While it’s common knowledge that buying a property in Singapore usually means a sizeable mortgage, fewer people realise the total cost includes far more than just the property price tag and interest on the loan.
Yet the upfront costs can be significant enough to eat into any savings earmarked as a deposit, so it’s worth crunching the numbers carefully before committing to anything that could stretch your finances too far.
Here, we take a look at some of the upfront costs of purchasing a property in Singapore.
The option fee, or Option to Purchase (OTP), is the fee you pay to the buyer to secure your dream home. Once you pay the option fee, the seller is contractually-bound to make the property available exclusively to you.
But you can still change your mind if you don’t want to proceed to buy the property, just that you have to kiss the option fee goodbye, which is usually between 1-10% of the property’s pre-agreed sales price.
But if you’re happy with the property’s condition, and has their finance sorted-out , they will pay to exercise the option.
Cost: Usually 5% or 10% (less the option fee) of the agreed purchase price.
The minimum sum to be paid in cash; it is the difference between the purchase price and the loan quantum granted and includes option monies paid.
Cost: Minimum sum less option and option exercise fees.
Example: A $1 million property financed with maximum 80% loan quantum ($800,000):
Option fee 1% = S$10,000
Option exercise fee 9% = S$90,000
Down payment/minimum sum = S$200,000 less option monies paid $100,000
Grand total = S$100,000.
At least five percent of the $200,000 must be paid in cash; the remaining 15% can be cash or CPF savings.
Stamp duty – purchase price
Once the OTP is signed, it gives rise to a valid sale contract. You’ll also need to pay Buyer’s Stamp Duty (BSD), which is essentially tax for purchasing a property in Singapore.
According to the Inland Revenue Authority of Singapore (IRAS), the revamped Stamp Duty since February 2018 is currently as follows:
Additional Buyer’s Stamp Duty (ABSD)
In addition to BSD, since the 2018 cooling measures, ABSD has also been implemented.
- If you’re a Singapore citizen who already owns a property and is looking to make another property purchase
- You’re a Permanent Resident (PR) looking to buy a property in Singapore
- You’re a foreigner looking to buy a property in Singapore
According to the IRAS, ABSD rates are as follows:
|Singaporean buying first residential property
|Singaporean buying second residential property
|Singaporean buying third residential property
|Permanent Residents buying first residential property
|Permanent Residents buying second residential property
|Foreigners buying a residential property in Singapore
For more information on rates for different categories of buyers, including Additional Buyers Stamp Duty for foreigners, check out IRAS website here.
Stamp Duty can be paid with cash or CPF.
Stamp Duty – mortgage documents
The paperwork for securing a standard mortgage attracts tax at a rate of 0.4% on the amount secured, paid to IRAS.
Cost: Capped at S$500.
Can be paid with CPF savings or cash.
Paid to a lawyer to carry out the necessary background checks on the property (due diligence). Banks often appoint their own panel of lawyers then allocated to buyers; in this case the legal fees are usually predetermined.
Cost: Around S$2,500-S$3,000 when using a lawyer appointed by the bank. Private lawyers’ fees vary.
Legal fees can be paid with CPF savings or cash.
A fee paid for a valuation of the home; banks will use the valuation figure to qualify the loan. Valuation fees may be absorbed by the bank issuing the loan as a benefit in some loan packages.
Cost: Usually between S$350 and S$500, depending on the property type.
Valuation fees can be paid with cash or CPF savings.
An amount, determined between the buyer and seller, to be paid by the buyer after the seller has granted the Option to Purchase.
Cost: Between S$1 and S1,000.
Option exercise fee
The buyer will pay a deposit to exercise the OTP within 21 days of it being issued.
Cost: Maximum S$5,000 including the option fee.
The down payment on all HDB flats includes monies paid to secure and exercise the OTP.
Cost: 10% of agreed purchase price.
The option fee, option exercise fee and down payment may all be paid using cash or CPF savings.
A valuation report is needed if CPF savings or loans from a bank or the HDB are being used to finance the flat. The fee varies depending on the type of flat to be valued.
Cost: Between S$140 and S$200.
Resale application fees
Resale application fees are payable by both the buyer and seller and are non-refundable.
Cost: Between S$40 and S$80, depending on the type of flat.
Legal fees cover costs such as conveyancing and the registration of land titles and deeds. The amount varies depending on whether the buyer uses the HDB’s solicitor or appoints their own.
Cost: See the HDB website for a breakdown of costs for the HDB’s solicitor.
Some of the legal fees must be paid in cash; the rest can be paid using CPF savings.
Fire insurance is compulsory for borrowers taking out HDB loans. It covers internal structural damage and damage to original fixtures and fittings (but not damage to furniture or home contents), in the case of a fire or similar event.
Cost: From S$1.50 for a one-room flat to S$7.50 for an Executive or Multi-Generation flat for a five-year term.
A non-refundable payment made when submitting an application for a flat to HDB.
Other administrative fees
Other administrative fees apply should the buyer agree to the temporary extension of stay by the flat’s sellers.
Buyer’s Agent fees
Buyers using an agent to purchase a HDB flat typically pay commission in addition to that paid by the seller to their agent; the fee is completely negotiable.
Cost: Traditionally 1% of the agreed purchase price.
Finally, buyers of both private and HDB properties may be faced with upfront payments for any property tax or utility bills that have been paid in advance by the seller. Pro-rated reimbursements for these expenses are usually negotiated during the sales process.
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