Buying a new launch condo in Singapore can be an exciting and rewarding experience, but it also involves a lot of planning, research, and paperwork. In this article, I have explained the steps that you need to follow to buy a new launch condo in Singapore. These steps are:
- Get an In-Principle Approval (IPA) from a bank or financial institution to know how much loan you can borrow and set a realistic budget.
- Check your funds and make sure that you have enough money to pay for the downpayment, stamp duties, legal fees, valuation fees and other costs involved in buying a property.
- Find a good new launch project that suits your needs and preferences, considering factors such as location, developer, design and price.
- Finalize your loan and sign the Sale and Purchase Agreement (S&PA) with the developer, paying a booking fee of 5% and a downpayment of 15% of the purchase price, as well as the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) if applicable.
- Progressive payment scheme (PPS), which allows you to pay in installments as the construction progresses.
- Collect the keys to your new launch condo after the construction is completed and the Temporary Occupation Permit (TOP) is issued, inspecting the property for any defects and paying the Seller’s Stamp Duty (SSD) if applicable.
1. Get an In-Principle Approval (IPA)
An IPA is a conditional approval from a bank or financial institution that indicates how much loan you can borrow based on your income, credit history, and existing liabilities. Getting an IPA is important because it helps you to set a realistic budget and narrow down your choices of new launch condos. It also shows the developer that you are a serious and qualified buyer.
To get an IPA, you need to submit your income documents, such as payslips, CPF statements, and income tax returns, as well as your personal details, such as NRIC, passport, and marital status. You can apply for an IPA online or through a mortgage broker. The IPA is usually valid for one to three months, depending on the bank.
2. Check Your Funds
Before you start looking for a new launch condo, you need to check your funds and make sure that you have enough money to cover the various costs involved. These include:
- Downpayment: This is the initial amount that you need to pay when you book a new launch condo. The downpayment is usually 20% of the purchase price, of which 5% is paid in cash and 15% can be paid in cash or CPF. For example, if the purchase price is $1 million, the downpayment is $200,000, of which $50,000 is paid in cash and $150,000 can be paid in cash or CPF.
- Stamp Duties: These are taxes that you need to pay to the government when you buy a property. There are three types of stamp duties that you may need to pay, depending on your profile and the property type. These are:
Buyer’s Stamp Duty (BSD)
On or after 15 Feb 2023: This is a tax that is based on the purchase price or market value of the property, whichever is higher. The BSD rates are as follows:
- First $180,000: 1%
- Next $180,000: 2%
- Next $640,000: 3%
- Next $500,000: 4%
- Next $1,500,000: 5%
- Remaining amount: 6%
Seller’s Stamp Duty (SSD)
This is a tax that you need to pay if you sell your property within a certain period of time after buying it. The SSD rates vary depending on the property type and the holding period. The SSD rates for residential properties are as follows:
- Sold within 1 year of purchase: 12%
- Sold within 2 years of purchase: 8%
- Sold within 3 years of purchase: 4%
- Sold after 3 years of purchase: No SSD
Additional Buyer’s Stamp Duty (ABSD)
This is an additional tax that is based on the purchase price or market value of the property, whichever is higher. The ABSD rates vary depending on your citizenship, the number of properties you own, and the property type. The ABSD rates are as follows:
- Singapore Citizens Buying First Residential Property: No ABSD
- Singapore Citizens buying second residential property: 20%
- Singapore Citizens buying third and subsequent residential property: 30%
- Singapore Permanent Residents buying first residential property: 5%
- Singapore Permanent Residents buying second and subsequent residential property: 30%
- Foreigners buying any residential property: 60%
Other fees
- Legal Fees: These are fees that you need to pay to a lawyer who will handle the legal aspects of your property purchase, such as drafting and reviewing the Sale and Purchase Agreement (S&P Agreement), conducting due diligence checks, registering the property title and facilitating the payment and handover. The legal fees vary depending on the lawyer and the complexity of the transaction, but they typically range from $2,000 to $3,000.
- Valuation Fees: These are fees that you need to pay to a valuer who will assess the market value of the property. The valuation fees vary depending on the valuer and the property size, but they typically range from $200 to $500. You may need to pay for a valuation if you are taking a bank loan or using your CPF to pay for the property.
3. Find a Good New Launch Project
Once you have an IPA and a clear budget, you can start looking for a good new launch project that suits your needs and preferences. There are many factors that you need to consider when choosing a new launch condo, such as:
- Location: This is one of the most important factors that affect the value of a property. You should look for a location that is convenient, accessible, and has good amenities, such as schools, shops, transport, and recreation. You should also consider the future development plans and potential growth of the area.
