Resale condo: How to buy a condo in Singapore on your own

July 30, 2020

If anything is in the spotlight in the Singapore property market this 2020, it’s condos. With home loan interest rates at an all time low – bank interest rates plunged by more than half – condos just got waaaay more affordable.

But yes, even so, buying a condo is a huge thing, both literally and figuratively. And doing so on your own, without a property agent?! -shivers-

To make it sound a little less daunting, because it really is super achievable, we’ve put together a simple condo-buying guide if you’re looking at the resale option:

How to buy a resale condo in Singapore?

1. Search for condos for sale
2. Arrange a viewing
3. Get an Approval in Principle (AIP) from the bank
4. Get an Option to Purchase (OTP) and place a 1% option fee
5. Sign the Sales and Purchase Agreement (S&PA) and pay a 4% Exercise Fee
6. Pay the remainder of the downpayment
7. Pay Buyer’s Stamp Duty (BSD)
8. Pay Additional Buyer’s Stamp Duty (ABSD) if you own more than one property

1. Search for condos for sale

Who’s eligible? Everyone! Singaporeans, Permanent Residents and foreigners alike. (Unlike HDB flats, for which only Singapore Citizens are eligible.)

Honestly, browsing condos for sale and trying to imagine yourself living in that space is one of the most best parts. Especially the case with resales – depending on the owners, different units in the same condo can give you entirely different vibes, and you can choose which parts of the home’s interior design to keep and which parts to infuse with your own character. Exciting stuff!

And don’t forget the technical stuff – narrow down your search based on your budget, house size and ideal location.

We know budget’s definitely one of the biggest concerns for most of us, so here’s a tip: Use this URA e-service to check the how much other similar units in the condo or neighborhood were recently transacted for. This gives you a good idea of the market price and conditions!

Also, compared to HDB flats, there are a lot more factors to consider when buying a condo, such as:

Condos in singapore are either freehold or 99-year leasehold condo. Which is better for you? 99-year leaseholds are cheaper, but they have, well, 99-year leases. Depending on your property strategy, whether you’re planning to rent it out, etc, one might be better for you than the other.
How much are the monthly/ quarterly maintenance fees, and what facilities are there?

2. Arrange a viewing

Found a promising condo unit for sale? Get in touch to arrange a viewing!

This is also the time to ask the homeowner or property agent about the house, for instance:

When was the place last renovated? This gives you an idea of the condition of the unit.
Who are your neighbours?
What’s nice around the neighbourhood? No harm asking for recommendations – building friendly rapport with the owners could make any future negotiations much smoother as well.
Have the owners already bought a new property? They may or may not be willing to disclose this, but if they do, this could give you some indication of how urgently they’re looking to sell, which might tell you how much bargaining power you have.

Don’t be paiseh to request to view the house more than once! After all, it’s a house you’re buying. That’s a ginormous decision.

You might also want to drop by the neighborhood to check out the area more than once. Perhaps you viewed the house on a weekend after a leisurely brunch, and all was good. But how busy are weekday morning rush hours? Check out road traffic, noise levels, etc at various times of the day.

3. Get an Approval in Principle (AIP) from the bank

If you’re already imagining yourself freely sprawled across the sofa in the home you’re viewing, maybe you’ve found The One.

Before you take it to the next step with the seller, you’ll need to get an Approval in Principle (AIP) from the bank you’re intending to get a loan from.

An AIP is basically the bank’s agreement to lend you a certain sum of money, based on your financial health and credit history, as a home loan.

Given the stipulated sum in the AIP, you’ll get a better idea of your budget for your next home.

Tip: When you get an AIP, you’re not obliged to take up a loan from that bank. So if you happen to find a better home loan from another bank later on, you’re free to go with that too.

An AIP is typically valid for 30 days, so this is when things get real serious:

4. Get an Option to Purchase (OTP) and place a 1% option fee

Once you and the seller have agreed on the final purchase price, place a 1% Option Fee (i.e., 1% of the purchase price) in exchange for an Option to Purchase (OTP) – this is basically you chope-ing the property.

For this bit of the home-buying process, you’ll have to hire a conveyance lawyer to help you with the legal bits.

Conveyancing is the legal process of transferring property from one owner to another (that’s you!), and typically costs between $2,000 to $3,000 for a condo transaction.

This also involves conducting a title search to confirm that the seller has “good root of title”. In simpler terms, their title to the property is not defective. In simpler simpler terms, making sure they can sell, if not how you buy?

