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When it comes to buying a condominium apartment in Singapore, it would be appropriate to say that what you see is not what you get. The newspaper and TV ads paint a picture that is, in all honesty, a little too fly and likewise, the listed price is not what you’ll be paying eventually. In the heady enthusiasm to work out the sums, people forget that there are many hidden costs that inflate the purchase price beyond imagination.

 

Down payment and loan shopping are merely the beginning of the financial night and daymare. Before you act on your spiraling interest to upgrade your HDB or snag yet another investment unit, crunch in the following nine hidden costs to uncover the true expense.

 

It might scare you when everything adds up, so you might want to be ready.

Property tax

Whether you actually live in the apartment or it is being rented out, you need to pay property taxes every year. Property tax is calculated as a percentage of the home’s annual value (AV), which is derived from factors such as location, size of unit and condition.

 

The rate is progressive; the higher the AV, the higher the percentage. The first S$8,000 is tax-free, followed by 4% on the next S$47,000.

 

You can refer to this table by IRAS to check out the full list of rates for different groups of buyers. 

 

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Legal fees

Home loans are serious business. Banks are lending you a lot of money (not just you) and it behoves them to conduct all the checks they can. One of them is done by the banks’ appointed legal eagles, who will swoop in to make sure everything is all right with the property and carry out the legal paperwork.

 

Banks are no longer allowed to dish out subsidies on legal fees like yesteryears, so be prepared to cough up S$2,500 to S$3,500. The good news is that you have the option to pay by CPF. 

Stamp duties

 

If you are buying a property in Singapore, then buyer’s stamp duty (BSD) is applicable to you. For the first S$180,000, you’ll be charged 1%. The next S$180,000 is at 2%. The remainder is at 3%. The BSD rates are slapped on either the market value or purchase price, whichever is higher. As part of the property cooling measures, there will be additional buyer’s stamp duty (ABSD) of 7% charged if you are buying a second property. Check out the full list of ABSD rates here.

 

BSD can be paid by either cash or CPF.

Maintenance fees

A lot of variables are at play here. Each condo project differs in terms of scale, facilities and services. The monthly upkeep you pay to the management could range from anything as low as S$100 (1-bedroom at a modest condo) to S$1000 (luxury condos). If we were to narrow it down to an average, we’d say somewhere in the ballpark of S$200 to S$300.

 

All the lazy Sunday laps in the pool, doorstep gym and napping security don’t come free.

Home insurance

Unless you want to take up extra insurance to cover your home furniture (that hard back antique sofa you’re so attached to, literally), expensive jewellery and a library of rare first edition comics, your condo apartment is already maintained and covered by the Management Committee of Strata Title Plan (MCST).

 

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Option fee

The option fee is like a deposit that gives you the right to exercise the Option To Purchase (OTP) in the future. If you change your mind, it will be forfeited. Expect to put down 1% of the purchase price in cash.

 

When you do decide to buy, you need to pay another option exercise fee, which is about 5% of the purchase price (it then forms part of the cash down payment).

 

You don’t really have an option here; it’s a mandatory expense. 

Valuation fee

Before your bank loan gets approved and disbursed, the bank will have to appoint a valuer to put a valuation on your apartment. If the purchase price is higher than the valuation, then you will have to pay the difference in cash. Valuation fee may or may not be absorbed by the bank.

Renovation and furnishings

Depending on how new the condo is, your apartment might come partially furnished. In the event that it is bare like a blank canvas, it’s on you to do the IKEA shopping. But furnishings are the little brother. What you should be concerned about is the big brother: renovation costs. It could run up to tens of thousands of dollars for a major makeover consisting wall hacking, flooring, carpentry, plumbing and truncation.

 

Before you compare personal loans on GoBear, refer to this detailed renovation cost guide courtesy of Qanvast.

 

 

Interests on home loan

The purchase price of the condo unit quoted in black and white in not the real price you are paying. The real price could be at least a good S$100,000 higher because of the interest payable on your home loan. That is, unless you have so much cash to burn you can pay everything upfront.

 

But not all of us are born with such fortunes. The only loan financing option available for condos is from banks, which offer floating and fixed rate packages. Along the way, be sure to take charge of your refinancing responsibilities to beat market rates.

Bonus: agent’s commission

On the HDB side of things, sellers usually pay 2% and buyers 1%. On the private property market, buyers usually don’t pay anything. This isn’t really a hidden cost as much as it is zero cost.

 

Finally something you don’t have to pay for!

 

 

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