Investing in a property is a big financial commitment and you will likely need to spend many years paying off your mortgage, unless you are born rich of course.
There are many reasons for people to own a property. Some buy for their own stay and some for investment. But why not buy one that meets both criteria?
Searching for a suitable property can be a time-consuming affair, especially if you are a foreigner, as some countries have strict restrictions property ownership.
Hence, one of the fastest ways to find your ideal home is to engage a professional realtor that can help evaluate your needs, finances, investment objective, and to recommend suitable properties that have good capital appreciation potential.
Below is a step-by-step guide to buying a property in Singapore.
Step 1: Evaluate Different Property Types and Prices
Do preliminary research on the different types of property in different areas and evaluate their cost. You can find such information either from online property portals or classifieds, or you can get in touch with a realtor.
The latter will be able to guide you through the entire process of buying a private property methodically, saving you considerable time in the process.
Step 2: Find Out About Any Eligibility Conditions To Buy A Property
In you are a foreigner looking to purchase a private property in Singapore for example, buying a landed property comes with various conditions stipulated under the Residential Property Act.
Step 3: Evaluate Your Budget
After looking through various properties, you will have a sense of their cost. In Singapore, properties are divided into three main regions, namely Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR). Properties in the CCR is the most expensive as they are located in the prime postal districts of 9, 10, 11, Downtown Core and Sentosa.
Step 4: Take Note of the Property Stamp Duties Payable
In Singapore, a foreigner needs to pay a 30% stamp duty when purchasing a private property in Singapore. This will add substantially to the cost of your purchase, especially when Singapore properties are one of the most expensive in the world.
Step 5: Secure A Bank Loan
Unless you are rich, purchasing a property in Singapore will most likely require you to take a bank loan.
There are various types of bank loans – fixed-rate, floating-rate, and hybrid (a combination of fixed and floating-rate).
Fixed-rate housing loans usually charge a higher interest rate, but they provide you with certainty about your monthly loan repayment. As for floating-rate loans, although they may be cheaper in the short-term, you will be subjected to uncertain future interest rate movements. This is especially when faced with a rising interest rate environment.
Step 6: Shortlist Your Properties
After shortlisting a few properties, arrange for a viewing. If it is a resale property, as opposed to a new launch property, some of the things to look out for include the direction of the sun, traffic noise, any obstruction to the property’s view, what are the amenities around, and even check out who your neighbours are! (Bad or noisy neighbours can be a real pain in the neck).
Step 7: Negotiate The Price
If it is a resale private property, bargain hard. It is a very common for landlords to mark up their prices and then let you negotiate downwards. If you have done your homework, you should know roughly how much the property is worth.
You can also get a bank valuation to gauge the value of the property you are interested in. If you are not confident about negotiating for the best price, get your realtor to assist you.
Step 8: Secure Your Option-to-Purchase (OTP)
After negotiating the price of the property, secure an Option-to-Purchase (OTP) from the seller. The OTP gives the buyer the exclusive right to purchase the property within an agreed timeframe – usually 2 weeks. This signals the start of the official buying process.
Step 9: Exercise Your Option-to-Purchase (OTP)
Within 14 days of exercising the OTP, you will need to pay Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD), if applicable. You can do this via the Inland Revenue Authority’s e-Stamping Portal to make your payment.
Step 10: Final Inspection of Property
The whole process should take no more than 10 – 12 weeks upon the signing of the OTP. After the landlord moves out, make a final inspection of the property to confirm that it’s vacant and in the right condition.
Meanwhile, your conveyancing lawyer will conduct relevant legal checks to ensure the proper transfer of the property to you.
Step 11: Completion of Property Purchase
On completion day, your lawyer will finalise the transaction and register you as the new owner of the property. You will have to go to your lawyer’s office and settle any outstanding payments. Thereafter, the keys to the property will be handed to you.
That’s it. I hope this guide to buying a property in Singapore will provide you a good idea what you need to do.
