How to buy a house in Singapore in 2020.

How to buy a house �� in Singapore in 2020.

In Singapore, buying a house is no easy feat. It takes months, or up to years, of planning, researching and saving the money in order to be close to calling a house your home.

To save you the brain drain, this article has concise the important information and translates them into simple steps to guide you in purchasing your first house in Singapore. With this guide, you will be able to buy the house of your dream and not suffer from buyer’s remorse.

1. Types of Property & Eligibility Requirements

HDB Public Housing

Over 80 percent of Singaporeans live in HDB public housing, it is one of the most common choices of housing in Singapore.

  • This is eligible for Singaporeans, who are at least 21 years old and within a family nucleus (spouse / parents and siblings / widowed). For those not within a family nucleus (single status), you will have to be at least 35 years old before you can purchase a HDB.
  • This is also only eligible for Permanent Resident (PR) Citizens, who must be within a family nucleus (spouse / parents and siblings / widowed).
  • This is not eligible for Non-Singaporeans.

Executive Condominiums

ECs are a type of public-private hybrid property, that have design and facilities that are comparable to a private condominium.

  • This is eligible for Singaporeans, same restrictions as purchasing a HDB flat.
  • This is also eligible for Permanent Resident (PR) Citizens, who must be within a family nucleus (spouse / parents and siblings / widowed).
  • This is only eligible for Non-Singaporeans when they purchase ECs that are a minimum of 10 years old.

Private Residential

The range of private properties consists of condominiums, apartments and landed houses. Most come with better amenities such as swimming pools, tennis courts, BBQ pits, gym, and security.

Regardless of your marital status, you will simply need to be at a minimum age of 21 years old to purchase a private property

2. The Cost of the Properties

The actual cost of a home in Singapore can vary significantly, based on factors such as location, facilities, accessibility to amenities (like MRT station), maturity of the estate, type and age of the property, and the condition of the unit.

In the tables below, we have simplified the latest property prices of HDB, ECs and private residences in Singapore.

2020 HDB Property Price List

Housing Type HDB BTO Flats (Non-Mature Estates)* [1] HDB BTO Flats (Mature Estates)* [2] HDB Resale Flats ** [4]
2-room From $89,000 From $90,000
3-room From $177,000 From $351,000 From $225,000 to $356,500
4-room From $272,000 From $395,000 From $339,000 to $728,000
5-room From $350,000 From $408,000 (2019 February Average [3] ) From $405,000 to $852,500
3Gen From $355,000 From $559,000 (2019 February Average)
Executive From $460,000 (2019 February Average) From $475,000 (2019 February Average) From $528,000 to $682,900
* HDB BTO flats listed above are based on February 2020’s HDB Launch price list, or otherwise state. ** HDB Resale flats listed above are based on the resale cases registered in the 1st quarter of 2020. RNR.SG

Latest HDB Executive Condominium (ECs) Price List

Housing Type Average Housing Price [5]
1-room From $420,000 to $560,000
2-room From $640,000 to $720,000
3-room From $776,000 to $960,000
4-room From $1.12 million to $1.4 million
5-room From $1.6 million to $1.76 million
Penthouse From $1.9 million

Latest Private Residential Property Price List

Housing Type Average Housing Price [6]
Condominium (Outside Central Region) $1.3 million
Condominium (Rest of Central Region) $1.6 million
Condominium (Core Central Region) $3.2 million
Terrace House $2.7 million
Semi-Detached House $4.1 million
Bungalow $11.7 million

On top of the actual price of the property, do not forget to factor in these additional fees into your budget. It may consist of legal fees, property valuation report, stamp duties, property taxes, maintenance fees, home insurance, and renovation costs, depending on the type of property you are moving forward with. Here is a list of some of the more pertinent additional fees you can be expecting.

Additional Expenses You Might Want to Include in Your Budget

Expenses Type Additional Amount
Stamp Duty for Agreement for Lease First $30,000 of property value: $0.90 per $1,000 Next $30,000 of property value: $0.72 per $1,000 Remaining Amount: $0.60 per $1,000
Caveat Registration Fee $64.45
Property Valuation Report Fee From $100 to $300 [7]
Option to Purchase (OTP) Fee 1% of the property price
Property Taxes Determined by your home’s Annual Value (AV)
Home Insurance From $45 to over $700 per annum
HDB Conservancy Charges From $20 to $90 per month
Private Residential Maintenance Fees From $200 to $400 per month

3. Payment and Loans

How Much Cash Is Needed To Buy A House In Singapore?

Now that we know the average cost of your future home, we next need to look at how we are going to afford it. Here’s a few things you need to note in order to gauge how much you realistically need in the bank to buy your first house, and what other expenses to prepare for.

Secure an Approval-in-Principal (AIP)

An AIP is an agreement with a bank. By securing an AIP, it ensures that the bank of your choice is willing to extend you a home loan when you need it. In Singapore, the AIP lasts 30 to 90 days. During this time frame, you are free to go house shopping with ease. Besides, it is completely free to get an AIP! SImply ask for it from your bank of choice.

However if you’re taking out a HDB loan, get a HDB Loan Eligibility letter (HLE) to certify that you are eligible to take a HDB loan. With this assurance, you are able to look at houses with a more informed choice of the budget you are able to have.

Mortgage Repayments

It can be intimidating looking at the total cost of a house in Singapore, hence it is important to figure out which mortgage repayments suit your situation.

Let us compare the HDB Concessionary Loan and Private Bank Loan.

