A Beginner’s Guide For First-Time Home Buyers in 2018: Private Property

Acquiring your first dream condo just became easier

“Risk comes from not knowing what you’re doing.” — Warren Buffett

Last week, we walked you through the necessary steps and every essential piece of information you would need to buy your first HDB flat. This week, we want to provide you with the same information for private homes, for those whose dream home comes with a pool and a private lift. Are you eligible? Are there grants and schemes for private home buyers? Where can you mitigate the financial burden of living it up? Read on to find out.

What Are the Eligibility Requirements?

Unlike HDBs, there’s little to no restriction who can buy a condo or a private house. But you do need to be at least 21 years old.

Although this guide is essentially for first-time home buyers, there are many out there who do upgrade from HDB to private, so you’ll do well to know that for current HDB owners, there is a Minimum Occupation Period (MOP) to fulfil before you can acquire a private residential property. For instance, you bought a resale flat with CPF housing grant — you will have to live in the flat for at least five years before it’s legally okay for you to buy private. The MOP varies depending on the type of flat you own and the grant you took. You will also have to continue staying in your flat even after you’ve purchased a private property unless you intend to sell it. In essence, you can’t have the cake and eat it, too.

See here for details.

Let’s Start From the Top

1.    Shop around and shortlist your favourite properties by area and budget. One of the easiest ways to access what’s available is via sites like PropertyGuru or iProperty. Visit a few show suites (for new developments) or resale units.
2.       When you’ve identified The One, get an approval-in-principle (AIP) for a bank loan.
3.       Check you have sufficient CPF funds.

For your first property, you should be able to use all the savings in your Ordinary Account up to the Valuation Limit.

See also: How Does the CPF Withdrawal Limit Work for HDB Flats?

4.       Make an offer. You’ll be given an “Option To Purchase” to book your dream home.
5.       Finalise your bank loan and hire a lawyer.
6.       What you will pay for next:

•       Downpayment of at least 20% of the property price — this consists of a 5% option fee and a 15% exercise fee. (This can be paid in cash and CPF funds.)
•       Buyer’s Stamp Duty: The 1-3% ad valorem tax to be paid by the buyer whether you’re a Singapore citizen or foreigner.
•       Valuation fee (from the bank)
•       Legal Fees*
•       Property Agent Fee (if you engaged one)

* Singaporeans will be able to pay for these items with their CPF Ordinary Account (OA) after the cash portion has been paid.

Getting A Bank Loan

Not sure where to start, or which bank to go to? There’s no shortcut to this but to do your due diligence, shop for the bank that offers you the best rates and perks. For a little help, use SingSaver’s handy home loan comparison tool to compare the available options easily. And to get you started, we’ve compiled a list of home loans promotions* you might consider.

*For simplification purposes, these loans are for new purchases of completed developments only.

1.  Citibank

•    Enjoy interest rate as low as 0.25% p.a. + SIBOR when you take up a home loan with Citibank now. Terms and conditions apply. Details here.
•    Refer your friends and family to take up a home loan with Citibank and be rewarded with up to S$500 worth of shopping vouchers for every successful referral. Terms and conditions apply.

Minimum loan amount: S$500,000.

2.    Maybank

•    Fixed rate packages that provides certainty of rates.
•    Floating rate packages pegged to the bank’s home loan board or 3M SIBOR.
•    Enjoy transparency of interest rate with our home loan board rate pegged packages.
•    Receive legal subsidy when you refinance your existing home loan to Maybank.
•    Exclusive Renovation Loan package for Home Loan customers

Minimum loan amount: S$400,000. Learn more about Maybank’s home loan packages.

3.    HSBC

•    Enjoy options of SIBOR + 0.35% p.a., or
•    Time Deposit pegged mortgage rate at 1.65% p.a., or
•    2-year fixed rates from 1.90% p.a.
•    Get up to S$1,200 worth of shopping vouchers when you refer your friends or family to take up an HSBC home loan. Terms and conditions apply.
•    Get $200 cash when your HSBC home loan is approved. Promotion ends 31 July 2018. Terms and conditions apply.

Minimum loan amount: S$200,000

4.    DBS

•    Enjoy a 2-year fixed rate package at 1.95% p.a., or
•    Floating rate package with 2-Year lock-in at FHR8 + 1.45% p.a.
•    Apply for a DBS Home Loan online and receive S$500 worth of Singapore Airlines travel vouchers.
•    Stand a chance to be one of the 50 lucky winners to win an additional S$50 CapitaVouchers.

Minimum loan amount: S$500,000. Terms and conditions apply.

See also: How Much Can You Borrow For Your Home Loan?

Final Tip: Consider Refinancing Your Home Loan

This may not apply to you just yet, but you will do well to keep in mind to refinance your loan when you approach the end of its lock-in period, typically between one and three years. This is to ensure you don’t miss out on competitive packages with more favourable rates every few years, and in turn, reduce what you pay in interest. Compare at a glance which rates are the most competitive with the SingSaver’s Refinance Comparison Tool.

By Alexa Fang

Alexa is a pop-culture vulture. She lives to read, write and travel, and decided long ago that life is stranger than fiction. When she's having croissant, she thinks in French. "31 Rue Cambon" is her favourite address, and she believes that money one enjoyed spending is never money wasted.