When buying a resale private property in Singapore, the **Option to Purchase (OTP)** is a crucial step. Let's break it down:
1. **Signing the OTP**: When you sign the OTP, you're essentially securing the exclusive right to purchase the property within a specified period (usually 14 days). The seller grants you this option.
2. **Option Fee**: Initially, you pay a 1% option fee to the seller. This fee allows you to hold the property while you decide whether to proceed with the purchase.
3. **Exercising the OTP**: To fully commit to buying the property, you need to exercise the OTP. This involves returning the signed OTP and paying the option exercise fee. For private properties, this fee is 4% of the purchase price. If you're taking a housing loan from a bank, you'll need a Letter of Offer from the bank before exercising the OTP³.
4. **Legal Completion**: After exercising the OTP, engage a lawyer to handle the legal completion process. This includes paying the remaining 4%, stamp duty, and other necessary steps². Once completed, both parties enter into a sales and purchase agreement.
Remember, the first 1% is only the option fee—it's not considered exercising the OTP. The full commitment comes when you pay the balance 4% and proceed with the purchase.
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