Downpayment for Condo

Downpayment for Condo 2022: How Much Do You Actually Need?

Downpayment is not the only upfront cost of buying a condo in Singapore. Hence, it is best to know the other costs involved so you can prepare. In this article, we tell you how much money you need to seal the deal.

Private vs. Executive Condominium

Singaporeans, permanent residents, and foreigners can choose between two types of condos.

1. Private Condominium

Condominiums, for many people, are synonymous with modern living and a lavish lifestyle. Indeed, its main attractions include amenities and proximity to malls, business centers, schools, and more. Compared to private residential properties nearby, the units cost less. But they are much more expensive than HDB housing.

2020 Average Listing Price of Private Condominiums

Rooms Average Price
1 Bedroom S$1,025,000
2 Bedroom S$1,464,000
3 Bedroom S$1,948,000
4 Bedroom S$3,102,000

 

2. Executive Condominium (EC)

Executive condos are hybrids and the solution for Singaporeans who cannot afford private residential properties nor qualify for grants.

Based on listing price, EC costs less than private condos, mainly because of location. Other than that, the other main difference is ownership. In the case of EC, the HDB only subsidizes the first ten years. After that period, it turns into private property.

2022 Listing Price of Executive Condominiums

Room OLA Parc Central Residences Piermont Grand Provence Residence
Location Anchorvale Crescent, Sengkang Tampines Avenue 10, Tampines Sumang Walk, Punggol Canberra Link, Sembawang
2 Bedroom S$887,000 to S$958,000 N/A N/A N/A
3 Bedroom S$988,000 to S$1,280,000 S$956,000 to S$1,069,000 S$888,000 to S$1,016,000 S$1,005,000 to S$1,617,000
4 Bedroom S$1,596,000 to S$1,755,000 S$1,258,000 to S$1,426,000 S$1,340,000 to S$1,479,200 S$1,648,000 to S$1,769,000
5 Bedroom N/A S$1,609,000 S$1,508,000 to S$1,649,600 N/A

 

Notes:

  • Prices are current as of 23 November 2021.
  • In some condos, the max range could be higher.
  • The prices are only for available units.

 

Factors Affecting the Cost of Condo in Singapore

Yes, there are other costs involved. These are the taxes that you pay, besides the downpayment.

1. Buyer’s Stamp Duty (BSD)

Buyers need to pay BSD for the documents executed for the transfer or sale and purchase of a Singapore property. As for the basis of computing the BSD, it depends on whichever is higher between:

  • The purchase price as indicated in the document to be stamped
  • The market value of the property

Suppose there is an acquisition-related benefit to the buyer. In this case, Qualifying for deduction from the purchase price depends on the nature of the gift.

  • Cash Discount. The buyer can only deduct this amount from the purchase price, but there are conditions. One is that it should be stated on the document. And, it is only applicable if the net price is within market value.
  • Benefit Other than Cash. Some sellers offer perks such as furniture, appliances, and others. Unfortunately, buyers cannot deduct the value of these items from the purchase price.

Current BSD Rates

Price of Condo or Market Value of the Property BSD Rates (for residential properties) BSD Rates (for non-residential properties)
First $180,000 1% 1%
Next $180,000 2% 2%
Next $640,000 3% N/A
Remaining Amount 4% 3%

Source: IRAS BSD

Example of BSD Computation

Assume, for example, that the cost of the condo you purchased is S$2,000,000. In this case, how do you compute the BSD?

Market Value of the Property BSD Rate BSD Calculation BSD Amount
First $180,000 1% S$180,000 x 1% S$1,800
Next $180,000 2% S$180,000 x 2% S$3,600
Next $640,000 3% S$640,000 x 3% S$19,200
Remaining S$1,000,000 4% S$1,000,000 x 4% S$40,000
BSD Payable N/A N/A S$64,600

 

2. Additional Buyer’s Stamp Duty (ABSD)

On top of the BSD, condo buyers also need to pay ABSD. However, there are exemptions, depending on citizenship status and previous homeownership. Knowing these conditions, in some cases, can help buyers avoid paying ABSD.

Current ABSD Rates and Computation

Buyer Profile ABSD Rates
Singaporean Citizen (SC) buying first residential property Not applicable
SC buying second residential property 12%
SC buying third and subsequent residential property 15%
Singapore Permanent Residents (SPR) buying first residential property 5%
SPR buying second and subsequent residential property 15%
Foreigners (FR) buying any residential property 20%
Entities buying any residential property 25%

Source: IRAS ABSD

 

Example of ABSD Computation and Exemptions

If the condo costs S$2,000,000, how do you calculate the ABSD?

