Buying a Resale Condo in Singapore: The Process Explained

Buying a resale condo in Singapore can be a complex process, especially for first-time buyers. However, with the right guidance and understanding of the buying process, it can be a rewarding investment. Resale condos are a popular choice for those who want to own a property in a prime location or a well-established estate.

The buying process for a resale condo in Singapore involves several steps. Firstly, the buyer needs to pay a booking fee to obtain an Option to Purchase (OTP) from the seller. The OTP gives the buyer the exclusive right to purchase the property for a certain period, usually 14 days. During this time, the buyer needs to conduct a thorough inspection of the property and decide whether to exercise the option or not. If the buyer decides to proceed, he or she needs to pay the balance of the down payment and legal fees to complete the transaction.

The Singapore property market is highly regulated, and buyers need to be aware of all the legal requirements and procedures involved in purchasing a resale condo. It is recommended to engage a conveyancing lawyer to assist in the buying process and ensure that all the necessary documents and paperwork are in order. With careful planning and research, buying a resale condo in Singapore can be a valuable investment for the future.

DAY 1	Prepare Option to Purchase (OTP) and send it to the buyer’s lawyer.
Waiting	The buyer’s lawyer reviews OTP. Sign OTP & collect a 1% Option Fee upon settling terms.
WITHIN 14 DAYS	Wait for buyer to exercise the option or let it lapse after 14 days.
UPON EXERCISE OF OTP	Buyer pays another 4% as Exercise of Option Fee.
WITHIN 14 DAYS	Pay Seller’s Stamp Duty (if applicable).
8-10 WEEKS AFTER S&P	The sale is completed at the law firm. Buyer settles remaining 95% payment.

Eligibility

When it comes to buying a resale condo in Singapore, there are certain eligibility criteria that one needs to fulfill. In this section, we will discuss the eligibility requirements for Singapore citizens, Singapore permanent residents, and foreigners.

Singapore Citizen

Singapore citizens are eligible to buy a resale condo in Singapore without any restrictions. They can use their CPF savings to pay for the property and can also apply for a housing loan from HDB or a bank. However, they need to meet the Total Debt Servicing Ratio (TDSR) and Loan-to-Value (LTV) limits imposed by the Monetary Authority of Singapore (MAS).

Singapore Permanent Resident

Singapore permanent residents (PRs) are allowed to buy a resale condo in Singapore, but they need to obtain approval from the Land Dealings Approval Unit (LDAU) of the Singapore Land Authority (SLA). They also need to meet the TDSR and LTV limits imposed by MAS. PRs can use their CPF savings to pay for the property, but they need to have been a PR for at least three years before they can do so.

Foreigner

Foreigners are also allowed to buy a resale condo in Singapore, but they need to obtain approval from the LDAU of SLA. They also need to meet the TDSR and LTV limits imposed by MAS. Foreigners cannot use their CPF savings to pay for the property and need to pay the full purchase price in cash. They also need to pay Additional Buyer’s Stamp Duty (ABSD) and Buyer Stamp Duty (BSD).

In summary, eligibility for buying a resale condo in Singapore depends on the buyer’s citizenship or residency status, as well as their ability to meet the TDSR and LTV limits imposed by MAS. CPF savings can be used by Singapore citizens and PRs, but not by foreigners. Foreigners also need to pay ABSD and BSD.

Financing

When it comes to buying a resale condo in Singapore, financing is a crucial aspect to consider. Buyers have several options when it comes to financing their purchase, including bank loans, home loans, and CPF savings.

Bank Loan

A bank loan is a common financing option for buyers looking to purchase a resale condo. Banks typically offer loans of up to 75% of the purchase price of the property, with the remaining 25% being the downpayment. It is important to note that the loan-to-value (LTV) ratio is subject to the Total Debt Servicing Ratio (TDSR), which takes into account the borrower’s income, debts, and other financial commitments.

Home Loan

Another financing option for buyers is a home loan, which is offered by the Housing and Development Board (HDB) and the Singaporean government. Home loans are a popular choice for buyers who have a sizable downpayment and want to minimize their financial commitment. The loan amount is typically up to 90% of the purchase price, with the remaining 10% being the downpayment.

CPF Savings

CPF savings can also be used to finance the purchase of a resale condo. Buyers can use their CPF Ordinary Account (OA) savings to pay for the downpayment and monthly mortgage payments. The amount that can be withdrawn from the CPF OA is subject to the Valuation Limit, which is the lower of the purchase price or the value of the property.

