Buying a property in Singapore will be a part and parcel of everyone's life at a certain stage of their lives.
From BTO to landed, different properties would require a different budget. Buying a property in Singapore would cost more than a pretty penny. Proper financial planning is important as buying a home is a big financial commitment.
There are 2 main components you need to consider before a property purchase. The first is the downpayment and the other is the mortgage. This is a guide to how much each type of property will typically cost and how much you need to earn to afford them.
The following calculations are based on the following assumptions.
Prices of the properties are based on average prices in the markets as of AUG 2021
Calculations are based on the assumption of purchasing the first property
Interest rates for bank loans are at an indicative 1.5% *
HDB Loans are at 2.6%
Additional Costs ( Legal fees, Stamp Duties) are estimated at 3% for properties below $1m and 4% for properties above $1m.
Assuming borrower is debt-free at the time of purchase.
* Base on MAS regulations, loans are calculated at 3.5%, we use 1.5% to reflect the current market situation.
Mortgage Servicing Ratio (MSR) refers to the portion of a borrower's gross monthly income that goes towards repaying all property loans including the loan being applied for. It is capped at 30% and applies to housing loans for the purchase of an HDB flat, or EC ( where the minimum occupation period of the EC has not expired)
Total debt servicing ratio ( TDSR) refers to the portion of a borrower's gross monthly income that goes towards repaying the monthly debt obligations or all outstanding debts, including the loan being applied for. TDSR is capped at 60%.
HOW MUCH DO YOU NEED TO EARN FOR BANK LOAN?
4 BR BTO
For BTO, 4 BR is one of the most popular choices for young couples. For BTO, you can either take an HDB Loan or a Bank Loan. An HDB loan gives you a higher loan to value at 90% vs a 75% for a Bank Loan. MSR is used for calculating income regardless if HDB or bank loan is chosen.
A 2BR cost about $1.1m
There are other costs to take into consideration. They are submission fees, valuation, stamp duties, legal fees, fire insurance, home protection scheme.
Additionally, for applicants, there are grants that will lower the overall costs of BTO. For this example, we would assume that grants are at $0 and you are opting for an HDB loan.
3BR Executive Condo
For HDB upgraders and those that exceed the income ceiling, EC is the next Choice
For EC, only bank loans are available. For a bank loan, the maximum you can take is 75%.
The other additional costs would be similar to BTO. Grants will also be available but we will assume that they are at $0. MSR is used for calculating income.
An executive 3BR at Piedmont Grand cost about $850000
2BR CONDO (OCR)
The 2BR Condo is chosen as it remains a favoured choice among young families and investors. We choose OCR as a location due to its affordability. A 2BR cost about $1.1m at The Florence Residences at Kovan. TDSR is used for calculating income for private residences.
For a bank loan, the maximum you can take is 75% for the first property
The other additional costs would include Lawyer's fee and stamp duty.
Price of 2BR CONDO : $1,100,000
Downpayment : $275,000
Additional Cost: : $ 44,000
Total Cash / CPF Required :$319,000
Loan : $825,000
Interest : 3.5%
Loan Tenure : 30 Years
Landed has always been an aspiration for Singaporeans. For landed on the mainland, it is only available to Singapore Residents. PRs and Foreigners can only be purchased with special approval from the Ministry of Law. TDSR is used for calculating income for private residences.
In land-scare Singapore, landed property is considered to be an aspiration of property owners.
Good Class Bunglow ( GCB)
The pinnacle of residential properties in Singapore. With only 2800 GCB in Singapore. It is not for the masses. GCB requires a minimum plot size of 1,400 sqm and to be located in designated prime residential districts. TDSR is used for calculating income for private residences.
One more thing
Some interesting points to note from this
If you take a bank loan, you could get a loan for a private property with a combine income of 4k and above. This works out to be lesser than compared to HDB and EC. This is because HDB and EC used MSR in the calculation while private properties uses TDSR. The catch is that you would need a higher downpayment in cash or CPF.
ALthought HDB bank loans gives you a higher quantum, the interest payable is much higher than banks. Additionally, the tenure for HDB loans is shorter in comparison to banks
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