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How much do couples realistically need to buy their first home in Singapore?

Purchasing your first home can be pretty overwhelming and confusing. Here's a guide to how much you'll need in your bank, whether you're planning to get a BTO or resale HDB flat, EC or condo, plus other expenses to consider.
 

Wedding portrait of Anthea and Vincent. Photography: Jessica Lim of Androidsinboots
 
If you’ve been thinking about buying a flat in Singapore, you might have felt confused and overwhelmed about the fees and costs involved. In this article, we get down to brass tacks. Here’s what you realistically need in the bank to buy your first house, and what other expenses to prepare for.

Be sure to also read up on the latest Enhanced CPF Housing Grants and higher income ceilings for both families and singles looking to qualify for housing grants, which take effect on 11 Sep 2019.

 

2019 PROPERTY PRICES IN SINGAPORE

  BTO Flats (Non-Mature Districts) BTO Flats
(Mature Districts)
Resale Flats Executive Condominiums Private Condominiums
Studio/One-Room - - -

Approx. S$420,000 to S$560,000

Approx. S$600,000 to S$700,000
Two-Room - - - Approx. S$640,000 to S$720,000 Approx. S$800,000 to S$900,000
Three-Room S$150,000 to S$190,000 S$200,000 to S$300,000 S$350,000 to S$380,000 Approx.S$776,000 to S$960,000 Approx. S$970,000 to S$1.2 mn
Four-Room S$295,000 to S$350,000 S$290,000 to S$320,000 S$420,000 to S$550,000 Approx S$1.12mn to S$1.4mn Approx. S$1.4mn to S$1.8mn
Five-Room S$390,000 to S$500,000 S$400,000 to S$550,000 S$520,000 to S$700,000 Approx S$1.6mn to S$1.76mn

Approx. S$2mn to S$2.2mn

Penthouse - - -

Usually a minimum of S$1.9mn

 Usually a minimum price of S$3mn

 

WHY ARE RESALE FLATS MORE EXPENSIVE?

A resale flat costs more because home prices tend to appreciate over time. A resale flat also means there is no wait time (you may have to wait two to three years for a BTO flat to be finished). There may be more amenities built up around the flat, as it has been around longer. This is also a reason why BTO flats in mature estates are more expensive than those in non-mature estates. 

For resale flats, there may be a premium on top of the actual flat price. This is called the Cash Over Valuation (COV). This varies significantly in different estates, from zero COV (no premium) to large amounts like S$50,000.

In extreme cases, there have been “million dollar flats” resulting from sky high COVs. The current record holder is a maisonette in Bishan, which sold for a COV of $250,000 in 2014 at a record S$1.05 million.

 

PRIVATE CONDOMINIUMS VS EXECUTIVE CONDOMINIUMS

The prices we listed above are for most private condos. Prices will be significantly higher for condos close to Orchard (District 9), as those would be considered luxury properties.

As a general guideline, a new Executive Condominium (EC) is about 20% cheaper than an equivalent private condo. This price difference falls to around 9% after the Minimum Occupancy Period (MOP) of 5 years and narrows further to 5% afterwards.

In short, deduct 20% off the equivalent private condo price for a new EC, and 9% for an EC that is at the 5- to 10-year mark.

 

HOW MUCH CASH DO YOU NEED TO SAVE FOR YOUR FIRST FLAT?

  • 5% downpayment in cash if you are using a private bank loan
  • Legal fees
  • Home Insurance premiums
  • Renovation and furnishing costs
  • Maintenance fees
  • Property taxes
  • Mortgage repayments

We can work this out in steps, using a 3-room BTO flat priced at S$180,000 and a 2-bedroom private condo priced at S$900,000 as our examples. 

In addition to these costs, we suggest you build an emergency fund that can cover 6 months of your mortgage payments if your CPF is not already sufficient for such a provision.

