Singapore boasts of one of the highest homeownership rates in the world. More than 90% of residents in the island nation own their own homes. Amidst the ever-shrinking sizes and ever-rising prices, people are still buying property, in numbers, for various reasons.
With Millennials increasingly replacing baby boomers in the job market, private property purchase could inch a notch higher. Below is a simple guide to buying private property in Singapore, ideal for first-time buyers.
Pick the Right Support Staff
The real estate sector is not for the faint-hearted. For those venturing into the industry for the first time, having the right support team to assist in the entire process is essential. A reputable and experienced real estate agent is a must, for anyone who does not know where to start or what exactly they need to do.
In case of a real estate agent, the Council of Estate Agents is an ideal place to start. In the catalog, you should be able to find an ideal agent conversant with all private properties in a given location. Real estate agents come in handy in helping one analyse the various properties on offer and settling on one, depending on need and interest.
Engaging the services of a lawyer is also important. Such professionals come in handy in helping one analyse all the documents involved in property purchase. Lawyers also help in the formulation of legally binding purchase and sale agreements.
Settle on a Property
Once you have the right support staff in place, the next step is checking out the various property up for sale in the market. Take time to shop around and shortlist your favourite properties by area and budget, with the help of a real estate agent. At the click of a button, many online platforms allow one to view such properties.
Once you have settled on a private property that perfectly aligns with your budget, it would be wise to inspect the property. During the inspection stage, you would want to check for defects and maintenance problems.
Negotiate the Price
If satisfied with what you see, the next step would be engaging the seller in negotiating for the price. It is common practice for owners to price their properties at a higher price in anticipation of negotiations. Research property prices in the area and try to come to a consensus with the seller, at a price you feel comfortable.
If you are not sure about the price, then it would be wise to seek the assistance of professionals to get some valuations done on the private property.
Secure Option to Purchase
Once you agree on a price with the seller, the next step will be to secure an Option to Purchase. You should be prepared to pay about 1% of the agreed purchase price for the seller to get the property out of the market, awaiting full payment.
An OTP prevents a seller from selling a property for a specified duration mostly 2 weeks.
Upon securing an OTP, the next step will be coming up with the remaining amount. For starters, you must come up with up to 4% of the remaining amount before the expiry of the two weeks. Failure to do so will result in the forfeiting of the initial 1%.
Most Singaporeans opt for a bank loan to purchase a property. However, if you intend to pay entirely on cash or CPF savings, it is still possible. When going for a property loan, it is important to remember that, you are only allowed 80% of the purchase price in case of a first property. It is also important to note that you can only spend 60% of your monthly income on repaying a bank loan.
In addition to the purchase price, one must also be aware of other fees. A buyer’s Stamp Duty is a must as well as a compulsory fee in case of a first property. To complete the purchase process, you will also have to pay legal and agent fees.
Wait for Your keys
Once all the relevant payments are made, you can heave a sigh of relief awaiting house keys, to move into your new home.
*The advice offered in this column is intended for informational purposes only and not intended to replace or substitute for any professional, financial, legal, or other professional advice. If you have specific concerns or a situation in which you require professional help, you should consult with an appropriately trained and qualified adviser.