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Procedures For Buying Properties

Getting ready to Purchase a New Launch

Step 1
The Buyer shows interest by signing an Express of Interest (EOI) Form and submitting a cheque (crossed & made payable to project account) to select and purchase a unit on Booking Day. The cheque will be returned if the buyer decides to not book a unit.

Step 2
Upon securing a unit, the Buyer will sign the Particular, Documents & Information (PDI Form 3), submit 5% booking fee (cheque/cashier order), NRIC/Passport copy & other required forms by the developer prior to issuing Option to Purchase (OTP).

Step 3
Within 2 weeks from the OTP date, the Buyer or their appointed lawyer will receive Sales & Purchase Agreement and a copy of the Title Deed form from the developer’s lawyer.

Step 4
Within 3 weeks from the receipt of S&P, the Buyer exercises OTP by signing the Sales & Purchase Agreement and return the signed copies to the developer’s lawyer.

Step 5
Within 2 weeks after signing the S&P, the Buyer pays Stamp Duty (and ABSD if applicable).

Step 6
Within 8 weeks from the OTP date, the Buyer pays 15% and other progressive payments due

Buyer *The expiry date of the OTP ends at 4 p.m.

The buyer has to confirm his loan approval with the bank before signing on the OTP. Documents needed: 1) Notice of Assessment (NOA) 2) 3 months’ payslips 3) CPF statement
Seller Ensure that to sign the acceptance portion of the OTP. Before selling, ensure to clarify the minimum time the bank needs to settle the loan​

5 Things To Know Before Purchasing a Second Property In Singapore

Singaporeans who already own a HDB flat, DBSS flat or Executive Condominium must first fulfil the Minimum Occupation Period (MOP) to be eligible to buy private property. The MOP is five years and you will be required to stay in the flat throughout the duration before you are allowed to purchase a private property. Meanwhile, permanent residents (PRs) will be required to sell their flat within six months of acquiring private property. However, those who currently own private property or a Housing and Urban Development Company (HUDC) flat are not subject to such restrictions.

Banks assess your loan eligibility based mainly on the following criteria.
They are:

i) Total debt servicing ratio (TDSR)
The TDSR dictates that the total loans you need to service in a month should not exceed 60% of your total gross monthly salary. This includes all types of loans, including property, car loans, personal loans and even student loans.
Specifically for loans taken from HDB or banks to purchase HDB flats, the monthly mortgage repayment instalment cannot exceed 30% of a borrower’s gross monthly income.

ii) Loan-to-value (LTV) ratio

When you’re buying your first home, you are eligible to borrow up to 75% of the property value if you’re taking up a bank loan. This was reduced from the previous 80% in the latest round of property cooling measures.
When you buy your second property, your loan-to-value (LTV) ratio drops to 45%, for loan tenures up to 30 years. If the loan tenure stretches beyond 25 years or your 65th birthday, your LTV drops to 30%.

The fact of the matter is, even if you are eligible for a bigger loan, don’t take it up unless you are certain that you have sufficient holding power to weather any fluctuations in property prices and rental demand before making a purchase.

Holding power is, after all, one of the most crucial aspects in property investing. In a previous study, we found that the average holding period for profitable sales transactions with annualised returns of 6% and above was 10.7 years.

When you buy your first home, you are required to pay up to 5% down payment in cash if you use a bank loan. For your second property, you will need to pay up to 25% of your property’s down payment in cash.

This will be measured against the property’s valuation limit, which is determined by the property value or purchase price, whichever is lower.

Higher ABSD rates were announced on July 5, 2018 to cool the red hot residential property market.

In addition to higher cash down payment and a lower LTV, Singaporeans will now have to pay a 12% ABSD on either the property value or purchase price of a second residential property (whichever is higher). PRs pay 15% ABSD for a second residential property, while foreigners cap off at 20%.

Below are the various ABSD rates for buyers of different profiles and depending on the number of properties they own:

i) Singapore Citizens
1st residential property: Nil
2nd residential property: 12%
3rd and subsequent residential property: 15%

ii) Singapore Permanent Residents
1st residential property: 5%
2nd and subsequent residential property: 15%

iii) Foreigners
1st residential property onwards: 20%

It is possible to use your CPF to buy a second property. However, if you have already used your CPF for you first property, you can only use the excess CPF Ordinary Account savings for your second property after setting aside the current Basic Retirement Scheme (BRS).

As mentioned, your loan-to-value (LTV) drops to 45% when you purchase your second property. This means you will need to fork out 55% in down payment, of which half must be in cash. Here, you have the option of paying the other half of your down payment in either cash or using your CPF monies.

However, there is a limit on the amount of CPF savings you can use to buy private residential properties. This limit is determined by a couple of things:
i) Valuation Limit (VL), which is the purchase price or the value of the private property at the time of purchase, whichever is lower. And;
ii) Withdrawal Limit (WL), which is at 120% of the VL. This is the maximum amount of CPF you can use for the private property. Once you have reached the Withdrawal Limit, you will not be allowed to use further CPF savings, and you will need to pay the remaining home loan in cash.

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