Also read: HDB BTO LAUNCH NOV 2019: A COMPARISON OF TENGAH, ANG MO KIO & TAMPINES

 

#1 At Least 5% Downpayment in Cash

If you are using an HDB Concessionary Loan, you will need to make a downpayment of 10% of the purchase price or valuation, whichever is higher. The downpayment can be paid from your CPF Ordinary Account (OA), in cash, or through a combination of both.

If you are using a private bank loan, you will need to make a downpayment of 25% of the purchase price or valuation, whichever is higher. At least 5% of this downpayment must be in cash and the remaining 20% can be paid with your CPF OA, in cash, or a combination of both. Note that you must use a private bank loan for ECs.

Note that this total downpayment is inclusive of the option fee. The option fee is a non-refundable deposit that must be put down 2 weeks before the sale of the house. This deposit is counted as part of the downpayment, once you exercise the option.

Flat Type

Option Fee
4/ 5-room and Executive Flat

$2,000

3-room

$1,000

2-room Flexi Flat

$500

 

For example:

In the case of a 3-room BTO flat with a price of S$180,000, the downpayment is S$18,000. This can be from your CPF OA, in cash, or a combination of both.

In the case of a 2-bedroom private condo at a price of S$900,000, the downpayment is S$225,000. Of this S$225,000, at least S$45,000 must be paid in cash. The remaining S$180,000 can be paid through your CPF OA, or a combination of your CPF OA and cash. With some discipline and careful planning, you can save money for your flat’s down payment before you turn 35.

 
#2 Legal Fees
There are legal services involved in processing the paperwork for property ownership. Examples of legal fees include: 
  • Stamp duty for Agreement for Lease
  • Conveyencing fees
  • Caveat registration fee
Stamp duty for Agreement for Lease is calculated as follows:
  • First $180,000: 1%
  • Next $180,000: 2%
  • Next $640,000: 3%
  • Remaining amount: 4%

You can also use the Stamp Duty Calculator from the Inland Revenue Authority of Singapore website to calculate the stamp duty payable for your flat purchase.

For new HDB flats, conveyancing fees are calculated as follows:

  • First $30,000 of property value: S$0.90 per S$1,000
  • Next $30,000 of property value: S$0.72 per S$1,000
  • Remaining Amount: $0.60 per S$1,000
There is no need to calculate this manually. Just enter the price of the flat in the HDB legal fee calculator.
 
In addition, there is a Caveat Registration Fee of S$64.45 that must be paid to the Singapore Land Authority.
 
For our sample 3-room BTO flat with a price of S$180,000, the conveyancing fee would be $121. Inclusive of the Caveat Registration Fee, this would be S$181.45.
 
For the 2-bedroom private condo, the conveyancing fees can range between S$1,100 to S$3,000 depending on the bank loan rate. Note that this price varies between law firms, and you can request to use a cheaper law firm than the bank’s default choice. If you use a mortgage broker, they will usually try to find a cheaper law firm for you.
 
If you use HDB’s default law firm, the conveyancing fees can be paid from your CPF. If you are using another law firm (such as one chosen by the bank), you will have to ask the firm whether fees can be paid via CPF.
 
For our sample condo, we will assume conveyancing fees of about S$1,500.
 
 

#3 Home Insurance Premiums

The basic fire insurance for HDB flats comes from Etiqa, and is not a significant cost (S$1.50 to S$7.50 depending on the size of your flat for a five-year premium). Basic fire insurance is mandatory but only covers damage to ‘internal structures, fixtures and areas built and provided by the HDB’ due to fire, smoke and water. For a 3-room BTO flat, it is just S$4.50 for five years.

We strongly recommend that all homeowners get a  comprehensive home insurance. This insures you against damage to furniture, renovations and personal belongings. It also covers temporary accommodation and storage costs (you will need both in the event of fire), and third-party coverage (if the fire is your fault and your neighbour’s house burns down, they might be able to hold you liable for damages).

Although the risk of damage or theft is small, you will also have to repair and refurbish the house after any disasters, and the financial cost of that is considerable.

