All you need to know for First Time Private Property Buyers Part 1:
Below are some of the common terms that you would have come across while you are looking to purchase a Private Property
1. Bank in Principal Approval (IPA or AIP)
An Approval In-Principle is also occasionally known as a pre-approval or in-principle approval for loan. It is an informal non-binding agreement with a bank, on the amount you can borrow and the tenure. Knowing the amount that the bank is likely to grant you, it will help significantly in your financial planning and narrow down your options to choosing the right home that is within your budget and borrowing limits.
For First Time Property Buyers (without existing housing loans), loan quantum is typically up to 80% of the Property Value subject to TDSR (capped at 60% of your income) and Credit assessment by the Bank.
For Example; For a Combined Household Income of 10K without any debt/obligations – (Capped at 60% TDSR, Interest:3.5%, Term: 25 years). the Max Amount of loan that you can get from the bank is approx S$1.2m. Therefore, the price range that you should be looking at should be around S$1.5m. This can help to narrow down your options in terms of location, unit type and what is available in the market.
2. VVIP Preview
Have you encountered a situation where you were told that – The Development has not launched yet and if you would like to register your interest for the VVIP Preview instead. So what is exactly is VVIP Preview? VVIP Preview is actually a date pre-determined by the developer for interested buyers who have submitted full documents + cheque to have priority selection of the units at the best prices through balloting process before the remaining units are released to the public for sale.
3. Buyer’s Stamp Duty
Buyer’s stamp duty is also applicable to first time private property owners. For Singapore Citizens – it is at 3% of property price less off S$5,400. This is usually payable within 2 weeks of exercising the S&P in cash and it can be later reimbursed back by CPF.
*Singapore PR – There is 5% additional buyer stamp duty on top of the buyer stamp duty for the first purchase of private property
4. Conveyancing for purchase of private property
It is highly recommended to engage a law firm for the purchase of the private property. This is because the lawyer will advise and guide you through the entire purchase process including the use of CPF etc
5. Buying Procedures – Private Property
- Get an IPA done from the banks to asses the loan amount
- Once you have decided to purchase a unit – Issue a cheque equivalent to 5% of the Property Purchase Price to secure the unit
- S&P will be delivered to your appointed law firm within 2 weeks of OTP
- Exercise S&P within 3 weeks of the S&P date, and you have 2 weeks from exercising the S&P to pay the Buyer Stamp Duty to IRAS
- To pay the remaining 15% within 8 weeks of OTP
For a list of Singapore Properties – click here
Disclaimer: This article is meant for research and educational purposes only. All information, especially property ownership laws, are subjected to changes and no responsibility shall be held on the accuracy. All sorts of property investments can be risky and investors are expected to perform their own due diligence before committing into any purchase.