Ok, back to the Option to Purchase. The OTP will usually be prepared by the seller’s lawyer and sent to your lawyer, and typically includes:

Each party’s details: the buyer and seller’s names, identification numbers, registered addresses, etc
Details of the OTP: The Option Fee, option period, and that the Option Fee will be forfeited if the OTP is not exercised before the expiry date
Details of the property: The property’s address, floor area, sale price, whether the property is sold furnished, and an inventory list if applicable, the move-in date, etc
The buyer and seller’s rights and responsibilities: e.g. that each party must pay their respective stamp duties and withholding tax

Be sure about your decision before placing the Option Fee. If you back out, your Option Fee will be forfeited to the seller.

That’s also why getting an AIP beforehand is so important – there have been cases of interested buyers placing the Option Fee for a property, only to give it up when they realise their borrowing capacity can’t cover the remaining cost of the home. Yiiiiikes.

5. Exercise your OTP: Sign the Sales and Purchase Agreement (S&PA) and pay a 4% Exercise Fee

The OTP is valid for 14 days, during which the seller is not allowed to sell the property to any other prospective buyers; before this window expires, you may exercise your OTP with a 4% Exercise Fee.

By exercising your OTP, you can now enter into a Sales and Purchase Agreement (S&PA) with the seller.

The terms of the S&PA should be the same as those in the OTP.

Your conveyance lawyer will lodge a caveat on the property with the Singapore Land Authority (SLA), which basically means your chope is now legit, preventing the homeowner from attempting to sell to another buyer.

Note that the Option Fee and Exercise Fee must be fully paid in cash i.e. not with your CPF funds or a bank loan. So a quick recap: At this point, you would have paid for 5% of the purchase price of the condo.

6. Pay the remainder of the downpayment

Now, you’ll also have to pay the remaining downpayment of the condo.

If it’s your first housing bank loan, your Loan-to-Value (LTV) ratio is is 75%, meaning you can only take up a bank loan for up to 75% of the value/ purchase price (whichever is lower) of your home.

The rest of the cost of the home, i.e. 100% – 1% Option Fee – 4% Exercise Fee – 75% bank loan = 20% has to be paid upfront with cash and/or CPF.

Your LTV ratio, and hence corresponding downpayment, depends on how many times you’ve taken up a housing loan:

First housing loan: 75% LTV i.e. 25% to be paid upfront (1% Option Fee, 4% Exercise Fee, 20% remainder downpayment)
Second housing loan: 45% LTV i.e. remaining 55% to be paid upfront (1% Option Fee, 4% Exercise Fee, 50% remainder downpayment)
Third housing loan onwards: 35% LTV i.e. remaining 65% to be paid upfront (1% Option Fee, 4% Exercise Fee, 60% remainder downpayment)

7. Pay Buyer’s Stamp Duty (BSD)

So much money talk! You’re also liable to pay Buyer’s Stamp Duty (BSD) within 14 days of signing the S&PA.

The BSD rate is calculated based on the purchase price or market value of the property, whichever is higher:

First $180,000: 1%
Next $180,000: 2%
Next $640,000: 3%
Remaining amount: 4%

For instance, if the condo costs/ is valued at $1,200,000, your stamp duty will be:

1% of first $180,000 + 2% of next $180,000 + 3% of next $640,000 + 4% of remaining $200,000 = $1,800 + $3,600 + $19,200 + $8,000 = $32,600

This can be paid via bank transfer, NETS, cash, cheque or GIRO to the Inland Revenue Authority of Singapore (IRAS).

8. Pay Additional Buyer’s Stamp Duty (ABSD) if you own more than one property

The Additional Buyer’s Stamp Duty (ABSD) should also be paid, if necessary, within 14 days of signing the SP&A.

Singapore Citizens get to escape the ABSD for their first residential property, but to everyone else – Singaporeans who are already property-owners, PRs and foreigners: Sorry 🙁

Singaporeans: 12% on their second residential property, 15% on their third and subsequent
PRs: 5% on their first residential property, 15% on their second and subsequent
Foreigners: 15% on their first residential property, 20% on their second and subsequent

Welcome to your new home!

Your lawyer will register the change in ownership of the property with the SLA.

It’ll typically take 8-10 weeks, also depending on the agreed date with your seller, before the sale is complete and the property title is delivered to you.

Take for instance a couple buying a $1,200,000 condo. All of their payments can be summed up in this timeline:

And that’s it! Tbh, if you’re in a good financial position to buy a condo, you’ve already done the bulk of the work 😉 So the process of finding the condo to buy should be the fun part, not the scary part!

Tap the banner below to begin your condo-shopping on Carousell. Exciting times ahead!

Resale condo: How to buy a condo in Singapore on your own