Below is a list of the payments you need to get ready:

 

  • Option fee: paid in cash when you make an offer to purchase, in return for an Option to Purchase (OTP)
  • Initial down-payment: how much you pay and the amounts payable in cash and from CPF savings depend on the value and type of property you buy, whether you have an existing housing loan, as well as the tenure of the loan you intend to take 
  • LTV/COV: If the purchase price is higher than the bank valuation of the property, you would need to come up with the difference in cash.
  • Stamp duty on purchase and Additional Buyer’s Stamp Duty (ABSD)
  • Legal/conveyancing cost
  • Agent’s commission (may or may not be applicable to purchase of private properties)

 

The chart below shows the amount you need to set aside on your down payment as a first property owner. As you can see, a longer tenure can be achieved if you put down a larger down payment. If you are buying your second property, read our article here.

Your loan tenure depends on your age. For HDB you may loan up to a maximum of 25 years. For private properties, you may loan up to 30 years up to age 65. However it is possible to extend your loan up to age 75 by putting down a higher down payment. Do talk to our HomeReward consultants to find out more.

 

 

Housing Loan

Down Payment

Cash/CPF

HDB Concessionary Loan

10% of purchase price or valuation, whichever is lower

CPF funds. Cash may be used to top up if necessary

HDB Bank Loan

  • Loan tenure should not exceed 25 years
  • Sum of loan tenure and age of borrower should not exceed 65 years

 

20% of purchase price or valuation, whichever is lower

5% in cash and 15% in CPF funds (or cash top up)

Private Property Bank Loan

  • Loan tenure should not exceed 30 years
  • Maximum age is 65

 

25% of purchase price or valuation, whichever is lower

5% in cash and 20% in CPF funds (or cash top up)

Private Property Bank Loan

  • Loan tenure should not exceed 35 years
  • Maximum age is 75

 

45% of purchase price or valuation, whichever is lower

10% in cash and 35% in CPF funds (or cash top up)

 

Illustrated tables

 

HomeReward has done up some examples of buyers with different estimated incomes and loan tenures who are purchasing either HDB, EC or private properties. We have also estimated the income needed for a 2 bedder condominium in either the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR).

 

Example 1: HDB Buyers

 

In the example below, we assume the buyers are going for a bank loan instead of a HDB concessionary loan of 90%. The interest rate at 3.5% is a ‘stress test’ banks use to assess the loan quantum. Current rates hover at about 1.8% to 2% so your monthly repayment will be lower than those in the examples.

 

For HDB, the typical option fee is $1000 (although it can be less). In order to exercise the OTP, the buyer can pay up to a maximum of $5000, (inclusive of option fee), to the seller. We assume the figures are $1000 (as Option Fee) and $4000 (as Option Exercise Fee) respectively. Therefore, the initial Payment is the compulsory 5% cash component after payment of the Option Fee and Option Exercise Fee. The remaining amount of the cash component after the Option Fee and Option Exercise Fee shall be paid on HDB's first appointment.

 

The Minimum Cash Upfront is assuming that you choose to pay your Conveyancing Fee and Stamp Duty on top of the 5% cash component by cash (although it can be paid with the CPF if sufficient). The Amount Required in CPF OA therefore is the remaining down payment of 20%. The Number of Years required portion gives one an estimate as to how long one needs to accumulate that 20% in the CPF OA.

 

Value of Property Based on Income

 

Assumptions on Income Level vs Age

Age 26 36 46
Income 4200 5500 6500

 

 

Single Income Family

   HDB  HDB  HDB
Buyer's Age  26  36  46
Salary (per month)  $4,200  $5,500  $6,500
Loan Tenure (years)  25  25  19
Interest Rate per annum  3.50%  3.50%  3.50%
Value of Property he/she can afford  $335,581.48  $439,451.94  $432,546.51
Down-payment Percentage (including option fee)  25%  25%  25%
Down-payment Amount (including option fee)  $83,895.37  $109,862.99  $108,136.63
OTP Fee (1k) + Option Exercise Fee (4k) + Initial Payment  $16,779.07  $21,972.60  $21,627.33
Stamp Duty  $4,667.44  $7,783.56  $7,576.40
Conveyancing Fees  $3,000  $3,000  $3,000
Loan Quantum  $251,686.11  $329,588.96  $324,409.89
Mortgage Servicing Ratio  30% of Gross Income  30% of Gross Income  30% of Gross Income
Total Cash + CPF upfront required  $91,562.82  $120,646.54  $118,713.02
Minimum Cash upfront  $24,446.52  $32,756.16  $32,203.72
Amount required in CPF OA  $67,116.30  $87,890.39  $86,509.30
No of years required to achieve required CPF Amount  5.79  6.34  5.84
Monthly Loan Repayment  $1,260  $1,650  $1,950

 

 

Example 2: Executive Condo and Private Property Buyers

 

In the example below, we have used a double income totaling to at least $8400. If there are two borrowers for the property loan, we will use a Income Weighted Average Age formula to derive the final monthly loan figure. You can read more about it HERE.

