me come to my own decision and didn't pressure me in any way when making a purchasing decision. He's been super helpful with my millions of questions and I trust (and hope) that he'll continue to be helpful even after he collects his commission, LOL. Details below for whoever is interested.
Name: Darren Goh ☎: 8223 5798
XOXO, T.
written at 11:32 0 comments