In summary, buyers have several financing options when it comes to purchasing a resale condo in Singapore. It is important to consider factors such as budget, downpayment, loan-to-value ratio, total debt servicing ratio, sizable downpayment, and financial commitment when choosing a financing option.

Property Search

When looking to buy a resale condo in Singapore, the first step is to begin the property search. This involves shortlisting properties based on one’s requirements, arranging viewing appointments, and researching the neighbourhood.

Shortlist

To shortlist properties, buyers can use online platforms such as PropertyGuru to filter properties based on their preferences such as property prices, property size, and type of property (condominium, executive condominium, landed property). Buyers can also engage the services of a property agent who can provide them with a list of properties that meet their criteria.

Viewing Appointments

Once a shortlist has been created, the next step is to arrange viewing appointments. During the viewing, buyers should inspect the unit thoroughly for defects and ask questions about the property. It is recommended to view the property during different times of the day to gauge the noise level and sunlight.

Neighbourhood

Researching the neighbourhood is also an important aspect of the property search. Buyers should consider the amenities available in the area such as supermarkets, schools, and parks. They should also check the public transport links to ensure easy accessibility. It is recommended to visit the neighbourhood during different times of the day to get a sense of the traffic and noise level.

Overall, the property search is an important step in the process of buying a resale condo in Singapore. Buyers should take their time to shortlist properties, arrange viewing appointments, and research the neighbourhood to make an informed decision.

Property Valuation

When buying a resale condo in Singapore, it is important to get the property valued by a professional real estate valuer to ensure that you are paying a fair price. Property valuation is the process of determining the market value of a property based on various factors such as location, size, condition, and recent transactions of similar properties in the area.

Valuation

The valuation report will provide an estimate of the property’s worth and will take into account any defects or issues that may affect the value. Buyers should review the valuation report carefully and take note of any discrepancies between the report and the property’s actual condition.

Defects Inspection Checklist

Before purchasing a resale condo, buyers should also conduct a defects inspection to identify any issues with the property. A defects inspection checklist can help buyers identify common issues such as water leaks, electrical faults, and structural damage.

Buyers should also be aware of the concept of cash over valuation (COV), which refers to the amount that a buyer is willing to pay above the property’s valuation. This can be a contentious issue, as sellers may demand a high COV, while buyers may be unwilling to pay more than the property’s true market value.

In summary, property valuation and defects inspection are important steps in the process of buying a resale condo in Singapore. Buyers should take the time to review valuation reports and conduct a thorough inspection to ensure that they are making an informed decision.

Legal Matters

When buying a resale condo in Singapore, there are several legal matters that buyers should be aware of to ensure a smooth and hassle-free transaction. Below are some important legal aspects that buyers should consider:

Lawyer

Hiring a lawyer is a crucial step in the buying process. A lawyer can help buyers navigate the legal complexities of buying a condo, review the legal documents, and ensure that all legal requirements are met. Buyers should choose a lawyer who is experienced in real estate law and has a good reputation in the industry.

Title Search

A title search is an important step in the buying process that helps buyers verify the ownership of the property and ensure that there are no outstanding liens or encumbrances on the property. A title search can be conducted by a lawyer or a professional title search company.

Option-to-Purchase (OTP)

An Option-to-Purchase (OTP) is a legal document that gives the buyer the exclusive right to purchase the property within a specified period. The buyer pays an option fee to the seller, which is usually 1% of the purchase price. The OTP also sets out the terms and conditions of the sale, such as the purchase price, completion date, and any other special conditions.

Legal Fees

Buyers should be aware that there are legal fees involved in buying a condo in Singapore. These fees include stamp duty, legal fees, and other administrative fees. Buyers should consult with their lawyer to understand the full extent of the legal fees involved.

Conveyance Lawyer

A conveyance lawyer is a lawyer who specializes in the transfer of property ownership. The conveyance lawyer can help buyers with the legal aspects of transferring ownership, such as preparing the legal documents and ensuring that all legal requirements are met.

Legal Document

The legal document involved in buying a condo in Singapore is the Sale and Purchase Agreement (SPA). The SPA sets out the terms and conditions of the sale, such as the purchase price, completion date, and any other special conditions. The SPA is prepared by the seller’s lawyer and reviewed by the buyer’s lawyer.

