Buying a resale condo can be an attractive alternative to buying a new launch condo in 2022 or Executive Condominium (EC) in Singapore.
Never mind the lack of new condo launches in Q1 2022 and the construction delays brought on by the pandemic – for those who want to begin living in or renting out their condo much sooner, looking up a condo for sale in Singapore is the way to go.
But buying a resale condo in Singapore can sometimes be a complicated process, especially if you are a first-timer. It is also important to note that resale condo unit prices increased for the 22nd straight month in May. Expect to see higher condo resale prices while searching for one! Other than saving up for a sizable downpayment, there are many administrative steps to take and deadlines to abide by.
If you are considering a resale Singapore condo, here is an overview of the benefits of picking a resale condo, as well as a checklist of all the steps you need to take, from browsing condos for sale in Singapore to paying for the downpayment for your condo to picking up your keys.
For those who want to read more insights about the property market, read the PropertyGuru Singapore Property Market Report Q2 2022.
Benefits of Choosing a Resale Condo Over a New Launch Condo
Resale condos have a few advantages over condos in new launches and this is why some homebuyers opt to buy a resale condo in Singapore.
1. Resale Condos Allow You to Inspect the Unit Before Making the Purchase
When buying private property in a new launch, you only have the showflat and brochures to go by. The finished product might differ from what is advertised. For resale condos, however, you can inspect the actual unit, which not only lets you see exactly what you will get but also lets you consider factors such as sunlight and noise levels.
One thing to look out for though is past defects and issues with the condo or neighbours. An online search should be able to throw up common complaints of other residents in the condo development. However, complaints pertaining to your specific unit might be harder to come by, which is why undertaking a thorough inspection is important.
2. Resale Singapore Condos Are Ready for Almost Immediate Move-in
Buying a resale condo enables you to move in immediately after the sale is completed and does not involve waiting for the development to be built. For investors looking to rent out their units as soon as possible, this is ideal.
3. Resale Singapore Condos Are Typically Larger Since They Were Built in the Past
The trend in the market has been moving towards smaller property sizes over the years and it is likely to continue. Thus, as property prices become more expensive, homes become smaller as well. Resale condos are typically older, which means they were built at those times when property size is still big. Thus, if you want or need more space, resale condos might be more suitable.
4. There’s More Room for Price Negotiation for Resale Condos
Since different sellers have their own reasons for why they want to sell, this leaves more room for negotiation for resale condos compared to new launch condos.
Step-By-Step Guide to Buying a Resale Singapore Condo
Ready to shop for resale condos? Here’s a detailed guide on what you need to do.
1. Browse Singapore Condo Listings and Make Viewing Appointments
A property agent can help you find suitable properties based on your price range and criteria. Alternatively, if you do not wish to engage an agent, you can browse portals like PropertyGuru. Shortlist some properties that interest you and that are within your budget, and then make appointments to view them.
Here is a list of condos for sale listed on PropertyGuru.
2. Browse Condo for Sale in Singapore and Go for Property Viewings
Check the unit thoroughly for defects. Some things to look out for include cracks and stains on the walls, ceilings, floors and tiles, as well as the taps, toilet and flushing system. Here is a complete defects inspection checklist. Aesthetic and environmental factors such as view, sunlight and noise levels in the unit should also be assessed.
Other than checking the actual unit, you should also inspect the surrounding area. Check how close public transport links are, as well as what amenities there are in the area and neighbourhood.
3. Negotiate the Price of Your Resale Condo in Singapore
Once you’ve settled on the dream home (or well, at least the best one of the lot), it’s time to talk about the dollars and sense.
Property prices are frequently open to negotiation in Singapore, so be sure to bargain in order to get a more attractive price. Do your research on similar properties in the area so you know how much you can reasonably lower the price.
It might also be a good idea to check for the property’s valuation with professional real estate valuers. That’s because the property valuation impacts your home loan quantum, which is pegged to 75% Loan-to-Value (LTV) and the Buyer’s Stamp Duty (BSD), you need to pay.
And it’s simple. Just enquire how much home loan you can qualify for at PropertyGuru Finance and you can get a rough idea of the property’s current market valuation.
4. Plan Your Upfront Payments and Finances When Purchasing Condo for Sale
Once you have negotiated a price you are happy with, it is time to plan your finances before you commit to the purchase. Here is what you can expect to pay from now until the day you collect your keys.
- Booking fee (1% of purchase price)
- Stamp duty and (if applicable) Additional Buyer’s Stamp Duty (ABSD)
- Balance down payment (4% of purchase price)
- Balance purchase price minus home loan amount
While you can typically use your CPF savings to pay part of the property price as well as the stamp duty and ABSD, note that the 1% option fee will still have to be put up in cash. And not to forget, you still have to pay the cash over valuation (COV), which is also in cash.
In addition, limits on the use of CPF savings might apply depending on how many years remain on the lease, how much you have in your CPF accounts and/or your age.
5. Pay Booking Fee and Obtain Option to Purchase (OTP) for Singapore Condo
In order to obtain an Option to Purchase (OTP), you must pay a booking fee equivalent to 1% of the purchase price in cash. Once the OTP is obtained, the seller cannot agree to sell the property to anyone else until you exercise the option or until it has expired.
6. Take Out a Home Loan for Singapore Condo
Once you have paid the booking fee, it is time to source for financing. Consider how much of the purchase price you can put up using cash and CPF savings, and how much you will need to borrow. Next, compare the interest rates on loans from different banks in order to find one that is competitively priced.
If you need help, PropertyGuru’s Mortgage Experts can guide you. You can even request for a resale condo payment schedule from our Mortgage Experts.
Be aware that the Total Debt Servicing Ratio (TDSR) might limit how much banks can lend you. All your loan repayments, including your housing loans and other loans like car loans, tuition fee loans and credit card debt, should not exceed 55% of your income.
7. Pay the Downpayment for Condo
“How much is the downpayment for condo” or "What is the downpayment for condo? " are questions you have to consider. Note that taking a home loan requires you to pay 25% of the purchase price as a down payment since banks will only loan you up to 75% when buying private property in Singapore. You can actually use your CPF (from your Ordinary Account) to pay for your downpayment.
Here’s an example, let’s imagine you search up "condo for sale Singapore" and you got your eyes on one that costs $700,000. Your downpayment for the condo would be $175,000 which is 25% of the purchase price. $35,000 would have to be paid in cash which is 5% of the purchase price and the remaining amount (20% of the purchase price) will be deducted from your CPF OA.
8. Exercise Option, Pay Balance Down Payment, Stamp Duty and (If Applicable) ABSD for Your Singapore Condo
In order to exercise the OTP, you need to return the signed document to the buyer. Depending on what is written on the OTP, you usually also need to pay 4% of the purchase price either on the same date or not long after.
Stamp duty and, if applicable, ABSD will also have to be paid when the option is exercised. Your lawyer will probably wish to collect the 4% initial down payment, stamp duty and ABSD payments a few days in advance.
9. Pay Balance Purchase Price for Resale Condo, Minus Home Loan Amount
On the completion date, you will have to pay the balance of the purchase price minus your home loan amount. Your lawyer will probably ask you to submit a cashier’s order a few days in advance.
10. Collect the Keys to Your Dream Singapore Condo
On the completion date indicated in your contract, your lawyer will pass your balance down payment to the seller, and you will thereafter be free to collect the keys to your new home.
… And that’s it! Congratulations on your new home.
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