5 reasons why buying private property is more affordable than you think
Home ownership – even for private residential units – is surprisingly affordable to first-time buyers.
Most Singaporeans overestimate how much they need to buy a property. Before you assume that a private property is unaffordable, you’ll do well to understand which financial schemes work in you favour. Home ownership – even for private residential units – is surprisingly affordable to first-time buyers.
1. MINIMUM CASH PAYMENT
What is the down payment for a million dollar condo, you ask? The total down payment is 25 per cent, of which 20 per cent can be paid using your CPF and the remaining 5 per cent has to be paid in cash – which works out to S$50,000. So if you start saving now – setting aside S$833 a month, you’ll have the sum in 5 years.
2. COOLING MEASURES
Cooling measures primarily target multiple home buyers. First-time Singaporean home owners are not subjected to the Additional Buyers Stamp Duty (ABSD) which makes private home ownership more accessible.
3. EASY QUALIFICATION FOR A BANK LOAN
For bank loans, you need only meet the Total Debt Servicing Ratio (TDSR), which caps your monthly repayment at 60 per cent of your monthly income.
4. EXECUTIVE CONDOS (ECs) ARE A GREAT FIRST STEP TO PRIVATE PROPERTY
ECs belong to HDB only for the first 10 years, thereafter they are privatised. But unlike private properties, owners of ECs are eligible for CPF grants, which offsets some of the cost, making them a great “entry level” property for first-time private home buyers.
5. DEFERRED PAYMENT SCHEME (DPS)
For completed developments, you can opt to pay with schemes such as DPS. According to the scheme, you’re required to pay 20 per cent upfront while the remaining 80 per cent will only be due in 2 years, interest-free.
The down payment of 20 per cent is less than the usual down payment of 25 per cent. For a mass market condo at S$1 million, this difference of 5 per cent can mean a cash outlay that’s S$50,000 less.
This story first appeared on 99.co.