Typical home insurance policies cost between S$45 to over S$700 per annum (the most expensive policies may also include accident plans, which cover you and your family in the event of an accident).

Policies for private homes cost more as compared to flats. We will assume our sample 3-room BTO flat has an insurance cost of S$45 per annum, whereas our sample 2-bedroom private condo has an insurance cost of around S$200 per annum.

 

#4 Renovation and Furnishing Costs

The maximum cap on most renovation loans is six months of your income, or S$30,000. We will also assume this is the general amount spent on furnishing your unit, whether you pay it all in cash or take a loan.

Interest rates on renovation loans range from 3-5% per annum, so be sure to compare between banks before applying. The typical renovation loan tenure is between three to five years.

You could also consider getting a personal loan for renovations if it suits your needs better.

Also read: UNDER $8K: MILLENNIAL COUPLES SHOW HOW THEY STYLED THEIR NEW HOME ON A BUDGET

 

#5 Maintenance Fees

These are conservancy charges in HDB estates. You will have to check the rates with your town council, but they are generally in the range of S$20 to S$90 per month for Singapore citizens (reduced rates). Non-citizens pay a normal rate, which is notably higher (check with your town council for specific details).

We will assume our 3-room BTO flat has conservancy charges of S$45 per month.

For condos, maintenance fees depend on the management council. These typically range from S$200 to S$350 per month, although there are cases when fees are even higher – for high-end developments with a concierge service or elaborate facilities, it is possible to see monthly costs of S$400 or more.

We will assume our sample condo has maintenance fees of S$250 per month.

 

#6 Property Taxes

Property taxes are determined by your home’s Annual Value (AV). The AV is the annual amount that you would get from renting out your property (check with the Inland Revenue Authority of Singapore to determine your home’s AV).

You do not need to work out the amount manually. Just use this online calculator to determine your tax rate.

For our sample three-room flat, we will assume an AV of S$14,400. The tax payable would be around S$512 per annum.

For our sample condo, we will assume an AV of S$36,000. The tax payable is S$2,240 per annum.

 

#7 Mortgage Repayments

For HDB flats, the mortgage interest rate is always 0.1% above the prevailing CPF OA rate. This is currently 2.6% per annum.

For private property, the mortgage rate fluctuates. However, it is has been around 1.8% per annum since 2008.

We will assume a 25-year loan for both our sample properties. The loan for the 3-room BTO flat is S$162,000 (after downpayment), and this comes to a repayment of $735 per month for 25 years.

The loan for the condo is S$675,000 (after downpayment). Assuming the rate stays at around 1.8%, this comes to a repayment of S$2,791 per month for 25 years.

Also read: HERE'S HOW COUPLES CAN MINIMISE THE COST OF THEIR HOME LOANS

 

Total Initial Cost Required:

  3-ROOM BTO FLAT 2-BEDROOM PRIVATE CONDO
Selling Price

S$180,000

S$900,000

Loan Amount S$162,000 (assuming HDB Concessionary Loan and 90% LTV) S$675,000 (private bank loan at 75% LTV)
Cash and CPF Downpayment

S$18,000

S$225,000

Legal Fees

S$181.45

S$1,500
Home Insurance Premiums S$3.75 per month S$16.67 per month
Maintenance S$45 per month S$250 per month
Property Tax

S$512 per annum

S$2,240 per annum
Mortgage

S$735 per month

S$2,791 per month

     
Monthly repayment over 25 years S$826.42

S$3,244.33

Total initial cost required S$18,181

S$226,500

The initial cost of the 3-room BTO flat, taking into consideration all of the above, is around S$18,181 (including CPF funds used). The monthly cost you have to be prepared to pay is about S$827 per month for 25 years.

The initial cost of the condo would be S$226,500 (including CPF funds used). The monthly cost is about S$3,245 for 25 years.

This story was originally published in Singsaver

Also read: "I'M A LITTLE OCD" - JESSECA LIU & JADE SEAH SHARE THE TRUTH ABOUT MARRIED LIFE

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