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10 Steps When Buying A House In Singapore

Buying a house in Singapore is a tedious process. However, it may also be the biggest purchase of your life. Thus, you must carefully weigh down your decisions.

To help you with your house hunting, here are ten steps that you should follow:

when buying a house in Singapore

Credit: https://www.constructionplusasia.com/sg/hdb-ensures-that-public-housing-remains-affordable-inclusive-and-liveable-for-singaporeans/

Step 1: Consider Where You Want to Buy a Property

Before you jump into buying any properties, it is always best to conduct a thorough research first.

The two things you have to look into are:

  • The area where you want to live; and
  • The type of property you want

Check the Market History of Your Desired Area

Some property experts would say that any time is an excellent time to buy a property.

WRONG.

It’s not advisable to buy a house in Singapore when the property market is at its peak. That’s because you might end up buying an expensive home and selling it cheap.

So, consider buying a property when the market is coming to a low point.

How would you know when the market bubble is about to pop?

  • When there is news of a decrease in property prices as well as several sales
  • If there’s an increasing number of “sandwich” class HDB flats popping up
  • When the government is considering (or implementing) cooling measures; and
  • When creative home loan packages are becoming more and more apparent

Also, it would help if you dug deep into your desired area’s market history. Doing so can help you big time when you start making an offer.

Determine the Type of Property You Want

When buying a house in Singapore, it’s also essential to know the different types of properties available in the market:

HDB Public Housing

HDB stands for Housing Development Board. Also, it describes any government housing in the Island Republic.

About 80 per cent of Singaporeans live in HDB public housing. However, this property is only available for the citizens.

RELATED: How to Get HDB 2-Room Flat for Singles in Singapore

Executive Condominiums

It is a type of public-private hybrid property. That’s because HDB issues ECs, but features design and facilities akin to a private condominium.

ECs come with a five-year Minimum Occupation Period, meaning you have to live in it for at least five years. After that, you will have a grant for the right to sell your property in the open market.

This type of property is available to citizens and private residents. As for foreigners, they can buy an EC 10 years after its construction.

Private Residential

This type of property is the luxurious version of an HDB flat. It is also a popular choice among ex-pats, as they don’t have restrictions on foreign ownership.

The following are sub-types of private residential property:

  • Condominiums: Condos come with provisions such as swimming pools, tennis courts, a gym, and security.
  • Apartments: Similar to condominiums but are part of a minor development. Thus, they only have featureless generous amenities.
  • Walk-up: This is a low-built apartment or condominium and doesn’t include a lift.

Landed Houses

A landed house comes with a lot. It is incomparable with a condo or an HDB flat, although it requires huge maintenance.

Step 2: Determine How Much You Can Afford

So you have your desired area and type of property in mind. The next thing you need to do is determine how much you can afford.

When calculating how much you can afford, always consider the following:

  • Your age
  • The type of residency (Singaporean, Foreigner, or Permanent Resident)
  • Your gross income
  • Your available funds (In hand and through CPF)
  • Personal debt obligations
  • Your existing property loans
  • Your loan tenure
  • The type of property your want to buy; and
  • The kind of purchase you’re going to make (joint or single)

Besides, you need to include other government fees and duties in your computation. For a more thorough calculation, it is best to seek the advice of a professional property agent.

Step 3: Take Note of Property Valuation

Property valuation, or real estate appraisal, is sometimes used to set a sale price for a property.

You must check the indicative valuation of the property you want to buy. That’s because it can affect the amount of loans you can get.

If this will be your first time applying for a house loan, keep these three points in mind:

  • Loan-to-Value limit is 80%
  • It becomes 60% if the loan tenure exceeds 30 years
  • It is also 60% if the loan period exceeds your retirement age of 65

Step 4: Secure an Approval-in-Principle (AIP)

House hunting in Singapore is like going to a restaurant, buying and eating as much food as you can, and then realizing that you forgot to bring your wallet. The only difference is that you don’t get to wash the dishes. You’ll lose thousands of dollars instead.

Before buying a house in Singapore, securing an Approval-in-Principle (AIP) is crucial.