- Developer: This is another important factor that affects the quality and reputation of a property. You should look for a developer that has a good track record, financial stability, and customer service. You should also check the developer’s past and current projects, as well as their reviews and feedback from previous buyers.
- Design: This is a factor that affects the aesthetics and functionality of a property. You should look for a design that is attractive, spacious, and practical. You should also check the layout, orientation, fittings, finishes, and facilities of the property.
- Price: This is a factor that affects the affordability and profitability of a property. You should look for a price that is within your budget and reflects the market value of the property. You should also compare the prices of similar properties in the same area and look for any discounts or incentives offered by the developer.
To find a good new launch project, you can do your own research online, visit showflats, attend property seminars, or engage a property agent who can advise you and arrange viewings for you.
4. Finalise Loan and Sign Sales and Purchase (S&P) Agreement
After finding a new launch condo you like, you need to finalize your loan and sign the S&P Agreement. The S&P Agreement is a legal contract that binds you and the developer to the terms and conditions of the property purchase. The S&P Agreement will include details such as the purchase price, payment schedule, completion date, defects liability period, and dispute resolution mechanism.
To finalize your loan, you need to submit your loan application and supporting documents to the bank or financial institution that you have chosen. The bank will then conduct a credit assessment and a valuation of the property. If your loan is approved, the bank will issue a Letter of Offer (LOO) that states the loan amount, interest rate, tenure, and other terms and conditions. You need to accept the LOO and pay a valuation fee to the bank.
To sign the S&P Agreement, you need to pay a booking fee of 5% of the purchase price in cash to the developer. The developer will then issue an Option to Purchase (OTP) that grants you the right to buy the property within a specified period, usually 14 days. Within this period, you need to sign the S&P Agreement and pay a downpayment of 15% of the purchase price in cash or CPF to the developer. You also need to pay the BSD and ABSD (if applicable) to the Inland Revenue Authority of Singapore (IRAS).
5. Progressive Payment Scheme
After you have signed the S&P Agreement, you need to pay the remaining 80% of the purchase price according to the progressive payment scheme (PPS). The PPS is a payment schedule that allows you to pay for the property in installments as the construction progresses. The progressive payment scheme
- Upon completion of foundation work: 10%
- Upon completion of reinforced concrete framework: 10%
- Upon completion of partition walls: 5%
- Upon completion of roofing: 5%
- Upon completion of door sub-frames, window frames, electrical wiring, internal plastering, and plumbing: 5%
- Upon completion of the car park, roads, and drains: 5%
- Upon completion of sewerage works: 5%
- Upon completion of drains: 5%
- Upon completion of electrical substation: 5%
- Upon completion of water tanks: 5%
- Upon completion of lifts: 5%
- Upon completion of external works: 5%
- Upon issuance of Temporary Occupation Permit (TOP): 25%
- Upon issuance of Certificate of Statutory Completion (CSC): 15%
For each installment, the developer will send a notice to your lawyer, who will then inform you and the bank. You need to pay the installment within 14 days of receiving the notice, either by cash, CPF, or bank loan. The bank will disburse the loan amount to the developer upon receiving the notice and the valuation report.
6. Collection of Keys
After the construction is completed and the TOP is issued, you can collect the keys to your new launch condo. The developer will notify you of the key collection date and time, and you need to bring along your NRIC, OTP, S&P Agreement, and proof of payment. You will also need to pay the SSD (if applicable) to IRAS.
Before you collect the keys, you should inspect the property for any defects or damages. You can do this yourself or hire a professional inspector. If you find any defects, you should report them to the developer within the defects liability period, which is usually 12 months from the date of TOP. The developer is obliged to rectify the defects at no cost to you.
After you collect the keys, you can start moving into your new launch condo and enjoy your new property, rent it, or sell it for a profit.
Summary
Buying a new launch condo in Singapore can be a rewarding experience, but it also requires a lot of planning, research, and paperwork. If you need any help or advice on buying a new launch condo, please feel free to contact me. I am a professional property agent who can assist you with finding the best new launch projects, recommending the best loan deals, and legal matters, and ensuring a smooth and hassle-free transaction. I have helped many clients to buy their dream homes and I would love to help you too. Please fill in the form below or call or WhatsApp me at +65 9771 9040 to get in touch with me. I look forward to hearing from you soon.
