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How Do I Buy a Resale Condo?
1. Plan Your Finances
Buying a resale condo is a costly task and you would have to plan your finances beforehand. Some costs include:
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Buyer's Stamp Duty (BSD): Tax paid on documents signed when you buy or acquire property located in Singapore. The BSD rate is calculated based on the purchase price or market value of the property, whichever is higher:
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First $180,000: 1%
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Next $180,000: 2%
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Next $640,000: 3%
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Remaining amount: 4%
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Additional Buyer's Stamp Duty (ABSD): Tax levied on property buyers who already own a property, on top of the Buyer's Stamp Duty. ABSD is calculated based on the purchase price or market value of the property, whichever is higher (Accurate as of 16 Dec 2021)：
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Singaporeans: 17% on their 2nd residential property, 25% on their 3rd and subsequent residential properties
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PRs: 5% on their 1st residential property, 25% on their 2nd, and 30% on their 3rd and subsequent residential properties
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Foreigners: 30% on any residential property
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Total Debt Servicing Ratio (TDSR): This restricts how much you can borrow. All your loan payments should not exceed 60% of your income, including car loans, credit card loans, and home loans.
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Loan-To-Value Ratio (LTV): For your first housing loan, you can get up to 75% LTV ratio with a bank loan. However, the LTV is drastically reduced when it comes to the second housing loan.
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Professional Legal Fees: Conveyance fees average about $2,000 to $3,000.
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Valuation Fee: Costs of getting your property valued average about $350 to $500.
2. Search for Resale Condos and Arrange for Viewings
You can browse for condos on property platforms online or engage a property agent to find a suitable house for you. Narrow down your search based on your budget, the size of the house, and the location. Once you have shortlisted a few properties, arrange for viewings.
When you are viewing the property, apart from checking thoroughly for defects, it is a good time to ask the homeowners or property agent for more information about the property. Some examples include how the neighbours are like or when the last renovation was done. You could also negotiate for the pricing with the seller depending on how urgent they are in selling the property.
3. Search for a Good Home Loan and Secure an Approval In Principle (AIP)
Unless you plan to pay entirely in cash or CPF, you would have to secure a home loan from a bank. How much you can borrow depends on the TDSR.
Securing an AIP is not compulsory, but is helpful especially if you plan to take out a home loan. An AIP ensures that you have sufficient borrowing capacity before paying the fees in purchasing a condo. An AIP allows you to obtain approval from the bank to lend you a certain amount of money based on your credit health. An AIP is valid for 30 days and you are not obliged to take up a loan from the bank that offered you the AIP if you were to find another bank with a better home loan.
4. Obtain an OTP and Engage a Lawyer
After agreeing on the final purchase price with the seller, you have to get an Option to Purchase (OTP) by paying the first option fee/booking fee (1% of the purchase price). Once the OTP is obtained, the seller cannot agree to sell the property to anyone else until you exercise the option or until it has expired which is within 14 days.
You usually have to engage a conveyance lawyer at this point to help you with the legal process of transferring the property from the seller to you.
5. Exercise the OTP
Upon exercising the OTP, you need to pay the second option fee of 4% of the purchase price within 2 weeks from the exercise date. After that, you need to sign the Sales and Purchase agreement (S&PA). The BSD and ABSD (if applicable) are also payable during this time when the option is exercised. This process usually involves your lawyer, who will advise you on when to make the payments.
6. Pay the Balance of Down Payment
The balance 20% of the downpayment can be paid in CPF or cash and is payable at least 2 weeks from the completion date. The remaining 75% would be covered by your bank loan.
Once you have completed the final payments of your purchase, you are then able to collect the keys to your condo!