After months of hard toiling, I have finally managed to buy a flat in Singapore. This article might be handy if you considering buying a hdb (resale) flat in Singapore.
Eligiblity : To buy a HDB flat, your spouse and you should be a Singapore PR or Citizens (if your age is less than 35). You can still buy a HDB flat if you are a PR, Single and above 35 years of age. Also note, Singaporean PRs are eligible to buy a resale flat only. Only citizens can buy newly built flats in Singapore.
Prerequisites:
You need to make sure you plan the following prerequisites before even you start your house hunting.
No Overseas Properties : This will let many people down but recently HDB added this rule that if you want to buy a HDB flat in Singapore, you have to declare that you dont have any other property anywhere else in the world. I am not sure how will they find out or if they will find out or not but if you are proven guilty, you will have to face worst time of your life :(
Housing Loan Eligiblity & 20% Down payment: For PRs, you can only get 80% of the valuation price as a loan. However, Singapore housing loan interest is very cheap compared to India and many countries. The remaining 20% can be a combination of cash and CPF (Central Provident Fund) savings that you have accumulated all the time in Singapore. The suggested advice is to research on the banks and their interest rates, apply for in principal loan approval. This means, the bank will issue a letter to you on the maximum loan you can avail, interest rates etc.,
COV: You also should have enough buffers for this funny element called COV (Cash over Value). This amount could be anywhere from 0 to 100000 dollars on top of the valuation price. Basically, this is the negotiation part where a buyer can usually get engaged with the seller. This COV concept evolved only few years ago as few sellers felt the valuation price is far too low for the flat and therefore the government does not interfere with this amount. Buyer has to research himself to make sure the COV amount is reasonable enough for the house. For eg., if the house is well renovated, you may want to consider giving the expected COV otherwise try and negotiate to get the best deal. Ofcourse, COV will not be part of the housing loan in any bank. Means, you need to pay the COV completely from your pocket. However, its 100% legal and will be added to valuation price.
Stamp Fee : You normally end up paying roughly around 10K for a 500K worth house (very approximate calculation)
Agent Fee: Buyer should pay 1% of total house value (excluding GST) as an Agent fee. Normally, it’s a hectic process if you prefer to buy a house without an agent’s help unless you have humongous patience and enormous time.
Renovation Fee: This is subjective. If the house is in perfect moving-in condition, you don’t need to worry about. Even if there is a renovation needed, there are one million banks ready to offer renovation loan.
Procedure:
Here is the step by step procedure to buy HDB flat once you planned the money part.
Step 1: Engage agents and start house hunt
Have a budget in mind and start researching the market. I was greatly benefited by the site www.propertyguru.com.sg to know about the current market condition. Also start fixing the viewing appointment. Ever viewing is a new learning. Try and view as many to know more about the market.
Step 2: Negotiation
Once you feel the house is good enough, you can start making your offer and engage in negotiation. The agent is the mediator. Ideally, you won’t negotiate the amount face to face with the seller. The agent will act as a mediator between seller’s agent and you. Normally, there will b a seller’s agent (who gets his commission from seller) and a buyer’s agent (who will get the commission from buyer) who talks to their clients during the whole negotiation process. Basically, you cannot negotiate on the valuation price part as it’s fixed by government. The only negotiation happens will be on COV only.
Step 3: 1000$ payment
Once you are happy with the price, place a 1000$ deposit (this is part of your 20% down payment/ COV amount) and sign the option to purchase document. This means you have 2 weeks time to get your loan approved and get the required documents from bank. Also, incase if you change your mind, you can chose not to buy the house but you won’t get the 1000$ deposit back.
