Your Financial Commitments Considerations When Buying A Condo
5 Factors buying a condo
- Condo Price
Look at the surrounding areas and determine the estimated property valuation of the surrounding projects. You can also check with IRAS on the property valuation. Have a brief understanding of the nearby condo prices, HDB prices and apartment prices gives you better insights if you are paying a reasonable price.
- Condo Payment Schedule
What is Progressive Downpayment Scheme and How Does It Does
Well, progressive downpayment scheme simply means you can pay for the property according to the construction stages. You will receive a letter from the developer’s lawyer when every stage is completed. You will then need to arrange for progressive payments according to the schedule. In other words, if the construction progress gets delayed, your payment schedule will also be pushed back.
Below is a common payment schedule that most developers use:
|Schedule||Purchase Price %|
|Signing Agreement – Within 8 weeks from date of option||5% booking fee in cash plus 20%|
|Reinforced Concrete Framework||10%|
|Door and window frames fitting, plumbing or plastering works, electrical fittings||5%|
|Carpark, roads, drains||5%|
|Building, roads, drainage and sewage works in the housing estate. Water, electrical and gas supplies connectivity||25%|
|Final payment and or completion||15%|
- Condo Downpayment
Downpayment for condo
Illustration based on $1 million property
|Buyer Type||ABSD||Loan Paid Up||LTV||Condo Downpayment||Min Cash Downpayment||Total Upfront Downpayment|
|1st time SC Homebuyer||0||75%||25%||5% or 10%||$250,000|
|1st time SC Homebuyer||0||55%||45%||5% or 10%||$450,000|
|2nd time SC Homebuyer||12%||Yes||45%||55%||25%|
|2nd time SC Homebuyer||12%||No||25%||75%||25%|
Buyer Stamp Duty
|Purchase Price or Market Value||BSD (Residential)||BSD (Non-residential)|
Clearly, a foreigner needs to pay more downpayment compared to citizens and permanent residents. Hence, we strongly advise for you to apply for PR residency before purchasing a house in Singapore.
With the new cooling measures in place, LTV has an impact on your upfront payments too. It is recommended that you settle any outstanding loans from the first mortgage before buying a second property.
- Condo Maintenance Fee
Condo maintenance fee is one of the most neglected fees when couples plan for their financials when buying a condo in Singapore. Condo is considered a strata title property, and the land is owned by homeowners of separate title deeds within the same development.
Condo maintenance fee is calculated based on the share value.
So now, you will probably want to know what is share value. Share value refers to the proportionate share entitlement assigned to each strata unit in the same development.
The typical range of maintenance fee may range from a couple of hundred to thousands of dollars. In other words, the higher the shared value, you have to pay higher maintenance fees.
Maintenance fee is collected by the condo management corporation (MC). The fees then go into the development management fund and sinking fund.
The MC keeps clear and transparent accounting. The management fund is used to pay for the day to day maintenance activities like cleaning, grooming etc. Sinking funds are kept aside for larger projects like painting or any reworks of the development. This helps to keep the development functional and safe over the years of stay.
Lastly, your share value determines your voting rights for Annual General Meeting (AGM) and, or in the event of an en-bloc sales.
You only need to meet the quorum for at least 30% of the total share value to pass any new regulations for the development, or fees and more.
Properties more than 10 years old, requires at least 80% of the shareholders to agree before an en-bloc begins.
- Condo Property Tax
Singapore property tax is broadly classified into owner-occupied property (OOP) and non-owner occupied property (NOOP).
Private Apartment and Condominium Owner-Occupied Property Tax Rate
If you are staying in your property, the property tax rate that you are liable to pay is significantly reduced.
|Annual Value (AV)||Progressive Tax Rates||Maximum Property Tax Payable For The Category|
|Above $130,000||16%||No Limit|
|Total Property Tax = Sum of property tax payable for all relevant categories|
With this information on hand, it makes it easier for first-time home buyers to consider if the new house that they are viewing is suitable when buying a condo. Remember, you don’t want to end up slaving for the home. Afterall, most home buyers want to buy a property that not only fits their lifestyle. Financial commitments are another important consideration when purchasing a property for the first time.
We hope these tips are helpful. You may also want to refer to our upcoming new condo launches 2020 here.