In summary, buyers should be aware of the legal aspects of buying a resale condo in Singapore. Hiring a lawyer, conducting a title search, obtaining an OTP, understanding legal fees, and working with a conveyance lawyer are all important steps in the process. Buyers should consult with their lawyer to ensure that all legal requirements are met and that the transaction is smooth and hassle-free.

Purchase Process

When buying a resale condo in Singapore, the purchase process involves several steps. Here is an overview of what to expect:

Option Fee

Once you have found a resale condo you are interested in purchasing, you will need to pay an option fee to the seller. This fee is typically 1% of the purchase price and is paid in cash. In return, the seller will grant you an Option to Purchase (OTP). This option gives you the exclusive right to purchase the property within a specified time frame, usually 14 days.

Exercise Fee

If you decide to proceed with the purchase, you will need to exercise the OTP by paying an exercise fee. This fee is typically 4% of the purchase price and is also paid in cash. Once the exercise fee is paid, the seller is legally obligated to sell the property to you.

Keys

After exercising the OTP, the seller will hand over the keys to the property. At this point, you will need to pay the remaining balance of the purchase price, as well as any other fees associated with the purchase, such as stamp duty and legal fees.

Move In

Once all the necessary payments have been made, you can move into your new resale condo. It is important to note that if you encounter any issues with the property, such as defects or maintenance problems, you should raise them with the seller as soon as possible. If the seller is unresponsive or unwilling to address your concerns, you may need to seek legal advice or file a complaint with the relevant authorities.

Overall, the process of buying a resale condo in Singapore can be complex and involve many different fees and obligations. However, by understanding the purchase process and working with a reputable seller and real estate agent, you can ensure a smooth and successful transaction.

Stamp Duties

When buying a resale condo in Singapore, there are several stamp duties that buyers need to be aware of. These include the Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), and Stamp Duty.

Buyer’s Stamp Duty (BSD)

The Buyer’s Stamp Duty (BSD) is a tax paid on documents signed when buying or acquiring property located in Singapore. The amount of BSD payable is based on the purchase price or market value of the property, whichever is higher. During Budget 2023, the Singapore government announced that BSD rates for both residential and non-residential properties will be raised with effect from 15 Feb 2023.

The BSD rates for residential properties are as follows:

Purchase Price or Market Value of Property	BSD Rate
First $180,000	1%
Next $180,000	2%
Next $640,000	3%
Remaining Amount	4%

Additional Buyer’s Stamp Duty (ABSD)

The Additional Buyer’s Stamp Duty (ABSD) is a tax payable on top of the BSD. It is applicable to certain categories of buyers, such as Permanent Residents and foreigners. Singapore citizens buying their first home are exempted from ABSD.

The ABSD rates are as follows:

Buyer’s Profile	ABSD Rate
Singapore Citizen buying a second property	20%
Singapore Permanent Resident buying first property	5%
Singapore Permanent Resident buying second property	30%
Foreigners buying any property	60%

Stamp Duty

Apart from BSD and ABSD, buyers also need to pay Stamp Duty. This is a tax payable on documents relating to the purchase or lease of a property. The amount of Stamp Duty payable is based on the purchase price or market value of the property, whichever is higher.

In conclusion, buyers of resale condos in Singapore need to be aware of the different stamp duties that they need to pay. The BSD, ABSD, and Stamp Duty are all calculated based on the purchase price or market value of the property, and the rates vary depending on the buyer’s profile and the type of property being purchased.

Conclusion

In conclusion, buying a resale condo in Singapore can be a smart investment for both homeowners and investors. With the ability to move in immediately and rent out the unit almost immediately, resale condos offer a level of convenience that new launch condos cannot match. Additionally, resale condos often come with a lower price tag and more room for price negotiation, making them an attractive option for those looking to save money.

However, it is important to keep in mind that there are upfront payments and ongoing maintenance fees to consider when purchasing a resale condo. Buyers should also take the time to research noise levels and public transport options in the area before making a purchase.

When it comes to finances, buyers should work with a conveyance lawyer to ensure all necessary paperwork is completed correctly and to avoid any potential legal issues. The Singapore Land Authority and Inland Revenue Authority of Singapore are also important entities to be aware of during the buying process.

Overall, buyers should take advantage of opportunities to visit show flats and review brochures to get a better sense of the finished product before making a purchase. By doing their research and working with experienced professionals, buyers can successfully navigate the process of buying a resale condo in Singapore and secure a valuable asset for their future.