Buying a property in Singapore, may it be a high-end residential suite or an affordable executive condominium is a life-long commitment that should be planned carefully. Depending on the type of property you wish to acquire, size, tenure and included facilities; purchasing a real estate property can significantly drain all your savings. Deposits, upfront costs and monthly mortgage payments can stretch-out your finances way too far to the point of exhausting all possible resources.

Crunching numbers and knowing the costs of buying new property in Singapore is indeed essential to shun away pricey mistakes. Owning a home is one of the biggest financial obligations you could ever engage in your entire life so carefully planning your expenses, monitoring your savings and computing associated interest rates are critical to avoid being broke in the end.

Costs of Owning a Home in Singapore

Before you even begin looking at the numbers, first off you need to prudently review your current financial status. Look at your existing debt obligations, on-going loans, net monthly income, stability of work and available savings. Always bear in mind that deposit alone is never sufficient and it will never be enough. Check your financial capability and prepare yourself for upfront payments.

Private Property

Option to Purchase

To secure the property you wish to acquire, buyers are advised to pay the Option to Purchase fee. This is a contractual agreement that bounds the seller and the buyer. It gives the buyer a 14-day exclusivity period to think about the property and the seller is not allowed to offer the unit to other buyers. As a good faith deposit, the option fee is normally 1% of the property’s agreed price. Note that the Option to Purchase fee is non-refundable and will be forfeited once the buyer decides to terminate the transaction.

Offer to Purchase

Another cost of purchasing property in Singapore is the Offer to Purchase fee. Usually, buyers who are fully decided to acquire the property can bypass the Option to Purchase and go straight to the Offer to Purchase. The Offer to Purchase fee or Option to Exercise fee (as some calls it) is normally 5% or 10% of the agreed purchase price. For those who paid the Option to Purchase fee, the 1% exclusivity payment will be automatically deducted from the total down payment.

Down Payment

The initial deposit or down payment is the minimum sum of the property that needs to be paid in cash. To get the down payment, simply minus the loan quantum granted to the total purchase price of the property (Total Property Price – Total Bank Loan Granted = Down Payment).

Down payments may range from 10-20% depending on the developer. Additionally, the Option to Purchase fee and Offer to Purchase fee are deducted from the total down payment. To better understand how these 3 costs of buying new property in Singapore works, check out this example:

Total Property Price –                     $1 Million

Total Bank Loan Granted –           $800,000 (80%)

Option to Purchase fee                     $10,000 (1%)

Offer to Purchase fee                         $90,000 (9%)

Required Down Payment                 $200,000 (20%)

                                                                  – $100,000 (1% + 9% Option Monies Paid)

——————————————————————————————————

Grand Total of Down Payment:      $100,000

Bear in mind that at least 5% of the $200,000 should be paid in cash. The remaining 15% can be paid in cash or through the use of Central Provident Fund (CPF) savings.

Buyer’s Stamp Duty

One of the costs of owning a home in Singapore is the payment of Stamp Duty. Stamp Duty is a tax on documents relating to the purchase of a property. It is required by the government and it is an offense to use a document which Stamp Duty has not been paid on. Paying the Stamp Duty is important because in case of disagreements and problems with regards to the acquisition of the property, only documents with paid Stamp Duty are considered admissible in the court.

Fees involved on Buyer’s Stamp Duty of the Purchase Price are as follows:

On the 1^st $180,000     =          1%

On the 2^nd $180,000    =          2%

Thereafter                        =          3%

Additional Buyer’s Stamp Duty

The Additional Buyer’s Stamp Duty or ABSD is another tax that needs to be paid when purchasing a property in Singapore. It was introduced on 2011 as a measure to cool down the escalating prices of residential assets.  The ABSD is paid by the buyer on top of the Buyer’s Stamp Duty or BSD.

Buyer’s Citizen Type                                 1^st Purchase       2^nd Purchase      3^rd & Subsequent Purchase

Singapore Citizen                                                N/A                              7%                              10%

Singapore Permanent Resident                    5%                              10%                            10%

Foreigners & Non-Individuals                        15%                            15%                            15%

Stamp Duty for Mortgage Documents

There is another form of Stamp Duty involved on the cost of purchasing property in Singapore. For securing mortgage documents, a tax rate of 0.4% needs to be paid to IRAS. The total amount is capped to $500 and you can use your CPF savings or cash to settle this payment.

Legal Fees

To carry out necessary background checks on the property, file legal documents and assist new buyers on the process of acquiring their homes, lawyers are often needed to complete a real estate transaction. Lawyers can either come from the bank but buyers can appoint their own solicitors and fees may vary accordingly. Legal fees can cost anywhere from $2,500-3,000.

Valuation Fee

To qualify for the loan, banks usually require a valuation figure. The remuneration associated with this is called the “Valuation Fee” and it can be anywhere from $350-500. Most banks waive this fee as part of their home loan benefit.

HDB Flats

Although most HDB Flats are subsidized by the government, there are still costs involved on buying Government Housing Estates. These costs of buying new property in Singapore are almost the same as with acquiring private homes but fees are slightly low-cost when compared to the former.

Option to Purchase – fees can range from $1-1,000.

Offer to Purchase – the maximum cost including the Option to Purchase fee is rated at $5,000. And this needs to be settled within 21 days after being issued.

Down Payment – 10% of the total agreed purchase price including the option monies paid. The option monies and down payment for the HDB flat can be settled through cash or CPF grant.

Valuation Fees – if the buyer chooses to finance the property through the use of CPF savings, bank loan or HDB, a valuation report is typically needed. Depending on the type of property, fees associated with it can range from $140-200.

Additional Costs of Owning a Home in Singapore

Fire Insurance

For buyers using HDB loans, fire insurance is required and it should cover the internal structure as well as original fixtures and fittings of the unit, but not furniture or home contents. This can range from $1.50 for a 1-room flat to $7.50 for an executive or multi-generation property; for five years.

Administrative Fees

A $10 non-refundable payment is needed when submitting applications to HDB. Likewise, applying for Temporary Extension of Stay will cost around $20.

Service & Conservancy Charges

For HDB flats, there is a charge for the maintenance of common areas. Fees may vary depending on the type of property and area where you live. Usually, it can be from $55-95 per month.

Maintenance Fees

Another cost of purchasing property in Singapore that you need to bear in mind is the monthly maintenance charges. Especially to private condominiums, keeping the swimming pool clean and other facilities comes with a cost. Maintenance fee covers the concierge services, lifts, gardens, rooms, etc. and this can charge you anywhere from $200-300 per month. Luxury residential homes are known to bill up to $1,000 a month.

Agent Fees

For buyers using agents to purchase a property, prepare to shell out at least 1% of the agreed purchase price as a commission. Although fees are highly negotiable, make sure to discuss this transparently with your agent.

Miscellaneous Costs of Buying New Property in Singapore

• Monthly Utilities
• Pest Control
• Repairs & Replacements
• Car Parking Fees
• Home Content Insurance (Optional)
• Mortgage Insurance (Optional)

As seen above, the cost of purchasing property in Singapore doesn’t simply end on making the down payment. Remember that upfront expenditures can either be paid in the form of CPF savings or cold cash.

Especially for those planning to acquire a private property, make sure to have enough cash ready on your pockets – and this guide to costs involved on buying a new property in Singapore can be your best friend. Lastly, take into consideration the monthly home loan that you need to pay off including utilities and basic expenses.