 

The option fee is 5% of the purchase price, paid in cash. For Executive Condo (EC), we have to use HDB’s Mortgage Servicing Ratio of 30% to calculate loan size. Private condos and landed properties will be subject to Total Debt Servicing Ratio of 60% instead.

 

The Minimum Cash Upfront is assuming that you choose to pay your Conveyancing Fee and Stamp Duty on top of the 5% cash component by cash (although it can be paid with the CPF if sufficient). The Amount Required in CPF OA therefore is the remaining down payment of 20%. The Number of Years required portion gives one an estimate as to how long one needs to accumulate that 20% in the CPF OA.

 

Double Income Family

   Executive Condo  Private Condo  Private Condo
Buyer's Age  26  36  46
Salary (per month)  $8,400  $11,000  $13,000
Loan Tenure (years)  30  29  19
Interest Rate per annum  3.50%  3.50%  3.50%
Value of Property he/she can afford  $748,255.15  $1,922,106.41  $1,730,186.05
Down-payment Percentage (including option fee)  25%  25%  25%
Down-payment Amount (including option fee)  $187,063.79  $480,526.60  $432,546.51
Option Fee (cash)  $37,412.76  $96,105.32  $86,509.30
Stamp Duty  $17,047.65  $52,263.19  $53,807.44
Conveyancing Fees  $3,000  $3,000  $3,000
Loan Quantum  $561,191.36  $1,441,579.81  $1,297,639.54
Total Debt Servicing/Mortgage Servicing Ratio  30% of Gross Income  60% of Gross Income  60% of Gross Income
Total Cash + CPF upfront required  $207,111.44  $535,789.80  $489,353.96
Minimum Cash upfront  $57,460.41  $151,368.51  $143,316.74
Amount required in CPF OA  $149,651.03  $288,315.96  $259,527.91
No of years required to achieve required CPF Amount  6.45  10.40  8.76
Monthly Loan Repayment  $2,520  $6,600  $7,800

 

 

Example 3: How much to own a condo in the 3 regions of Singapore

 

In the example below, we illustrate the costs and income needed for a 2 bedder 900sf condominium in either the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR). Prices are based on the time of this article, for a newly-TOP unit.

 

The interest rate is kept at 3.5% although current rates hover at about 1.8% to 2% so your monthly repayment will be lower than those in the examples.

 

  OCR Private Condo RCR Private Condo CCR Private Condo
Selling Price  $1,250,000  $1,620,000  $2,650,000
Down-payment Percentage (including option fee)  25%  25%  25%
Down-payment Amount (including option fee)  $312,500  $405,000  $662,500
Option Fee (cash)  $62,500  $81,000  $132,500
Stamp Duty  $34,600  $49,400  $90,600
Conveyancing Fees  $3,000  $3,000  $3,000
Loan Quantum  $937,500  $1,215,000  $1,987,500
For 35 Years Old Buyer      
Loan Tenure (years)  30  30  30
Interest Rate per annum  3.50%  3.50%  3.50%
Monthly Loan Repayment  $4,209.79  $5,455.89  $8,924.76
Minimum Income Required to meet TDSR  $7,016.32  $9,093.15  $14,874.61
For 45 Years Old Buyer      
Loan Tenure (years)  20  20  20
Interest Rate per annum  3.50%  3.50%  3.50%
Monthly Loan Repayment  $5,437.12  $7,046.51  $11,526.70
Minimum Income Required to meet TDSR  $9,061.87  $11,744.18  $19,211.17
Total Cash + CPF upfront required  $350,100  $457,400  $756,100
Minimum Cash upfront  $100,100  $133,400  $226,100
Amount required in CPF OA  $250,000  $324,000  $530,000

 

In HomeReward’s Affordability and Housing Part 2, we will discuss in greater detail the factors we need to consider when purchasing a property such as TDSR, CPF and withdrawal limits.

 
Disclaimer : This article is intended as a guide and we have taken every reasonable effort to ensure the accuracy of these information. Information is correct as of 21 March 2018.