Understanding your needs

A property can serve an individual’s needs in many ways. Some property buyers purchase a property that will serve their growing family, some are staying alone, while others want to leave a lasting legacy for their future generation. The list goes on.

Knowing clearly your purpose of purchasing a property is important as it serves as a strong guide when searching for your ideal property.

Universal criteria

There several universal criteria which we think are necessary to consider:

• It should fit your budget for the foreseeable future

• It should ideally appreciate in value or at least maintain its value

Knowing your budget

A property can easily be one of the biggest ticket item in your lifetime and most people will require a mortgage to service the payment of the property. It is important to make some detailed calculations before committing to purchase a property.

Financing

It is important to ascertain the amount of financing available to you given a specific tenure, and monthly mortgage payment. The loan tenure is dependent on your age, while the payment amount is dependent on your income level in accordance to prescribed Total Debt Serving Ratio (TDSR) by the Monetary Authority of Singapore (MAS). Today, the TDSR stands at 55%, which means only 55% of your income can be committed to mortgage payments and other loans.

There are also other ways to secure more financing, such as pledging an asset to obtain additional loan.

Downpayment

The downpayment amount is also critical in deciding the property value you can commit to. As the mortgage financing available to you is limited to a proportion of the property valuation (commonly known as Loan-to-Valuation of LTV). The balance amount of payment will need to be financed by your own liquid cash or CPF. Today the LTV stands at 75% for buyers of their first property with a loan tenure up to 30 years, this means that 25% of the property value will need to be financed through cash/CPF.

Searching for properties

There are 2 sources of properties available to buyers: 1) New properties and 2) Resale properties from existing owners.

New properties

These are properties that are usually not fully constructed yet when you make a purchase and the property will be handed to you brand new.

Prices are typically steeper due to higher costs (both land and construction) but buyers benefit from the choice of units, more modern layout and fittings, minimal renovation costs and a longer lease period (for non-freehold properties).

Payment for the property is also progressive in nature, where each payment is tied to a particular construction milestone.

Find out more about upcoming new properties in Singapore

Another type of new properties are Sub-sale properties. These properties are usually under construction and could be nearing completion (or completed). They have an existing owner (typically investors or owners with a change of plans) waiting to exit the development. Such units offer an opportunity to purchase new properties for immediate needs.

Resale properties

Resale properties are pre-owned properties where you usually purchase with vacant possession together with all the fittings of the previous owner come with the property.

Prices on resale properties tend to be lower on a per square foot basis but tend to be larger. The property choices tend to be limited, varied and subject to availability. Buyers will usually need to renovate the unit and are faced with a decaying lease (if it is a leasehold property).

You can browse through resale properties at property portals such as propertyguru.com, 99.co or even discover properties through Youtube. There are also properties that may be advertised internally within property agents that may be worth looking out for.

Viewing the properties

The next step will be to fix up the appointments to see the property in person as pictures are usually not sufficient for buyers to decide.

For new properties, a visit to the showflat will help to visualise the development.

It is also advisable to have an agent to represent you to look out for details that might otherwise be overlooked. Given the number of properties that real estate professionals have been exposed to and their experience in the market, they will be able to identify issues (if any) quickly.

Making the Offer

After shortlisting your favourite properties, you can proceed to make an offer. For new properties, it is also important to find out the discounts available and potential customisation available for the unit.

To ensure that you are paying a fair amount for the property, it is important to look at the available market data, the market conditions as well as the supply situation. One good source of market data is the URA website.

There are also other key conditions that needs to be considered, such as timeline to completion, financing and any extension of stay.

The agent looking after your purchase will be able to help ensure all aspect of the purchase is done correctly in your interest and the transaction will complete smoothly with no foreseeable hiccups.