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How to Finance Your Singapore Property Purchase: 6 Essential Tips

  • Writer: Property Moms
    Property Moms
  • Sep 27, 2024
  • 4 min read

Buying a home in Singapore is quite a decision, be it an investment or the first home. With high prices and enough people wanting homes, it is essential to plan your money well. Knowing how to pay for your house will make sure you save yourself some money troubles and make the whole purchase process more accessible. We will touch on six easy tips for paying for your dream Singapore property. From checking money to choosing the best loans and planning for future costs, these tips will make you feel confident. So, you can be ready to buy that perfect dream home with no surprise!



How to Raise Fund for your Singapore Property Purchase?

1. Check Your Money

Before you start picking houses, check your money. Knowing what you can spend helps one avoid picking a house that costs too much.

●     Count your savings: These are the monies you have kept aside. You will use them for a down payment. In Singapore, down payments range between 5% and 25% of the house price.

●     Think about your monthly income: This is the money that you can bring in every month. Lenders and others who lend to you will look at this to ensure you can pay them back.

●     Think about your debts: Do you owe money on things like an automobile or credit cards? Pay these off as quickly as possible. Too many debts make it much harder to get a mortgage on a house.


2. Look at Loan Choices

Singapore offers different ways to borrow money for a house. For instance, picking the right loan helps you in the long run. Here are some common loans:


●     Loans from banks: Singaporean banks offer two kinds of loans, namely fixed-rate and floating-rate. In a fixed-rate loan, they fix the rate for the entire period. In floating-rate loans, they float with the market.


●     HDB loans. If you are planning to buy an HDB flat, you may get a loan from the Housing & Development Board. HDB loans are relatively cheaper and offer better deals than the bank loans. However, it only applies to people purchasing HDB flats.

If you’re unsure which loan to pick, talk to a property agent who finished the Property Agent Course Singapore. They know all about the latest trends.


3. Use Your CPF Savings

Therefore, it helps Singaporeans and permanent residents to save money for the most important things which comprise housing and retirement. Consequently, your savings can be used in paying for your home.


CPF Ordinary Account (OA): You can use the money in the OA for the down payment and each succeeding month's loan payments. When you buy private properties, you can use as much as 100 percent of your OA savings. Of course, if it's an HDB, you'd have to check which rules govern.

Using your CPF savings will enable you to pay for your home using less cash. However, never forget that CPF is for your future too, so don't spend it all now.


4. Prepare for Add-ons

Home buying is not based on the price of the house. Additionally, you have to incur other costs in the process. So, you should prepare for them.


●     BSD: Buyer's Stamp Duty—This is a tax you pay when buying property in Singapore. The tax depends on the price or value of the property. The BSD varies from 1% to 4%.

●     Legal fees: You will require a lawyer to assist with the paperwork for your new home. This could cost around S$2,500-S$3,000.

●     Maintenance fees: When you buy private property, you have to contribute to the maintenance of common facilities like the swimming pool or a gym. The cost is usually between S$200 and S$600 per month.


And you also have to pay for hiring a property agent; they charge too. Most charge 1% to 2% of the house price. To get the best support, find an agent who has been at least through the Property Agent Course Singapore.


5. Check If You Can Get a Loan

Always determine whether a loan is available before demanding one. However, people who lend you money will scrutinize some factors before offering it to you.

 

●     Total Debt Servicing Ratio (TDSR): This rule states that you cannot service more than 60 per cent of your monthly earnings on all your debt repayment, including the home loan, car loan, and any other debts you have.

●     Credit score: The lenders check whether you are one of those reasonable repayments of loans or not. Therefore, a high score makes it easy to get a loan.

●     Loan-to-value (LTV) ratio: This is the property price the bank will let you borrow. In Singapore, the LTV for bank loans is 75%, which means you must pay the other 25% upfront.

 

If you need help, ask a Singapore property agent who took the property Agent-related Course. Consequently, they can guide you through everything.


6. Plan for the Future

Buying a home means you’ll be paying for it for a long time. Ultimately, you need to plan ahead to make sure you can always afford it.

●     Build an emergency fund: Save enough money to cover six months of living expenses, including your home loan payments. This helps if something unexpected happens.

●     Get mortgage insurance: Mortgage insurance helps if something happens that keeps you from paying your loan. It covers your family if you can’t work or pass away.

●     Plan for higher costs: In the future, property taxes and other costs might go up. Planning for these increases keeps you ready for anything.


The End Note

Overall, paying for a home in Singapore is rather cumbersome yet not impossible with a proper plan. Check your money, pick the right loan, and use your CPF savings, and you'll find it relatively easy. Plan for additional costs and check if you qualify for a loan. A good real estate agent, especially someone who's had the benefit of the Property Agent Course Singapore, can really guide you through the whole process.


So, follow these six tips to buy your dream home and enjoy your new space. It does not matter whether you're buying your first HDB flat or a private property. Therefore, the above steps should help you navigate Singapore's housing market well.

 
 
 

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