HomeReal EstateEssential Guide: How to Finance The Purchase of Property in Singapore
How To Finance The Purchase Of Property In Singapore

Essential Guide: How to Finance The Purchase of Property in Singapore

A Breakdown on How Much Properties Cost and How You Can Finance The Purchase of a Property in Singapore.

As one of Asia’s premier financial hubs, it comes as no surprise that the real estate market here is thriving. And within this ever-evolving landscape, there is a hidden gem that continues to attract savvy investors – private property.

I’m pretty sure many of us aspire to climb the property ladder from your first BTO / Resale Flat to an Executive Condominium, Private Condominium and to a Landed Property

Find out how much you really need to set aside for the mortgage instalments and recurring expenses to own your dream home. 

In Singapore we have various housing types from affordable public housing to the ultra luxurious good class bungalows. We will not go in-depth into the nuances of the properties as that has been covered in another article. Let’s take a quick look at the different types of properties in Singapore:

  • HDB Flat – This is public housing, which can be purchased directly from the government or in the resale market. Sizes available range from 2 Bedroom Flexi to Jumbo flats.
  • Executive Condominium – This is a hybrid of public and private housing and there are several restrictions on the initial purchase due to the subsidies accorded.
  • Condominium – A private property option that is in a gated compound with 24/7 security. It also boasts luxurious amenities such as swimming pool, gym, function room, playground, tennis courts etc.  
  • Terrace house – It is part of a row of houses with at least three units, where terrace houses are the middle units with shared walls on both sides with their neighbours.
  • Semi-detached house – These are two units built side by side and have a shared wall in the middle.
  • Bungalow/detached house – This is a standalone, free-standing building that does not share any walls with other houses.
  • Good Class Bungalow (GCB) – The top of the ladder, GCBs are essentially bungalows with an expansive land area of at least 1,400sqm and is the most expensive of all landed properties.

How Much Do The Properties Cost?

There can be a large range in the prices for the same type of property as it really boils down to the specific attributes of the housing type. For example, you can get the cheapest HDB flat if you purchase a 2-room flexi directly from HDB and at the top end, you can be paying more than a million dollars for a 5–room resale flat at Pinnacle @ Duxton or at The Peak @ Toa Payoh.

In the same vein, the lowest priced terrace house is likely a property that requires a rebuild as compared to a brand new terrace house priced at the higher range, which comes with brand new structure and modern design.

You can get a better understanding by speaking to a real estate agent to give you a detailed breakdown. 

Type of ProprtyPrice (SGD)
HDB Flat$178,000 to $1,500,000
Executive Condominium$750,000 to $4,800,000
Condominium$750,000 to $108,000,000
Terrace House$1,800,000 to $7,000,000
Semi-Detached House$3,000,000 to $18,000,000
Bungalow / Detached House$3,500,000 to $35,000,000
Good Class Bungalow (GCB)$10,000,000 to $120,000,000

Initial Downpayment and Fees

If you are getting a HDB flat, you can apply for a housing loan from HDB or from financial institutions. Applicants have to pay a downpayment of 20% for a HDB loan and 25% if you opt for a bank loan. The purchase can be financed through a combination of CPF grants (eligibility criteria applies), CPF funds, mortgage loan and cash. 

For Executive Condominiums, Condominiums and Landed Properties, you can only apply for housing loans from the financial institutions. A minimum downpayment of 25% can be financed through cash or CPF funds, out of which the first 5% has to be paid with cash. 

Applicable property stamp duties can be paid using cash or CPF funds. For resale private properties, you do have to pay the stamp duty in cash first before seeking a reimbursement from your CPF account.

The Income You Need To Buy A Property in Singapore

Here are some assumptions we have made to derive at the calculations:

A home loan tenure of 25 years with an interest rate of 3% to establish the monthly repayments; TDSR rate of 55%; MSR rate of 30%; minimum downpayment of 25% and no consideration of expenses such as legal fees, agent fees, renovation costs, etc.

HDB FlatExecutive CondominiumCondominiumTerrace HouseSemi-Detached HouseBungalowGood Class Bungalow
Loan QuantumS$375,000S$1,125,000S$1,725,000S$3,375,000S$4,350,000S$6,000,000S$28,500,000
Monthly InstalmentS$1,778S$5,335S$8,180S$16,005S$20,628S$28,453S$135,150
Monthly IncomeS$5,926S$17,783S$14,873S$29,100S$37,505S$51,733S$245,727
Buyer's Stamp DutyS$9,600S$44,600S$84,600S$209,600S$287,600S$419,600S$2,219,600

Methods to Finance The Purchase of Property in Singapore

There are several ways to finance the purchase of property in Singapore. Here are some common and not so common options to consider:

  1. Cash Purchase: If you have the financial means, you can choose to buy the property outright with cash. This eliminates the need for borrowing and allows you to own the property unencumbered.

  2. Mortgage Loan: A mortgage loan from a bank is a common way to finance the purchase of property. You can approach banks or financial institutions to obtain a mortgage loan. The loan terms, interest rates, and eligibility criteria will vary, so it’s important to shop around and compare options.

  3. Equity Financing: If you already own another property with a low outstanding loan or no loan, there is substantial equity that can be unlocked, you may be able to use that equity as collateral for a loan to purchase another property. This option may be available through a home equity loan or line of credit.

  4. CPF Funds: If you are a Singaporean or Permanent Resident, you can tap into your Central Provident Fund (CPF) savings to finance your property purchase. CPF funds can be used for a down payment, monthly mortgage payments, stamp duty, or to repay an existing mortgage. There are specific rules and eligibility criteria imposed by the authorities, so it’s crucial to consult with a financial advisor, or visit the CPF website for detailed information.

  5. Government Assisted Schemes: In Singapore, there are government assisted schemes or subsidies available for financing the purchase of public housing. Buyers can apply for BTO flats which are heavily subsidised or Resale flats with housing grants. These programs aim to make homeownership more affordable and accessible.

  6. Developer Financing: In some cases, property developers may offer financing options for buyers. This can include instalment payment plans or developer-backed loans. In the case of a new condo launch, the developer offers progressive payment schemes for buyers to pay in several stages over the course of the property development. Be sure to carefully review the terms and conditions before considering your options.

  7. Private Financing: Buyers can also explore private financing options, such as seeking loans from family members, friends, or private lenders. Private financing may offer more flexibility and fewer restrictions than traditional bank loans, but it’s important to negotiate clear terms and have legal documentation in place to protect both parties involved.

  8. Seller Financing: In a seller financing arrangement, the property owner acts as the lender and provides financing to the buyer. This option can be beneficial if you have difficulty obtaining traditional financing or if the seller offers favourable terms. This is not common in a rational property market.

When considering your financing options, it’s important to carefully assess your financial capability and long-term goals. Consider factors such as interest rates, loan terms, repayment schedules, and any potential risks associated with each option. 

Before deciding on the best financing option for your situation, it is advisable to consult with a financial advisor or mortgage broker who can help you make an informed decision that aligns with your financial goals and circumstances.

Do you intend to buy or sell your property?

You may be thinking what is the next step for you and if it is worth going through the necessary work to buy or sell your property.

When is the best time to sell and can I sell for a better price than my neighbours? 

What are my options for buying a property and how can I get the best deal?

Here at The Landed Collective, we specialise in residential properties and that means, HDB flats, Condos, Landed Houses and New Developer Sales. 

Before you start anything, speak to us for a complimentary consultation as we will provide you with comprehensive advice, run through the essentials on the property market and answer any questions you may have.