Are you thinking of buying a home? If you are, this is probably going to be the biggest and most important financial investment you will ever make in your life. Homes don’t come cheap, especially in Singapore. The country’s real estate market is ranked amongst the top 10 most expensive in the world. Very few people are able to purchase houses in Singapore without the help of a loan.

It is therefore important to be mindful when making a decision about the home you will purchase. This will reduce the chances of making a decision that you will regret for the rest of your life.

How much it costs to own the roof over your head in Singapore

While the price of the home isn’t the only factor to consider when choosing a house to purchase, it is one of the most important. Understanding the price of homes will not only help you to choose the right home within your budget, but it will also help you determine a reasonable budget based on your earning power and available financing.

The real estate market in Singapore is quite expensive. If you’re planning to buy a home, you probably already know that the house prices increased in the first half of 2018. This was mostly a result of a rise in the economy.

Homes in Singapore go for an average of between S$400 and S$2000 per square foot. If you wish to buy a property that includes land ownership, you will have to part with much more. Therefore, if you’re hoping to purchase an HDB apartment of about 400 square feet with one bedroom and one bathroom, you should be prepared to pay anything from S$200,000. An executive apartment costs an average of $590,000.

The average family of four is likely to be looking for a family home. These are more costly. The average price for semi-detached houses is S$ 4,100,000 and a bungalow costs an average of S$ 10,600,000.

With such a hefty price to pay for just a roof over our heads, most of us would probably be looking at alternative sources of funding to help finance our dream homes. One can consider applying for a property loan in Singapore to help to ease the financial burden. With their flexible repayment schedule and affordable interest rates, you won’t have to find yourself struggling to make repayments each month.

More to the total cost

Many prospective homebuyers make the mistake of assuming that the cost of the home is the same as the price of the house. You will actually end up spending much more than the actual price of the house in order to own it. You should, therefore, factor this into your budget.

Some of the costs you should consider include:

  • Buyer Stamp Duty

This is a tax that you pay on the Sales and Purchase Agreements (S&P) or Option to Purchase (OTP). The amount you pay is a percentage of the market price of the property or the price at which you purchase it (whichever is higher).  

  • Additional Buyer Stamp Duty

This was introduced for residential properties. It is paid in addition to the existing buyer stamp duty. However, not all property buyers pay this stamp duty. For example, if you are a Singaporean citizen and are buying your first property, you won’t be charged this duty. However, you will be charged 7% on the property purchase price if it is your second property.

  • Conveyancing Fees

These are legal fees charged by the legal firms for any work done. These often start from S$1,800.

  • Valuation Fees

In order for the bank to release funds for you to purchase the property you are interested in, a valuation must be performed. The fee on this will vary depending on the value of the property. It is usually a couple of hundred dollars.

  • Agent’s Commission

You will have to factor the agent’s fee into the purchase price if you hired a property agent to help you purchase the property. This commission is usually 1% of the price you purchased the property at.

  • Interest On The Loan

The interest on the loan adds up. Interest can add thousands of dollars to the amount you repay annually. It is therefore important to shop around and find the best possible interest rate and loan terms.

  • Homeowners Insurance

If you are financing the purchase of your home through a bank, you are likely going to have to get homeowners insurance. Many banks require homeowners to protect their investment in the event of fires or flooding. This ensures security for the collateral for the loan.

What To Consider When Purchasing A House

Whether you’re buying a house as an investment or to live in, now is a great time to make a purchase. The real estate market in Singapore is experiencing a steady rise. This doesn’t mean that you should purchase just any property. Ensure that you make a choice that meets your needs and requirements.

The following are some factors that you should consider when making your choice.

  • The Location Of The House

Although most of Singapore is highly accessible, it is still important to purchase a property in a location that is best suited for you and your family’s needs. This is different for everyone. You will have to determine what is important to you.

Younger people who want to be close to the action prefer to purchase houses in up and coming estates that are centred around suburbs like Punggol. On the other hand, families tend towards more established suburbs with well-established amenities, like Toa Payoh or Bishan.

When considering location, you should think about the proximity to the CBD, public transportation, schools, hospitals, shopping centres and commercial hubs.

  • The Cost Of Repairs

Will the house needs repairs? It is always a good idea to have the home inspected before you make any purchase. This will ensure that any serious structural damage is recognized early. You can use this as a point for negotiating for a better price, or even opt out of purchasing the home altogether if the damage is significant.

  • The Cost Of Renovating The Home

Very few people, if ever, purchase their dream home. In many cases, people purchase a home that is close to what they envision as their dream home, with the hope of turning it into what they dream of. If this is you, you should consider the cost of renovating the home when choosing a house to purchase.

  • Maintenance Charges

Many people are excited to own a home as they will no longer have to pay rent. However, they forget that there are still various maintenance charges that you will have to continue paying even after you purchase the home. These include utility bills and property maintenance e.g. hiring someone to trim the bushes and clean the gutters.

The cost of maintaining the home will depend on various factors, including whether you will outsource services or choose to do the work yourself. They will also depend on how you manage your utilities.

Ultimately, it is important to consider the factors that are most important to you when making a choice on the property to purchase. It would be useful to explore the different financing routes available to help you become a homeowner. You should also ensure that you consider the different costs involved in the purchase of the home in order to get a clear picture of the actual cost of the house.

With the above points to take into consideration, you’ll be one step closer to your dream home!