In the Island Republic, you shell out some money for a booking fee of one per cent. So if the house you’d like to buy costs SGD 1,000,000, the booking fee would be SGD 10,000.

You have two weeks to one month to pay the rest. However, you should also secure a loan from the banks during this time. Otherwise, you will forfeit your booking fee.

This is where your AIP comes in. A bank promises to lend you a certain amount of money with the promise of buying a house for a particular time frame.

How much does it cost to get an AIP? Nada!

It’s free, and you can ask for it from your bank of choice.

Step 5: Know the Mortgage That Suits Your Situation

It’s a no-brainer that applying for a mortgage can pose concerns. It is true when you consider the amount of interest you’ll end up paying.

After all, a house in Singapore doesn’t come in cheap. The expected down payment is around 20 per cent of the total price of the property. So if the place you’d like to buy costs SGD 1,000,000, your down payment would be SGD 20,000.

Although it is difficult to compute for a monthly mortgage, it considers the interest rate and loan term.

Step 6: When Buying a House in Singapore, Save Up for Down Payment

As mentioned earlier, buying a house in Singapore would need a down payment of around 20 per cent. According to MoneySense:

“How much you pay and the amounts payable in cash and from CPF savings depend on the value and type of property you buy, whether you have an existing housing loan, as well the tenure of loan you intend to take.”

In addition, HDB offers two types of down payment schemes:

Staggered Down Payment Scheme

It is available for first-time couples and flat owners who are right-sizing in non-mature estates (or newly built properties).

Deferred Down Payment Scheme

It is available for flat buyers aged 55 years old and above.

RELATED: The Most Effective Strategies to Save Money in Singapore

Step 7: Consider Your Property’s Rental Yield

When buying a property, it is essential always to think long-term. Thus, you also have to consider your house’s rental yield. Think how easy it will be to rent your place, as well as how much you can charge.

Are you thinking of buying a house for investment? Your safest bet would be buying properties in prime districts like the Central Business District.

However, keep in mind that the Urban Redevelopment Authority (URA) prohibits homeowners from renting their properties in shorter than six months.

So, if you’re thinking of posting your house on Airbnb, you better forget about it. Otherwise, you’ll incur a fine of SGD 200,000 and be imprisoned for up to a year.

Step 8: Seek Professional Advice

Since 2013, about 25 per cent of HDB buyers and sellers have bought and sold units without seeking the help of a property agent.

While citizens are becoming savvier and savvier in buying and selling a property, seeking professional advice could still come in handy, especially if you’re a first-time homebuyer.

Sure, it’ll cost you money, but a real estate agent will work to get you the best deal. They can provide you with information on the property market, the neighbouring area, and the buying process.

Buying a house in Singapore is a long and tedious process. A property agent can help you go through the necessary paperwork. They can also represent you when negotiating and making an offer to buy a property.

Step 9: Conduct a Home Inspection

How can you say if a particular house you want to live in?

Aside from the price, the area, and amenities, it is also important to conduct a home inspection.

Also, it is best to consider the property’s layout. For example, is it ideal for the size of your family? Is it suitable for a multi-generation family?

What about the plumbing, electricity, and water source. Does the property have provisions for air conditioning and Wi-Fi installation?

How accessible is your house from work, school, and mall?

Conducting a home inspection allows you to make a shortlist of houses that you can buy.

RELATED: 3Gen Flats: Singapore’s Housing Schemes for Multi-Generation Families

Step 10: Make an Offer and Negotiate when buying a house in Singapore

So you now have a shortlist of properties that you can buy. The next step is to seek the help of your property agent to make a fair offer for you.

Does the house have a previous owner? If yes, see whether he’s in a hurry to sell his property. There’s a high chance that he’d be willing to sell the house for a lower price. The same thing goes if he’s been selling it for a long time.

The steps indicated here are preliminary. As previously mentioned, buying a house in Singapore is a long and tedious process. Plus, there are government fees you need to pay.

Nonetheless, celebrate! After all, you’ve finally found your ideal home.

Are you a homeowner? Or, perhaps, buying a house? Take out a personal loan from Cash Mart Singapore. Then, please share your experience on how efficient they are in the comments section below!