A GUIDE TO PURCHASING
A RESALE PRIVATE CONDO
Step 1: Start Financial Planning
Check the maximum home loan amount and property purchase price you can afford based on your income, age, and loan commitments.
Important financial considerations include:
-
Buyer’s Stamp Duty (BSD): Calculated based on either the purchase price or the property valuation, whichever is higher.
-
Additional Buyer's Stamp Duty (ABSD): Singapore Citizens purchasing their first home are exempt. However, Permanent Residents and foreigners are subject to ABSD rates of 5% and 30%, respectively.
-
Total Debt Servicing Ratio (TDSR): Imposes a cap on the amount you can borrow from financial institutions (FI). FIs must ensure that your total monthly repayments for all debts, including mortgage, credit card bills, car loans, and personal loans, do not exceed 55% of your gross monthly income.
-
Loan-to-Value Ratio (LTV): Initial LTV limit is 75% for your first housing loan. If the unit's purchase price exceeds its valuation, you'll need to cover the difference personally.
Step 2: Initiate your home search
Research different neighborhoods and condominium developments to find one that suits your preferences and budget. Attend property viewings to inspect the units and assess their suitability.
Step 3: Contact a lawyer
At this point, it's essential to engage the assistance of a lawyer to ensure the timely execution of the Option to Purchase (OTP), along with managing the entirety of the property transfer process. This encompasses the lawful transition of property ownership from the seller to you, the buyer.
If you plan on utilizing your CPF funds and/or obtaining a home loan to facilitate your home acquisition, it's advisable to select a law firm from both the CPF's and your Financial Institution's (FI) panels. This approach guarantees that you won't need to engage separate lawyers for these matters, thereby saving considerable amounts in legal fees.
Step 5: Make an offer
Ensure that you conduct a thorough research by examining recent transactions and prevailing market prices. Once you have identified a suitable property at an appropriate price, feel free to submit an offer!
Following negotiations and mutual agreement on the property price, the seller will provide the Option to Purchase (OTP).
Step 6: Obtain the Option to Purchase (OTP) And Pay Option Fee
The Option To Purchase (OTP) constitutes a legally binding agreement between the buyer and the seller for the acquisition of private property.
Upon the seller's approval of the OTP, you will be required to remit the Option Fee, typically amounting to 1% of the total purchase price. By completing this step, you signify your keen interest in procuring the private property, thereby prohibiting the seller from issuing OTPs to other potential buyers.
Step 7: Exercise Option
You will be given a period of 14 days to exercise the Option to Purchase (OTP) and arrange the remaining 4% down payment using a cashier’s order. Your conveyancing lawyer will handle this process and send it to the seller’s lawyer.
We recommend delivering the 4% cashier’s order to your lawyer at least one day before exercising the OTP to prevent any delays.
If you decide to cancel the purchase of the resale condo, you must notify the seller of your decision not to proceed with the purchase. You can allow the OTP to expire and forfeit the 1% option fee.
Step 8: Proceed With Payment For Stamp Duties And Legal Fees.
The financial expenses indicated in Step 1, including BSD and ABSD (if relevant), will be calculated based on either the property's purchase price or its market value, whichever is greater.
Your legal counsel will provide guidance on the timing of these payments, typically due within 14 days from the OTP's exercise. Failure to make timely payments may result in penalties and enforcement measures from the Inland Revenue Authority of Singapore (IRAS).
Step 9: Completion And Key Collection
After making the last payment and receiving the disbursement of your home loan, the moment you've eagerly awaited arrives: the collection of the keys to your new home.
The completion timeframe typically spans 8-12 weeks (subject to your agreement with the seller from the date of exercising the Option). Your lawyer will notify you of the key collection date.