Especially for first time buyers – How much to pay and when?

You have been eyeing a particular new project for ages, gone down to the showflat a dozen times just to be sure it is “The One”, and now finally ready to put money on an apartment unit. So what do you do to complete the purchase and what can you expect in terms of a payment schedule?

Some of you property veterans may find this all too elementary, but here is a rundown on what to expect for the benefit of first time private home buyers:

The following is written based on a Progressive Payment option. The wife and I are no big fans of the Deferred Payment/Interest Adsorption Scheme – there is normally a 2 – 3% premium charged on the purchase price, and you find yourselves facing a hugely inflated monthly housing loan repayment when this finally kicks in.

1. Booking Fee
This is the money you need pay the Developer once you have decided to buy. You can call this the “Option to purchase/Exercising of Option” combined payment. This is typically 5% of the purchase price, and you have to pay this in cash, i.e. cannot utilize your CPF.

In the event that you change your mind about buying the property after you have put in the option, most Developers will allow you to “back out” by imposing a partial forfeiture of this 5% booking fee that you have paid.

2. Completion of Sale
This normally happens between 8 to 10 weeks from the day you put in the 5% option. By now, you would have engaged a conveyance lawyer and a bank to take the housing loan from.

To exercise the option, you need to pay another 15% of the purchase price. This can be paid either in Cash, money from your CPF (subject to fulfilment of all conditions on use of CPF for property purchase) or a mix of Cash/CPF. This 15% payment is paid to your lawyer, who will also collect Stamp Duty and some other fees from you – we will detail these in the next section. The legal fees will usually be fully subsidized by the bank that you are taking the loan from.

And should you decide to change your mind about the purchase after completion of sale, be prepared to forfeit the full 20% and possibly getting sued by the Developer for breach of contract. So if you really need to back out of the purchase at this juncture, a better option is to try and “flip” the unit even if it means suffering a small loss.

3. Stamp Duty and Other Fees
This is the biggest component of legal costs in the purchase of your property. A simple way to calculate this is to multiply the purchase price by 3% and deduct $5,400 from the result.
In addition to the Stamp Duty, there are several other fees that you need to pay:

• Mortgage Stamp Fees – maximum of $500

• Registration fees – This is payment to the Singapore Land Authorities (SLA) in order to register the transaction. Registration is a must to formalize the change in interest in the property. Unfortunately, we cannot remember how much this is, and our web search did us no favor. But it should not come up to be more than a few hundred dollars.

• Disbursements – These are expenses incurred by your lawyer on your behalf. Again, this is not big money, i.e. less than a hundred dollars normally.

4. Progress Payment Schedule
After the completion of sale, the balance payment will be based on a progress payment schedule. The schedule is based on the different stages of completion of work done at the project, as detailed in the Sales & Purchase Agreement.

A sample of such progress payment schedule is shown below. However, this will differ somewhat between Developers/Projects:

Purchase Price: $1,255,180

Progress Payment Scheme(%)             Amount
Booking fees – Paid (5%)                  $  62,759.00
Completion of Sale – Paid (15%)       $188,277.00
Foundation Work (10%)                   $125,518.00
Concrete Framework (10%)             $125,518.00
Brick Walls (5%)                              $  62,759.00
Ceiling Works (5%)                          $  62,759.00
Doors and Windows (5%)                $  62,759.00
Carpark, Roads & Drains (5%)        $  62,759.00
TOP (25%)                                      $313,795.00
Certification of Completion (15%)     $188,277.00

It usually takes up to a year after TOP for the Certification of Completion (CSC) to be obtained. So you usually do not have to pay the last 15% till then.

The bank will take care of the various stages of payment, in accordance to the amount of loan you have taken, and pay the Developer accordingly. The quantum of your loan will increase correspondingly and so will your monthly loan repayment amount.

So there you have it. Happy hunting!

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Want to know how much you actually made out of that property sale?

After our recent post titled Just when you think you have made that tidy profit “flipping”… (January 20th), we have received a request for a working spreadsheet to calculate the “Nett Profit” of a property sale after deducting all known costs.

And being the obliging people that the wife and I are, here is a downloadable spreadsheet that allows you to do just that… or at least put you around the ballpark.

The usual disclaimer follows (refer to spreadsheet). The calculation will probably apply for both old and new properties, but we reckon it will work better with new property that is unconstructed/under construction, as the “costs” associated with old properties may be more complicated than what we have envisaged.

Have fun!

DOWNLOAD ‘Nett Profit Calculator’

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Just when you think you have made that tidy profit "flipping"…

Let’s say you have bought a 1000sqft apartment in a new project (unconstructed) for $1.25 million back in September 2009, and have taken a loan of $1 million from the bank to cover the purchase.

You realize today that in just four months, the price of the unit has jumped by $150/sqft. This means you have made a cool $150K in profit! So you decide to engage an agent and managed to sell the apartment for $1.4 million.

Before you head out and start spending that $150K, here are some food for thought:

Buying Price of unit: $1,250,000
Selling Price of unit: $1,400,000
Profit: $150,000

HOWEVER, you have to pay
Agent’s Commistion (usually 2%): $29,960 (inclusive of GST)
Stamp Duty you paid on purchase:  $32,100
Penalty for undisbursed loan (assuming 100% undisbursed at 1%): $10,000
Legal fee (on purchase): $2500
Legal fee (on sale): $2500
Stamp fee: $502
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Nett Profit: $72,438
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So the supposed $150K profit has suddenly shrunk by more than 50%. Some may argue that 70 grand over 4 months is still pretty decent money, but the sale is definitely not as fantastic a deal as originally perceived….

Pardon us if we are stating the obvious here, but the math has recently dawned on the wife and I when we had the chance to ponder over a similar deal. Hopefully, this may set some of you thinking too.

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Feng Shui 101

Following list is complied by the wife.

Should Adelina Pang (the famous Feng Shui consultant) or any other Feng Shui experts be reading this and wish to append/explain the list, you are most welcomed!

VERY Basic Feng Shui Tips:

1. The condo unit should not have a road running towards it – this creates “Sha Qi”.


2. There should preferably not be a Temple, Church or funeral parlour located behind, next to or in front of the condo unit.


3. Apartment with square or rectangular layout with no missing corner is generally preferred.


4. Front door of the apartment should preferably not face a window or the sliding door to the balcony, as this does not allow “chi” to circulate. The “chi” (wealth) that enters through the front door will flow right out via the balcony/window.


5. Toilet should preferably not be at the centre of the apartment to avoid having your wealth being flushed away.


6. If the apartment is a split-level unit, the living room should preferably be at the lowest level.


7. Dining room should preferably not face the toilet door.


8. Kitchen door should preferably not face the front door.