Understand the costs of buying a home
by developer on May 27, 2014
https://www.moneysense.gov.sg/articles/2018/10/understand-the-costs-of-buying-a-home
Buying a home needs careful planning. Find out what you have to pay upfront and on a monthly basis, and why you should be insured.
Key takeaways
- Be prepared for one-time downpayment and recurring costs.
- Find out what you can afford before deciding to buy.
What do you have to pay?
Buying a home is a big financial commitment that needs careful planning.
The home that you buy should meet your and your family’s needs now and in the future. With this in mind, take a moment to think about what’s important and what’s nice to have.
Before looking for a home to buy:
- Do your sums and look at what you can afford
- Find out what your mortgage payments will look like
What you can afford depends on your income, expenses, debts and savings as well as the amount you may be eligible to borrow. You’ll need to make some upfront payments, and keep up with monthly housing loan instalments, and other recurring charges.
Upfront payments
The payments you need to make to purchase your home include:
- Option fee
- Downpayment
- Buyer’s stamp duty
- Additional Buyer’s Stamp Duty (for a second and subsequent property if you’re a Singapore Citizen)
- Legal costs, including stamp fees
- Agent’s commission and fees
- Other miscellaneous costs
Let’s look at a few of these in detail.
Option fee
You pay the option fee to reserve the property of your choice. The tables below show the option fees for the various housing types, all payable in cash. If you choose not to exercise the option, you must be prepared to forfeit the option fee paid.
For an HDB flat:
| Type | Option fee (cash) |
|---|---|
| New 4-room, 5-room, Executive Flat | $2,000 |
| New 3-room | $1,000 |
| New 2-room | $500 |
| Resale flat | Up to $5,000 in total, comprising:
|
Learn more: Costs and fees when buying an HDB flat.
For an Executive Condominium (EC) or private property:
| Type | Option fee (cash) |
|---|---|
| EC or private property | 5% |
| Resale EC or private property | 5% comprising:
|
Downpayment
How much downpayment you have to pay in cash or from your CPF savings depends on:
- The value and type of property.
- Whether you have an existing housing loan and the tenure of the new loan (capped at 25 years for HDB flats and 30 years for private properties).
- The loan-to-value (LTV) limit (loan ceiling) of the property.
For an HDB loan
| Flat type | Downpayment in cash or CPF |
|---|---|
| Build-To-Order Flats (BTO) | 10% of purchase price Includes booking fee and balance (both only in cash and/or CPF) |
| Resale | 10% of purchase price Includes booking fee and balance (both only in cash and/or CPF) |
For a bank loan
| No outstanding housing loan | 2nd housing loan | 3rd housing loan | |
|---|---|---|---|
| Minimum cash downpayment |
|
25% | 25% |
| Rest of downpayment | Can be paid using cash and/or CPF | ||
Third-party costs
| Fees | Paid to | What it’s for |
|---|---|---|
| Valuation fee | Professional appraiser | Valuation report on the property to be financed. |
| Legal fee | Lawyers | Processing the mortgage over the property to be financed. |
| Stamp duty | Government | A tax payable for registration of the mortgage. |
| Insurance premium | Insurance company | Insurance cover for your property against fire and other damage. Lenders will require you to adequately insure assets being financed. |
Recurring payments
In addition to your monthly home loan repayments, you’ll also want to budget for other recurring costs that come with owning a home. These include:
- Maintenance, conservancy charges and utilities
- Property tax
- Mortgage insurance and other home-related insurance
