How A lot Do You Actually Have to Purchase Your First Singapore Apartment ?, Cash Information

Getting your homeownership in Singapore is often a difficult, complicated and arduous task that becomes even more complicated with the realities of Covid-19.

You probably came across this article about buying a condo because you are trying to examine all of your housing options before deciding on one that suits your circumstances.

Here is everything Information you need about this vital Singapore condo down payment to help you, the first time buyer, decide what to do next.

Why Should First Time Buyers Splash On A Condo?

In the past, it has been a standard rite of passage for first-time Singapore home buyers to buy an HDB BTO apartment and then upgrade to a condo at some point.

But Covid-19 has complicated a lot of things, to put it very easily. Most recently, we heard that HDB BTO apartments are being delayed for another year or more due to stricter Covid-19 restrictions. Not good news if you want to move out of your parents’ house as soon as possible.

Chanel Li, 23, whisking bakes owner and potential first-time BTO homeowner, notes her frustration with the slow process.

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“We applied for September 2019 [BTO]but they told us it might only be ready from October 2023 to January 2024. ” This is a delay of at least four months from early June to September 2023.

In early 2020, 99.co reader Dawn Tan wrote about her BTO experience. After waiting almost a year to get a queue number and only to have her application turned down, she opted for an Executive Condominium (EC) instead.

And then there are the restrictions on buying an HDB apartment – you have to be a citizen, have a core family (or be over 35 years old) and earn within the income limit. Not to mention the absurd seven-figure resale flat rates.

It’s no wonder first-time buyers like you may be considering buying a condo instead.

What is the down payment on Singapore condominium for first-timers?

If you were wondering how much you need to have on hand to buy a condo – and deal with the circus that is public housing – this article is for you.

There are a few factors that will affect your Singapore condo down payment:

1. Loan-to-Value Limit (LTV): The amount that you can borrow from the bank
2. The condominium pending down payment that you can partially pay with your CPF
3. The minimum deposit that must be withdrawn from your bank account
4. Stamp duty (BSD and / or ABSD), which you must first pay in cash (then request a refund from CPF)

These factors vary depending on the price of the apartment. For simplicity, let’s say you’re looking for a small apartment in a non-central neighborhood and you’ve found a unit that is operational $ 800,000.

The following table shows the costs you will need to pay the down payment for your Singapore apartment:

How much cash + CPF do I need for my condominium deposit?

In case you didn’t know, you can use your CPF funds to pay your condo down payment. The money must come from your regular account (OA).

In the example above, the aspiring apartment is $ 800,000. You have a total down payment of $ 200,000, or 25 percent of the price of the apartment – this high amount has been required by law since 2018.

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Of that $ 200,000, you must pay at least $ 40,000 in cash, or five percent of the purchase price.

The remaining balance can worn by your CPF OA. This is equivalent to $ 160,000, or 20 percent of the purchase price.

But wait! Do you have USD 160,000 in your CPF account? If you’re a regular employee and making a pretty high income of $ 4,000 / month, it will take your OA a little over eight years to achieve that much. Ooft. That’s a long time.

So, if your CPF OA isn’t quite that flush, you’ll have to pay more than $ 40,000 in cash to make your home down payment.

Do I have to pay stamp duty (BSD or ABSD) in cash?

Buyer’s Stamp Duty (BSD) is an additional fee to consider when saving for your home down payment. This applies to all residential property purchases, regardless of whether you are a first-time buyer.

Here is a screenshot from IRAS that shows you how it is calculated:

For a $ 800,000 condominium, the buyer’s stamp duty is 18,600 USD (Calculator here). If you are a Singapore citizen, that is “all” you have to pay for.

However, if you are a PR or a foreigner you need to factor in the buyer’s additional stamp duty. On their first property purchase, PRs have to pay a five percent tax, while foreigners are taxed 20 percent.

Overall, PRs have to pay BSD + ABSD from 58,600 USD (Calculator here), while foreigners have to cough BSD + ABSD from 178,600 USD (Calculator here).

You can use CPF OA to pay stamp dutybut it is on a refund basis. This means that you still need to withdraw the funds from your bank account.

And of course, your CPF needs to have enough balance to be able to reimburse you in the first place.

What are the monthly repayments for my home with a home loan?

Did you think it would be hard to cough up the hefty deposit? Wait until you find out about the monthly repayments for your apartment.

Typical at the moment Home loan With a blocking period of two to three years, bank interest rates range between 1.25 and 1.6 percent per year.

For a condominium costing $ 800,000, allow for a monthly repayment of at least $ 3,000.

The above rates assume that you are taking out a fixed home loan. However, there are many other types of home loans such as: B. the different types of variable home loans (SIBOR vs Board). Note that these home loan fixed rates will revert back to the floating rate after the lock-up period.

Always keep yourself updated on the interest rates Don’t hesitate to refinance your home loan if necessary!

Do I have enough cash to pay a condo down payment?

In summary, the Singaporeans need at least CPF OA of $ 160,000 and cash on hand of $ 58,600 on a condominium down payment. (If you don’t have enough in your CPF OA, you will have to pay more in cash.)

When you weigh that against the other options, here are guides to ponder:

Most home purchases follow a similar structure: calculate your down payment from the credit limit, and then how much you have in your CPF versus cash you actually have to pay. Your circumstances can be unique, which is why we have tools for you to find out what is best for you.

But once you’ve decided on a condo, you definitely have to work hard and save for that six-figure sum.

Consider low risk investments for higher returns when you have years to save on your condo down payment. Otherwise, your best short term choices would be side appearances and other sources of income for extra cash.

This article was first published in MoneySmart.