Cost Associated in Buying a Private Property in Singapore

Property Posted on April 29, 2016

Some people might think that buying a private property is about

  • Find the price of the property
  • Have the money or seek out bank mortgage
  • Pay the bank for monthly payment
  • Just like that until the mortgage finish

But in reality, there are quite a lot of process you need to undertake before you go in this conclusion. Remember that we are playing with big funds here.

And it is not only the price tag.

So you need to make sure you have your steps right before jumping into the world of property. Here we will explore more on the cost of owning a private property (It is a different case for buying HDB property).

So, what are the associated cost?

  • Option fee – It is a payment to the seller to secure your Option to Purchase (OTP) that usually cost around 1% of agreed property price. When you paid this fee, the seller will be obliged to sell (or make it available) for you to purchase. You can change your mind here, but be aware that by doing so will forfeit your option fee payment.
  • Option exercise fee – When you (as the buyer) is satisfied that the property is physically fit for purchase and have your finance organised, you will be required to pay the option exercise fee. The cost usually ranges from 5% – 10% of the agreed purchase price (minus the option fee you paid beforehand).
  • Down payment – It is a minimum payment that you need to pay. Let’s say you buy a $1.000.000 worth of property with 80% ($800.000) as a mortgage. This left you with $200.000 of downpayment. Since you already paid for exercise fee (let’s say 10% or $100.000), you will have $100.000 to pay in cash. (Please note that you can use your CPF savings for some of the downpayment). 
  • Stamp duty – purchase price – When you signed the option to purchase documents, you will have a valid contract that attracts stamp duty fees. Please note that foreigners and locals will have different stamp duty rates.
  • Stamp Duty – mortgage documents – This is a paperwork to secure a mortgage for your property. Will cost you around 0.4% of the amount of mortgage (capped at $500). This will be paid to IRAS.
  • Legal fees – This will be a payment to lawyer(s) to carry a background checks on the property. Bank will usually appoint theirs and allocate the payment to the buyers. This will cost you around $2.500 – 3.000 and will vary if you use a private one.
  • Valuation fee – In order to qualify the loan, the bank will need to do home valuations by experts. In some cases, the valuation price will be paid by the banks that issue the loan as a benefit. Typically cost around $350 – $500 depending on the type of property.

These are just the initial cost of owning your private home. Furthermore, you will need to seek out the bank payments of the rest of $800.000 with the banks. We will cover that in our future blog posts.