HDB loans have more restrictions than a bank loan, such as it is only eligible for HDB flats, at least one of you must be a Singaporean, and your monthly income must not exceed $12,000 (or $18,000 for extended families), and more.

HDB loans have a fixed interest rate of 2.6%, whereas a bank loan interest rates usually fluctuate depending on the current Singapore Interbank Offered Rate (SIBOR) rates. There may be times when a bank loan can be better or worse than the HDB loan‘s fixed rate.

If you’re considering a HDB loan, there’s a minimum downpayment of 10% of the purchase price or valuation, whichever is higher. You can use your CPF to pay for your downpayment, provided you have enough savings in your Ordinary Account. You can also opt to pay in cash, or through a combination of both. For bank loans, the initial downpayment is 25% of the purchase price or valuation, whichever is higher. Of which at least 5% of this downpayment must be paid in cash and the remaining 20% can be paid with your CPF, in cash, or a combination of both. Furthermore, HDB loans have a higher loan-to-value (LTV) limit (up to 90%) than bank loans.

* Note that both the downpayment percentage shown is inclusive of the option-to-purchase (OTP) fee.

Besides that, there is no early repayment penalty for HDB loans, but for banks it is a hefty 1.5% prepayment penalty. Do take note that the faster you clear your debt, the less interest you end up paying and the more money you save for other expenses. If you’re anticipating a larger cash flow in the near future, it would be more suitable to get a HDB loan and plan to settle the debt quickly. In addition, HDB loans are more lenient when it comes to late repayment than bank loans.

* Note that you must use a private bank loan for ECs.

HDB Concessionary Loan Private Bank Loan
Eligibility only eligible for HDB flatsat least one of you must be a Singaporeangross monthly income must not exceed $12,000 (or $18,000 for extended families)* Only needs to run a credit check
Interest Rate Fixed at 2.6% Fluctuates between 1.3% to 1.7%, dependent on the SIBOR rates
Downpayment 10% can be fully paid using CPF, cash, or a combination of both 5% must be paid in cash, 20% can be paid in CPF, cash, or a combination of both
Loan-To-Value (LTV) limit 90% 75%
Early Repayment No penalty 1.5% penalty
Late Repayment 7.5% late payment fee per year $50 late payment fee per repayment

How Much Should You Be Earning To Buy A House In Singapore?

The calculations listed below are an approximation, with certain assumptions put in place.

  • Buyers do not get any government grants for HDB flats.
  • Buyers do not have any other loans to service.
  • Buyers consist of two working adults earning the same salary.
  • For HDB flats and ECs owners, we assume that they are paying the maximum amount of 30% of their gross total income, in accordance to the Mortgage Service Ratio (MSR).
  • For private property owners, we assume that they are paying the maximum amount of 60% of their gross total income, in accordance to the Total Debt Servicing Ratio (TDSR)

Do take note that with all assumptions, anomalies can appear as we are assuming an ideal situation. For this above scenario we assume, the owners must not have any other loans, in order to be able to allocate the maximum 30% (or 60%) of their gross total income towards repaying their mortgage fees. This is unlikely to be the case for many people, as there are other loans to consider, such as personal, car or even student loans.

Bear in mind, that these calculations also do not include other expenses, like renovations costs. To have a better grasp on whether you can afford the home you are intending to purchase, it is best that you calculate your own figures.

4. Home Inspection

How Are You Able To Choose A House That You Want To Call A Home?

Aside from the price, the type of property, and its amenities, it is also important to conduct a home inspection and determine whether it is a suitable fit for your situation.

Is the property’s layout suitable for the size of your family or the family you are planning to have?

Is it ideal for a multi-generation family?

Is the property equipped for air conditioning and Wi-Fi installation?

Are you looking to buy a house to rent to others, and earn a side income?

Are there recreational centres and facilities in the neighbouring area that are of your interest?

How accessible is your house from work, school, and mall?

Living near a MRT station is extremely convenient. You are able to save on commuting time and transportation costs, however, such properties tend to be more expensive. Research shows that properties located near MRT stations cost more, especially if it’s within 1km of an MRT station.

It is also important to note the long-term prospects of the property youre purchasing.

Considering purchasing a house for investment? It would be wise to buy properties in prime districts like the Central Business District (CBD). The actual MRT line also affects the property’s capital appreciation rate. For instance, properties along the East-West line are typically a better choice compared to the North-South line as it is much nearer to the CBD.

Therefore, by conducting a home inspection it allows you to make a more concise list of houses that you can buy.

5. Professional Advice

If you are still overwhelmed about the fees and costs involved in buying a home in Singapore, do not fret, there is always the option to turn to the professionals for help. Seeking professional advice is always useful and convenient, especially if you’re a first-time homebuyer.

A property agent can provide you layman information on the property market, the neighbouring area, and the buying process. They are able to empathise with you and provide you with customised advice that pertains to your current situation.

Buying a house in Singapore is a long and arduous process. A property agent can assist you through the tiresome but necessary paperwork. They can also represent you when negotiating and help make a fair offer of the house you want for you.

6. Conclusion

This is a preliminary guide to assist you in your house hunting. Before you invest in properties, it is always best to conduct thorough research first.

With a clearer understanding of the price and expenses needed to buy a house in Singapore, it allows you to make an informed choice of the type of house you want, what loan you should apply and who to seek out when you need expert advice. It saves yourself the heartache and time spent on looking at properties that are not within your budget

Buying a house in Singapore is long-term financial commitment for you and/or with your family. It is best to find a home that you can afford and live comfortably in for the long journey ahead.

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