Buying a private property at new launch

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Buying a private property at new launch

How to buy a unit at a new property launch

Ready to buy a new property? Before you place a deposit for your dream home, lets walk though the steps.

Step 1: Check your financials

a) Upfront cost

Booking Fee1%-5%
Buyer’s Stamp Duty is computed on the purchase price or market value of the property (whichever is higher)1% on first $180,000 2% on next $180,000 3% thereafter, every $100 or part thereof Payable within 14 days from date of acceptance of OTP or Sale and Purchase agreement
Legal FeeGenerally less than 0.4% for purchase price not exceedingly $2 million
Real estate’s commission and feesUsually nil if purchase at a showflat
Valuation feeVariable
Additional Buyer’s Stamp Duty (applicable to purchases or acquisitions of residential properties on or after 12 Jan 2013.)Up to 15% for foreign residents buying Singapore residential property

For example, the upfront cost for a Singapore citizen buying his first private residential property (purchase price $900,000) under construction is estimated to be

Booking Fee (5%)$45,000
Buyer’s Stamp Duty1% on first $180,000

2% on next $180,000

3% on remaining $540,000Total payable: $21,600

Additional Buyer’s Stamp DutyNil
Legal Feeest. $3,000

b) Monthly expense

Other than the upfront cost, buyer should budget the monthly expense of owning a private property. The common expenses are

  • Housing loan instalment
  • Mortgage insurance
  • Fire insurance
  • Home contents insurance
  • Renovation loan instalment
  • Maintenance fee
  • Utilities
  • Annual Property tax
  • Annual Income tax if property is generating rental income


Step 2: Search for bank mortgage

Before exercising the Option to Purchase, you will need to search for a bank mortgage. You can start your search early by visiting the banks’ branches or online via mortgage comparison site like  Such mortgage comparison sites are good because it allows you to estimate the monthly instalments and interests that you need to pay on your home loan.

You can also submit to the bank for an Approval in Principle (AIP) to ensure that that you qualified for the loan amount you want when you need it. This is crucial because if you commit to a property that exceed the loan amount, then you risk having part of your booking fees forfeited. If you like to do an estimate on the maximum loan amount, you can also use online loan calculator here.

From 6 October 2012, the maximum loan-to-value (LTV) limits for borrowers who are individuals will be

LTVConditionsCost of purchase
  • Loan tenure does notexceed 30 years; or
  • Loan period does not extend beyond age 65 years
First 5% in cash

Next 15% in cash/ CPF

Balance 80% bank mortgage

  • Loan tenure exceed 30 years; or
  • Loan period extend beyond age 65 years
First   5% in cash

Next 35% in cash/ CPFBalance

60% bank mortgage

  • Loan tenure exceed 30 years; or
  • Loan period extend beyond age 65 years and;
  • has one or more outstanding mortgage
First 10% in cash

Next 50% in cash/ CPF

Balance 40% bank mortgage

Updated on 6 oct 2012


Step 3: Search for your desired property

Once you have a good idea of the property you like you to purchase, you can now actively search for your desired property in newspapers, property portals or engage a real estate agent. When engaging a real estate agent, make sure you check his credentials in the Public Register of Estate Agents and Salespersons. A good agent will make your search and purchase a fruitful affair.


Step 4: View the property in the showflat

Once you have shortlisted the property, make sure you visit the showflat. At the showflat, you should ask as many questions as you can on the unit that you are interested.

  • Area of the unit – the area stated may include areas such as air conditioner ledges, planter boxes, private enclosed space, balconies, terraces, bay windows etc
  • Equipment and appliances – the showflat display may not represent that all the equipment, appliances and fittings seen are provided. You should check the specifications of the unit with the developer or its representative.
  • Car parking lots – some projects may have less car parking lots than the total number of units. Hence not all owners of the units in such a project will have the use of a car parking lot.
  • Facilities vs number of units – some project may have a lot of facilities like swimming pool, tennis courts, etc. You should check with the developer how big the project is and decide if the facilities are of a suitable size.


Step 5: Option to purchase

If you are ready to purchase, you will have to pay a booking fee before the option to purchase (OTP) is issued. An option to purchase is a right or option given by the vendor of a property to the intending buyer to buy the property at a specified price within a specified period of time. The buyer has to exercise the option of purchase within its validity period if he decides to buy the property.

Booking fee typically varies from 1% to 5% of the purchase price.

After paying the booking fee, you should immediately engage a good lawyer to perform the legal work pertaining to the property purchase. For example, your lawyer can check that the OTP is properly drafted and legally binding.


Step 6: Apply to the bank for a mortgage

You need to apply and have your mortgage approved within the Option to Purchase validity period.

For the bank to process your mortgage, you will need to submit the following documents

–          Bank application form

–          CPF contribution history up to the last 12 months

–          Latest Income tax notice of assessment or

–          Latest computerised payslip or

–          Latest 2 years Income tax of assessment (only applicable to self-employed/ commission based customers)

–          Option to Purchase (OTP) or Sale and Purchase (S&P) Agreement

Once the application is approved, you will receive a Letter of Offer (LO) from the bank. The LO will detail the loan amount, tenure and terms and conditions. Before signing the LO, you should ensure that you understand its contents entirely, as it becomes legally binding upon acceptance.


Step 7: Exercise your option to purchase

You can now meet your lawyer to exercise the OTP. Your lawyer will conduct the necessary searches and conveyance work to complete the purchase. He will liaise with the vendor, lawyer representing the bank and the CPF board to release the bank loan and CPF funds to pay the vendor.

Your lawyer will also register you as the new owner of the property and lodge a caveat with the Singapore Land Authority.


Step 8: Standard payment scheme for new launch

The time for payment and the amount of purchase price payable under the standard payment scheme is shown below.

Order of PaymentStagePayment under a   standard payment scheme ( % of purchase price )Estimated timeline
1st paymentUpon the grant of Option to Purchase5% – 10% (booking   fee)2-3 weeks
Upon signing of the Sale & Purchase   Agreement or within 8 weeks from the Option date20% less booking fee8 weeks
2nd paymentCompletion of foundation work10%6-9 months later from work commencement
3rd paymentCompletion of reinforced concrete framework of unit10%6-9 months later after 2nd payment
4th paymentCompletion of partition walls of unit5%3-6 months later after 3rd payment
5th paymentCompletion of roofing/ceiling of unit5%3-6 months later after 4th payment
6th paymentCompletion of door sub-frames/ door frames,   window frames, electrical wiring, internal plastering and plumbing of unit5%3-6 months later after 5th payment
7th paymentCompletion of car park, roads and drains   serving the housing project5%3-6 months later after 6th payment
8th paymentIssue of Temporary Occupation Permit25%To be advised
9th paymentOn Completion Date2%To be advised
Issue of Certificate of Statutory Completion8%To be advised
Expiry of the defects liability period5% To be advised
Source: URA

As the loan is progressively drawn down, your loan instalment will increase slowly. Hence its less demanding on your cash flow compared to a completed private property. Nevertheless you should be prudent in your budget and not make any purchase that you think you will have a problem servicing when its fully disbursed.

Your bank will update you on the loan instalment whenever there is a change.


Step 9: Completion of sale

When the developer is ready for completion, the developer will issue a notice to complete to the buyer. Upon receipt of TOP, you can collect the keys to your new home from your lawyers.

Source: URA, MAS



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