Select the best loan for your needs

Taking a loan to finance a home purchase is common in Singapore. Different loans are available depending on your property type, so do your research before you buy.

To avoid being saddled with too much debt, buy within your means. As a general rule of thumb, you can look for a property priced within five times of your annual household income.

You may not be aware of the loan amount you can receive and it may be wise to speak to your banker to assess how much your bank is willing to lend you first before committing to the purchase. If not, you could possibly forfeit thousands of dollars after placing an Option Fee for your desired property.

For the environmentally conscious buyer, Maybank offers the Green Home Loan, and you will be rewarded through sign-up perks as well as enjoy leaner utility bills, and improved indoor environmental quality in the long run when you purchase a Green Mark-certified home. Unsure if your home is a Green-mark certified home? Simply look through the directory of Green Mark-certified buildings here.

Decide on terms of ownership and repayment

Beyond designing your dream kitchen and going furniture shopping, one of the most important steps in a new home purchase is deciding who owns the property legally, and how to service your loan.

There are two forms of co-ownership in Singapore: joint tenancy and tenancy-in-common.

The former gives both partners an equal share of the property, and is a common arrangement for married couples. A tenancy-in-common agreement gives co-owners a specific percentage of shares in the property.

Have a candid discussion with your partner on how to repay your loan – equally, or according to earnings. Another important consideration is the repayment tenure. A longer tenure may mean more affordable monthly repayments but higher interest payments overall.

 

Beware of Additional Buyer’s Stamp Duties

Don’t get tripped up by Additional Buyer’s Stamp Duties (ABSD) if you have your sights set on a second property.

The cost of purchasing a second property is substantially higher due to ABSD, which is 17 per cent for Singaporean citizens. This amounts to a hefty additional $170,000 for a million-dollar property.

One way to avoid ABSD is by selling your existing property before signing the Option to Purchase for your new property.

Plan your move well and you may be able to save a tidy sum. This will go a long way to pay for future costs in renovation, family planning and retirement, which will add up in your journey together.