Step 4: Exercise the option
This is the first critical step you do in the house buying process. After 2 weeks from the date you signed the option to purchase, you have to pay 4000 SGD (again, part of your COV/20% down payment) to confirm that you intend to buy the house and no turning back after that. You will further sign the Exercise the option document along with your spouse. Immediately after signing the document, the agent will get in touch with HDB and get the first appointment date to go physically and sign further documents in front of HDB officers. Meanwhile, the bank will also engage their lawyers to do the legal formalities for you. There will be a small legal fee for this (around 600 SGD)
Step 5: HDB appointment
Roughly 5-6 weeks later, your spouse and you should go to HDB hub along with the agents, sellers to sign the agreement to buy and sell. At that point the HDB officer will announce the house completion date. After that you need to visit the lawyers (your agent will help you arrange) to sign further documents that explains legal fee, cpf contribution to your housing loans etc., The agent will let you know the stamp fee amount for which you need to bring a cheque in the name of ‘Commissioner of Stamp Duties’ to be handed over to the law firm. The law firm will let you know exactly by when you need to settle the entire balance amount and the exact amount as well. Normally, you need to hand the complete balance cheque to law firm 1 or 2 days before completion date. The completion date will normally be 5-6 weeks after this point.
Step 6 : Hand over
Basically, after Step 5 all you need to do is to get the balance amount ready in your bank and get the cheque ready on time before the completion date. 1 or 2 days before the completion, you can fix an inspection appointment with the current owners to make sure the house is in the same condition as you have seen before. Neither HDB nor the owners will take responsibility of any damages that you find after the completion date. You can also use this 5-6 weeks period to plan you renovation, furniture shopping etc., during the completion date, you need to visit the law firm again to collect the house keys and the house is all yours.
Keep in mind:
The whole process from Step 1 to 6 will be typically around 4-6 months depends on the mutual agreement between the buyer and seller, hdb work load etc.,
You don’t own the house until the completion date and therefore you can not disturb the current owners time to time in the name of repeated viewing etc., unless the seller is kind enough to allow you.
Renovation plan is the key. You won’t be able to renovate once you move in due to the complexities involved. So, plan your renovation bit carefully and make sure you got your money/paper works ready before completion date so you don’t waste any time.
Organize yourself well and keep the documents safe and ready all the times. You may have to take copies and submit them time to time.
All I posted in this article are purely my experience and research output only. Don’t whack me if you have different experience ;) everyone is unique and you may have different experience. The purpose of this post is to give you a high level idea on buying an hdb flat in Singapore.
What is HDB?
HDB stands for Housing Development Board which is a government organization that builds and sells the houses to the Singapore residents. The government basically controls the valuation price of the house and takes the responsibility to maintain the HDB buildings. More than 80% of Singapore population lives in HDB flats.
Eligiblity : To buy a HDB flat, your spouse and you should be a Singapore PR or Citizens (if your age is less than 35). You can still buy a HDB flat if you are a PR, Single and above 35 years of age. Also note, Singaporean PRs are eligible to buy a resale flat only. Only citizens can buy newly built flats in Singapore.
Prerequisites:
You need to make sure you plan the following prerequisites before even you start your house hunting.
No Overseas Properties : This will let many people down but recently HDB added this rule that if you want to buy a HDB flat in Singapore, you have to declare that you dont have any other property anywhere else in the world. I am not sure how will they find out or if they will find out or not but if you are proven guilty, you will have to face worst time of your life :(
Housing Loan Eligiblity & 20% Down payment: For PRs, you can only get 80% of the valuation price as a loan. However, Singapore housing loan interest is very cheap compared to India and many countries. The remaining 20% can be a combination of cash and CPF (Central Provident Fund) savings that you have accumulated all the time in Singapore. The suggested advice is to research on the banks and their interest rates, apply for in principal loan approval. This means, the bank will issue a letter to you on the maximum loan you can avail, interest rates etc.,
COV: You also should have enough buffers for this funny element called COV (Cash over Value). This amount could be anywhere from 0 to 100000 dollars on top of the valuation price. Basically, this is the negotiation part where a buyer can usually get engaged with the seller. This COV concept evolved only few years ago as few sellers felt the valuation price is far too low for the flat and therefore the government does not interfere with this amount. Buyer has to research himself to make sure the COV amount is reasonable enough for the house. For eg., if the house is well renovated, you may want to consider giving the expected COV otherwise try and negotiate to get the best deal. Ofcourse, COV will not be part of the housing loan in any bank. Means, you need to pay the COV completely from your pocket. However, its 100% legal and will be added to valuation price.
Stamp Fee : You normally end up paying roughly around 10K for a 500K worth house (very approximate calculation)
Agent Fee: Buyer should pay 1% of total house value (excluding GST) as an Agent fee. Normally, it’s a hectic process if you prefer to buy a house without an agent’s help unless you have humongous patience and enormous time.
