Things to Consider Before Buying a Condo in Singapore

Purchasing investment property in Singapore can be a significant financial commitment, often requiring an investment exceeding a million dollars. While having the capital is essential, it's not the only factor to consider when buying a condo in Singapore. This guide will help you understand the eligibility requirements, various costs involved, and key elements to consider when securing a loan from a bank for your condo financing.

What is a Condo in Singapore?

Condos, or condominiums, are private housing properties in Singapore, comprising non-landed strata developments with multiple residential units. When looking to buy a private condo in Singapore, it's important to understand whether the property is a freehold or leasehold (99-year or 999-year) condo.

Freehold condos are more popular among buyers planning a long-term stay, making them ideal for HDB upgraders. Leasehold condos, on the other hand, might be more practical for those with budget constraints. Buyers can choose between new launch condos or resale units. New launches offer brand new facilities and early bird discounts, while resale condos allow for inspection of the actual unit before purchase, providing a clearer idea of aspects like sunlight, noise level, and any past defects.

Let's examine the differences between a new launch and a resale condo in Singapore.

Differences Between Condos and Executive Condos (EC)

If you thought that the condo house buying process is going to be that easy, you need to learn more! While both private condos and executive condos offer similar amenities, the rules and regulations for buying and selling them differ. Private condos can be sold to Singaporean citizens, permanent residents (PR), and foreigners without restrictions. ECs, however, are initially only available to Singapore citizens and PRs and can be sold to foreigners only after a 10-year period. ECs are typically 25-30% cheaper than private condos due to government subsidies.

Here's a brief comparison between private condos and executive condos:

Can You Buy a Condo in Singapore if You Already Own an HDB?

Yes, HDB flat owners can buy a private condo after completing the 5-year Minimum Occupation Period (MOP). Singapore citizens can retain their HDB flat and purchase a private property, but PRs must dispose of their HDB flat within six months of buying a private property. It’s crucial to note that buying a private property while owning an HDB flat involves significant financial commitments, including Additional Buyer’s Stamp Duty.

Condo Financing in Singapore

Worried about the condo downpayment in Singapore? Well, there are many other payments to watch out for! Understanding the financial requirements is essential when calculating the overall costs for buying a house condo. Here’s a breakdown of the costs involved:

• Purchase Price: Includes a non-refundable option fee (1% of the purchase price) to reserve the property. If you proceed, an additional 4% is required within 14 days.

• Buyer’s Stamp Duty (BSD): A tax calculated from the property’s market value or purchase price, whichever is higher.

• Additional Buyer Stamp Duty (ABSD): Varies according to citizenship status and the number of properties owned.

• Legal Fees: Typically ranges from $2,500 to $3,000 for conveyancing services.

• Maintenance Fees: Monthly charges paid to the Management Corporation Strata Title (MCST) for maintaining shared facilities.

• Property Tax: Based on the property’s annual rental value and tax rate.

Loan-to-Value (LTV) Ratio

The LTV ratio determines the maximum loan amount you can borrow based on the condo’s selling price. Under current regulations:

• First home loan: Up to 75% LTV if the loan term is under 30 years.

• Second home loan: Up to 45% LTV.

• Third and subsequent home loans: Up to 35% LTV.

Total Debt Servicing Ratio (TDSR)

The TDSR framework ensures borrowers do not exceed 55% of their gross monthly income in servicing their total debts, including existing loans and the new condo loan (including a big sum of condo mortgage rates). This measure helps maintain financial stability and prevent over-borrowing.

A condo downpayment in Singapore is the initial upfront payment made by the buyer when purchasing a condominium unit. It represents a significant portion of the total purchase price. It signifies the buyer’s commitment to securing a condo loan in Singapore

Discover essential tips for condo financing in Singapore, including insights on condo prices, mortgage rates, using CPF funds, down payment requirements, and securing bank loans.

Wrapping Up

Buying a condo in Singapore is a significant investment that requires careful financial planning and understanding of the house buying process. Ensure you meet the eligibility requirements and understand the differences between private and executive condos. Consider all associated costs and choose a financing option that aligns with your financial situation. With thorough preparation, you can navigate the complexities of purchasing a condo and secure your dream home in Singapore.