Thinking about buying property in Singapore? Hold up! Before you rush in, there are a number of factors you will need to consider. Whether it's applying for a property loan, finding the deposit, or stamp duty, here are some things that you should know before you take the plunge.
1. Finding a good real estate agent
Singapore is a popular country to purchase property in as the standard of housing here is generally of a good quality. However, the property market can be confusing to say the least, and prices will fluctuate depending on location and various other factors. To help you along the way, we recommend that you select a good real estate agent to guide you through this difficult process. You'll need to find an agent who is familiar with the area of Singapore you are interested in, as well as one who is a member of the IEA, or Institute of Estate Agents. When talking with the agent, be specific about what you want so that problems don't develop further down the line.
2. Make sure the seller actually owns the property
Singapore differs from some other countries in that the seller isn't always entitled to sell the property if they don't own it. Make sure you check this when looking for a house as this can often complicate the entire process. Remember - if a private property has been mortgaged to a bank and the seller has lost money on its sale, they may not be able to sell the property if they can't make up the shortfall on the loan. There's also a minimum occupation period where the seller of an HDB flat has to reside in the property before they can put it on the market. Your real estate agent should help you with all of this, but if in doubt, you can always check for yourself.
3. Decide between property and location
It's hard to find the perfect home anywhere, and this is also true in Singapore. Depending on your budget, you might need to make some important decisions before you begin your property search. Ask yourself the following question: what's more important to you - location or the type of property? This will help you with your search and narrow down what's available on the market. If you are looking for something larger, you might not be able to afford a home in a more desirable or centrally located area, and vice versa. Deciding between property type and location can often be difficult, so consult with friends and family members if you are unsure.
4. Getting the deposit
You will need to place a deposit on the property you are interested in, and this amount will differ depending on the type of property you are looking for. For example, HDB resale flats in Singapore have a maximum deposit of $5,000, while private properties usually require a deposit that is one per cent of the purchase price. When buying property in Singapore, note that a deposit is sometimes called 'option money'.
5. Financing your move
The Total Debt Servicing Ratio in Singapore can affect your loan eligibility, and is dependent on your monthly income and liabilities. Before you approach lenders, you might want to use an online calculator to work the maximum loan you can take. There are plenty of these available and they are usually free to use. Once you have worked out this calculation, you will be able to approach different financial institutions and apply for a mortgage. A good real estate agent can work out the calculation for you and advise you on the current promotional bank interest rates.
6. Sort out stamp duty
In Singapore, you will need to pay stamp duty on the property you are interested in, using the formula 3% of purchase price minus $5,400 if the property is over $360,000. Additional Buyer Stamp Duty will need to be paid by certain groups of people, in addition to the regular buyer's stamp duty. These include permanent residents, foreigners and Singaporeans who are purchasing a second property. Work out your finances before you apply for a property. It is advisable to work with an experienced agent to get the stamp duty sorted out.
7. Viewing the property
You will need to feel comfortable in the property before you commit to buy. Arrange a viewing with your estate agent, and go for a second look if you want to. Pay close attention to any repair work that needs to be done to the house, as this could cost you a significant amount of money once you've moved in. Engaging an agent to arrange all your appointments is highly recommended since you need not pay any commission as the buyer.