Buyer Profile ABSD Rates ABSD Calculation ABSD Amount
Singaporean Citizen (SC) buying first residential property Not applicable Not applicable Not applicable
SC buying second residential property 12% S$2,000,000 x 12% S$240,000
SC buying third and subsequent residential property 15% S$2,000,000 x 15% S$300,000
Singapore Permanent Residents (SPR) buying first residential property 5% S$2,000,000 x 5% S$100,000
SPR buying second and subsequent residential property 15% S$2,000,000 x 15% S$300,000
Foreigners (FR) buying any residential property 20% S$2,000,000 x 20% S$400,000
Entities buying any residential property 25% S$2,000,000 x 25% S$500,000

 

ABSD, as you can see, costs a lot of money. So, how do you avoid paying ABSD?

ABSD Exemptions:

  • Under the Free Trade Agreement, citizens and permanent residents of some countries do not have to pay ABSD. These countries are:
    1. Iceland
    2. Liechtenstein
    3. Norway
    4. Switzerland
    5. United States
  • Decoupling is a common practice between spouses who buy a second home. Instead of co-owning both properties, they can divide ownership. For instance, the husband owns the first home, while the wife owns the second home.
  • Instead of a spouse, another option is to use a child’s name, provided the child is at least 21 years old. And, it makes sense. Not only do you avoid paying ABSD, but the second home can be an investment for the future.

 

3. Loan-to-Value (LTV) Limit and Minimum Cash Downpayment

Both LTV and outstanding mortgages not only serve as the basis for calculating minimum downpayment. It also affects the amount you need to pay in cash.

For a private condo, you produce the cash to pay for the downpayment. But that is not the case with an executive condo. Usually, buyers would use a combination of CPF OA and cash.

Minimum Cash Downpayment Based on LTV

Note: This table is only for loan tenures that do not exceed 30 years or the buyer does not exceed the age of 65 by the time the loan tenure ends.

Number of Outstanding Mortgages LTV Limit Minimum Downpayment The portion of Downpayment Paid in Cash
0 75% 25% 5%
1 45% 55% 25%
2 or more 35% 65% 25%

 

Minimum Cash Downpayment Based on LTV (Loan Tenure 30 years or more)

Note: This table is only for loan tenures that exceed 30 years or the buyer exceeds the age of 65 by the time the loan tenure ends.

Number of Outstanding Mortgages LTV Limit Minimum Downpayment The portion of Downpayment Paid in Cash
0 55% 45% 10%
1 25% 75% 25%
2 or more 15% 85% 25%

 

Example of Minimum Cash Downpayment

  • Condo price: S$2,000,000
  • Loan tenure: 20 years
  • Buyer’s age: 30 years old

In this example, the LTV is 75% if the buyer has no previous home loan. The loan tenure is under 30 years, and the buyer would only be 50 years old by the time it matures.

Computation:

  • S$2,000,000 x 25% = S$500,000 (total minimum downpayment amount)

Depending on the property type, he may or may not need to use cash. If it is a private condo, the buyer needs to come up with S$500,000 from savings and other funds.

If it is an EC, the buyer can seek a grant from the HDB. Moreover, the buyer can use CPF Ordinary Account to pay the downpayment. But the one condition is that the 5% (S$25,000 in the example) is cash.

Older buyers and those with previous home loans, as your might surmise, will end up paying higher downpayment amounts.

 

Small Scaled House Model

Breakdown of the Initial Cost of Buying a Condo (DP + BSD + ABSD)

Condo downpayment is not the only initial cost. You also need to pay the buyer’s stamp duties.

In the following sections, the sample computations assume the property price is S$1,000,000.

