This fee reserves the flat that you wish to purchase. The size of the fee depends on the flat:
This is paid when signing the agreement for the lease. The amount will vary depending on whether you are:
Of the down payment sum, the amount paid in cash vs from CPF savings will be contingent on:
For an HDB loan:
For a Bank Loan:
Source: MoneySense.gov
The valuation fee is a report on the property being financed. This is owed to a professional appraiser.
The legal fee is for processing the mortgage on the property being financed. This is owed to lawyers. (This is sometimes covered by the bank you take the mortgage out with as part of a package deal, though naturally, you would need to use lawyers on their panel)
The stamp duty is a form of taxation owed to the government for the registration of the mortgage.
The insurance premium covers your property against multiple damages. Any lender will require you to sufficiently insure the property being financed. It is payable to an insurance company.
There will be ongoing expenses away from monthly home loan repayments. These should be budgeted for accordingly:
A potential decrease in property value could lead to the original LTV (Loan-to-Value) ratio being surpassed, meaning borrowers must be aware that there is a risk they may have to top up with cash to stay below their bank's maximum LTV.
If property prices fall, there is a risk, in the opinion of lenders, that those with a high LTV would not be able to cover their outstanding balance with the sale of their property. If you had an LTV at the HDB limit of 85%, then a 16% decrease in property value would result in the property going into negative equity, i.e. the sale of the property would not cover the outstanding balance. The risk taken on by lenders when lending to those with high LTV ratios is reflected in the higher interest rates they offer.
Photo by Aishah Rahman on Unsplash
Public housing has a Minimum Occupancy Period (MOP) of 5 years before you can rent the whole flat or sell it. You do not have to worry about a MOP for private housing, but there is a degressive Seller Stamp Duty (SSD) if you sell within the first three years:
SSD rates if you have sold property after owning for…
For public housing, you have a resale levy to keep in mind, which will lower your housing grants when you purchase public housing in the future. Housing grants are not eligible for private properties. However, you can get executive condominiums (ECs) grants, even though bank loans finance them.
Most of the time, foreigners cannot buy landed property. In addition, foreigners are not allowed to own HDB flats unless they marry a Singaporean. There is no ban on buying condos; however, you’ll have to fork out a sizable 60% Additional Buyer’s Stamp Duty (ABSD) on top of the selling price.
The ABSD also applies to Singapore Citizens and PRs buying their second homes and was first introduced by the IRAS in 2011 as a "cooling measure" to dampen surging demand for property in order to maintain affordability for Singaporeans.
HOUSING: UPFRONT COSTS AND ADDITIONAL TIPS! COMPLETED. ✅
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