For the last three years, property prices in Singapore have gone down. The decline however, people forget, that it **was preceded by a 60 percent rise on private homes in the global financial crisis of 2008-2009. The government of Singapore has, as a result, established regulations for controlling the home-loan amount limit for those looking to buying property.
What remains despite the success of the measures, is the wide range of home prices, even extending to public housing. That even property sites do not include the comprehensive price on the properties advertised. Thinking of owning an affordable home in Singapore? Work out the additional costs first before any decision.
TDSR & MSR Fulfilment
The Total Debt Servicing Ratio (TDSR), which came into being on June 2013, is a measure that sees to it that your monthly debt repayments are within a 60 percent limit of your monthly income.
A TDSR calculator is all you need to come up with the maximum loan amount allowed for you to acquire property. Some banks will provide these calculators, the DBS or UOB type, where with only keying in a few details, you will have revealed, your maximum loan amount, the maximum property price allowed alongside the down payment required.
The Mortgage Servicing Ratio (MSR) is something that potential HDB flats and Executive Condominiums owners need to take a peek at. The MSR limits to 30 percent your monthly income, what you should spend on mortgage repayments. TDSR and MSR aside, the funds in your CDF OA and cash are important in seeing that you can make the upfront payments. With the 20% upfront pay for private properties being seen a barrier for those not settled on a resale HDB or a private condominium.
Keen interest is not given on matters stamp and legal fees. Buyer stamp duties coming to a 4 percent of your home price; mortgage agreement stamping counting to $500; another $500 for stamp duty for taking a home loan, not to mention other small charges which include bank processing and legal fees bringing the total amount higher.
Cost of Borrowing
With the standard HDB Concessionary loan interest rates being used in the example above, one should take note that depending on the type of bank loan you choose, borrowing fees can total up to a fairly large amount.
Currently, the interest rates for bank loans are considerably lower in comparison to HDB loans. Many do prefer the HDB loans over bank loans as with HDB loans one can access a 90 percent loan-to-value, making it possible to afford an amount, 10 percent less the down payment.
The monthly repayment may come up as small; with $120 over a period of 20 years, but the additional interest payments you will be making sums up to $28,513. Thus in the long term perspective, you might have to rethink your decision.
Renovation & Furnishings
Oblivious to most home-buyers, renovation costs are much expensive, no matter how simple. With costs being much higher for an older flat or resale, an approximate cost for renovation would fall in the scale of $50,000- $70,000.
What you do not want to see is the total cost, if furnishing is to be included. Furnishing however should not be a worry since you can furnish your home at your own pace as you continue.
With property purchase, the stated price is not enough to convince you; rather, the additional costs should serve as your best guide.
As a buyer, your CPF money and upfront cash is all you need to have in mind in order to comfortably service your home loan in the long-term.