1. Example of Singapore Citizen Upfront Cost

Home Ownership 1st home 1st home 2nd home 2nd home
Loan Tenure (years) Less than 30 30 and up Less than 30 30 and up
Age at the End of Loan Tenure Under 65 65 or older Under 65 65 or older
Previous Loan Already Paid N/A N/A Yes No
LTV 75% 55% 45% 25%
Condo Downpayment Rate 25% 45% 55% 75%
Condo Downpayment Amount S$250,000 S$450,000 S$550,000 S$750,000
Minimum Portion of Downpayment Payable in Cash 5% 10% 25% 25%
BSD Payable S$24,600 S$24,600 S$24,600 S$24,600
ABSD Rate N/A N/A 12% 12%
ABSD Payable N/A N/A S$120,000 S$120,000
Total Upfront Cost S$274,600 S$474,600 S$694,600 S$894,600

 

2. Example of Singapore Permanent Resident Upfront Cost

Home Ownership 1st home 1st home 2nd home 2nd home
Loan Tenure (years) Less than 30 30 and up Less than 30 30 and up
Age at the End of Loan Tenure Under 65 65 or older Under 65 65 or older
Previous Loan Already Paid Yes No
LTV 75% 55% 45% 25%
Condo Downpayment Rate 25% 45% 55% 75%
Condo Downpayment Amount S$250,000 S$450,000 S$550,000 S$750,000
Minimum Portion of Downpayment Payable in Cash 5% 10% 25% 25%
BSD Payable S$24,600 S$24,600 S$24,600 S$24,600
ABSD Rate 5% 5% 15% 15%
ABSD Payable S$50,000 S$50,000 S$150,000 S$150,000
Total Upfront Cost S$324,600 S$524,600 S$724,600 S$924,600

 

3. Example of Foreigner Upfront Cost

Home Ownership 1st home 1st home 2nd home 2nd home
Loan Tenure (years) Less than 30 30 and up Less than 30 30 and up
Age at the End of Loan Tenure Under 65 65 or older Under 65 65 or older
Previous Loan Already Paid N/A N/A Yes No
LTV 75% 55% 45% 25%
Condo Downpayment Rate 25% 45% 55% 75%
Condo Downpayment Amount S$250,000 S$450,000 S$550,000 S$750,000
Minimum Portion of Downpayment Payable in Cash N/A N/A N/A N/A
BSD Payable S$24,600 S$24,600 S$24,600 S$24,600
ABSD Rate 20% 20% 20% 20%
ABSD Payable S$200,000 S$200,000 S$200,000 S$200,000
Total Upfront Cost S$474,600 S$674,600 S$774,600 S$974,600

 

Other Costs Besides Downpayment for Condo

Until this point, the upfront cost to buy a condo discussed were:

  • Minimum downpayment dictated by the LTV
  • Buyer’s Stamp Duty
  • Additional Buyer’s Stamp Duty

In addition, there are other costs involved:

1. Legal Fees

Some lawyers in need of clients charge low prices. Others, meanwhile, may ask for exorbitant fees. A reasonable range, for your information, is S$2,500 to S$3,200.

2. Home Insurance

Getting covered is highly recommended. Plus, it is not that expensive. Typically, you would be paying somewhere in the range of S$45 to S$200.

3. Furnishing and Renovation

Before moving into your new home, you will spend money on furniture, appliances, and others. For basic units, that means you may have to spend on renovation too.  Quantifying how much it costs is difficult. Suffice to say, it will be thousands of dollars. 

4. Property Tax

The basis for calculating property tax is Annual Value (AV). In essence, AV is the assumptive rental income for your property. Suppose the annual AV of your condo is S$36,000; the property tax would be S$1,120. Use this calculator to calculate your tax.

5. Maintenance Fees

For condos, the fee ranges from S$250 to S$350. On premium condos, it could even reach S$400.

6. Mortgage Repayments

Soon after sealing the loan terms, you will be making monthly home loan repayments. It is one of your major expenses that takes a sizable portion of your monthly income.

 

Consider Other Costs, Not Only Downpayment for a Condo

Downpayment for a condo is not the only money you prepare ahead of time. You also need to know how much cash to save for other charges. You can reduce the money needed using grants and CPF OA funds for EC, but not with a private condo.

As you ponder your options, remember these three things:

  • Along with the downpayment, you will also need to pay the BSD and ABSD (if applicable).
  • Other costs to consider are legal fees, maintenance, insurance, furnishings, and more.
  • Expect more expenses associated with home loans. And then, you need to make monthly loan repayments. Know more about the best home loans in Singapore here.

As a general rule, the longer the loan tenure, the higher interest you pay. Hence, finding a bank loan or mortgage broker offering lower interest rates helps reduce overall cost.

Finding the best loan rates, though, is not easy. That is why many home buyers turn to Instant Loan to request free quotes. After providing the needed information, you can see and compare the latest mortgage rates from legal lenders in Singapore. Get your loan quotes now.

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