Renovation Fee: This is subjective. If the house is in perfect moving-in condition, you don’t need to worry about. Even if there is a renovation needed, there are one million banks ready to offer renovation loan.
Procedure:
Here is the step by step procedure to buy HDB flat once you planned the money part.
Step 1: Engage agents and start house hunt
Have a budget in mind and start researching the market. I was greatly benefited by the site www.propertyguru.com.sg to know about the current market condition. Also start fixing the viewing appointment. Ever viewing is a new learning. Try and view as many to know more about the market.
Step 2: Negotiation
Once you feel the house is good enough, you can start making your offer and engage in negotiation. The agent is the mediator. Ideally, you won’t negotiate the amount face to face with the seller. The agent will act as a mediator between seller’s agent and you. Normally, there will b a seller’s agent (who gets his commission from seller) and a buyer’s agent (who will get the commission from buyer) who talks to their clients during the whole negotiation process. Basically, you cannot negotiate on the valuation price part as it’s fixed by government. The only negotiation happens will be on COV only.
Step 3: 1000$ payment
Once you are happy with the price, place a 1000$ deposit (this is part of your 20% down payment/ COV amount) and sign the option to purchase document. This means you have 2 weeks time to get your loan approved and get the required documents from bank. Also, incase if you change your mind, you can chose not to buy the house but you won’t get the 1000$ deposit back.
Step 4: Exercise the option
This is the first critical step you do in the house buying process. After 2 weeks from the date you signed the option to purchase, you have to pay 4000 SGD (again, part of your COV/20% down payment) to confirm that you intend to buy the house and no turning back after that. You will further sign the Exercise the option document along with your spouse. Immediately after signing the document, the agent will get in touch with HDB and get the first appointment date to go physically and sign further documents in front of HDB officers. Meanwhile, the bank will also engage their lawyers to do the legal formalities for you. There will be a small legal fee for this (around 600 SGD)
Step 5: HDB appointment
Roughly 5-6 weeks later, your spouse and you should go to HDB hub along with the agents, sellers to sign the agreement to buy and sell. At that point the HDB officer will announce the house completion date. After that you need to visit the lawyers (your agent will help you arrange) to sign further documents that explains legal fee, cpf contribution to your housing loans etc., The agent will let you know the stamp fee amount for which you need to bring a cheque in the name of ‘Commissioner of Stamp Duties’ to be handed over to the law firm. The law firm will let you know exactly by when you need to settle the entire balance amount and the exact amount as well. Normally, you need to hand the complete balance cheque to law firm 1 or 2 days before completion date. The completion date will normally be 5-6 weeks after this point.
Step 6 : Hand over
Basically, after Step 5 all you need to do is to get the balance amount ready in your bank and get the cheque ready on time before the completion date. 1 or 2 days before the completion, you can fix an inspection appointment with the current owners to make sure the house is in the same condition as you have seen before. Neither HDB nor the owners will take responsibility of any damages that you find after the completion date. You can also use this 5-6 weeks period to plan you renovation, furniture shopping etc., during the completion date, you need to visit the law firm again to collect the house keys and the house is all yours.
Keep in mind:
The whole process from Step 1 to 6 will be typically around 4-6 months depends on the mutual agreement between the buyer and seller, hdb work load etc.,
You don’t own the house until the completion date and therefore you can not disturb the current owners time to time in the name of repeated viewing etc., unless the seller is kind enough to allow you.
Renovation plan is the key. You won’t be able to renovate once you move in due to the complexities involved. So, plan your renovation bit carefully and make sure you got your money/paper works ready before completion date so you don’t waste any time.
Most importantly, buying private properties in Singapore has lots of variation from what I mentioned here. If you plan to buy private flats, you are reading wrong post ;)
Feel free to contact me if you need any references for House Agent, Banks for House loan, Renovation loans, Renovation contractors etc., Personally I felt satisfied with the quality of work though I am not 100% sure if I paid killer-deal money to get there services.
All I posted in this article are purely my experience and research output only. Don’t whack me if you have different experience ;) everyone is unique and you may have different experience. The purpose of this post is to give you a high level idea on buying an hdb flat in Singapore.
