Things to take note before the upgrading to Private Condominium in Singapore

Our Adora Green reaches MOP and the date will be 5 years from the day where we collect our keys. So is better to collect key earlier than your neighbors, so you can put your unit on sale before them.  There was plenty of flyers at our door steps and letterbox.

Upgrading came to our mind, while we have peers buying condo and we went a few new launch showroom together. Indeed we do have interest in upgrading and we are in doubt on what are our opportunity.

Just then, Cs recall he has a friend who is doing property, Stuart, so cs just dropped him a text to ask for some advise. We met up with him to hear out the current market trend and what are the options that suit our situations. We gained alot of knowledge from him.

Initially, in the month of July18 we are looking at new ECs in Yishun like signature and criterion. Unfortunately, the timing doesnt match ours and we see the price of the units climbing up steeply. We manage to see some of the unit that was bounced out, however, it may not match our situation as our adora green had not reach its mop.

Considering that we had taken housing grants, and we will need to return 30k after selling adora if we have proceeds from the sale. And, the prices for new launch is getting higher and higher, we consider looking at resale instead of new launch.

There is actually a few options to choose from for those who are looking for upgrade.
1. Getting a New Launch
2. Getting bounced unit for newly TOP project
3. Resale

New launch is definitely attractive so does the price, and by the time the unit is ready, it probably takes another few more years, our age might not eligible us if any one of us exceed 35 yrs old, as the max loan will be 30 years which result the payout for the house per month to be higher, or more upfront cash will be required. It will also incurred of additional buyer stamp duty (ABSD). With effect from 6 July 2018, ABSD rate has increased from 7% to 12 %. This 12% ABSD will be payable when exercise the option. However, it is refundable if you dispose of your apartment within 6 months from the date of TOP/CSC (whichever is earlier). Do note 12 % of the purchase price upfront can be quite a huge amount.

Getting bounced unit, the price per square feet are likely to match the market rate, and you are probably buying at a higher price compare to those who had purchased more than 3 years ago during the launch time. At the same time, the units available are limited and it may not be the ideal unit that you are looking for. However, there will be not much wait time, and suitable who wish to receive key the soonest possible.

Getting resale unit, the price is definitely lower than the current market rate. The unit layout may not be as amazing as those new launch. Heavy renovation cost may be involve, and renovation involve will be cash. You may need to compromise the unit as they may not be that ideal as you only able to view unit that are up for selling.

Nevertheless, is never easy to meets both ends. But what truly matters is to set our needs and priority.

To kick start, some pointer to note:

1. To do In-Principle Approval (IPA) with bank, the purpose is to know if you can get a bank loan from bank and how much loan you able to secure. Buying private property will need to get loan from bank. Unlike buying HDB, there is a option to get either a hdb loan or bank loan. The bank will require several documents such as latest 3 months payslip and bonus declare, latest 12 months CPF contribution statement, CPF account balance, Latest Notice of Assessment (Income tax), active credit card, any other loan such as car loan. With the information provided, the banker will check with you what project are you looking at before advising the indicative loan amount. This is because, Total Debt Servicing Ratio (TDSR) limits the amount individuals can spend on monthly mortgage debts repayment at capped at 60% of gross income (salary + bonus). In short, if buying private property, the loan will be 60% TDSR, while HDB or EC will be half of TDSR due to Mortagage Service Ratio (MSR) which is 30% of gross income. For instance, the max loan eligible will be 668k for 5000 fixed income salary with age below 35 years old. The amount will be half for EC, and adds up both eligible loan sum will be the total amount bank will loan. You will need to work backward from the loan amount.  As the max loan now is 75%, 20% required from CPF/cash and 5 % cash required. If combined max loan is 750k, the property for max purchase will be 1million.
2. Not forgetting, buyer stamp duty will be 3% of purchase price -$5400. Has to be paid in cash and reimburse from CPF later, as this amount need to pay 4 weeks after option exercise.
3. Those selling will need to pay agent commission of ((2% of the sale price in cash)+7%(gst)).
4.  You will also need to pay legal fee, range from $2300 to $3000, to be paid in cash and can be reimburse from cpf.

Here are some quotes:

Anthony Law $2300, AT Law $2500, APAC Law $2500 and SMTP Law $3000 all inclusive GST.