Real Estate In Singapore

Real Estate In Singapore

Foreigners and corporate bodies may buy resale ECs in the open market from the eleventh year of the EC project, calculated from the date of TOP.

Resale Levy: Buyers who currently own a flat bought from the HDB or have previously sold a subsidised HDB flat need not pay the resale levy when they buy an EC in the open market. However, owners of direct-purchase HDB flats must have occupied their flats for at least five years before they can buy resale ECs.

Mortgages can be obtained for purchase of all freehold properties and some leasehold properties depending upon the usage and the unexpired lease term. New leasehold residential properties which generally come with 99 years leasehold shouldn't be a problem. Banks may be unwilling to give loans for residential properties with less than 60 years unexpired lease.

The current Monetary Authority of Singapore (MAS) (August 2006) ruling allows buyers to borrow up to 80 percent of the valuation (Market Value) or purchase price, whichever is lower. (The percentage is lower for commercial properties.) Ten percent must be paid in cash, the other ten percent can be paid using the buyer's Central Provident Fund or cash.

Some banks offer a lower interest rate for mortgages where the residential property is the first property purchased and is for owner occupation.

The purchaser should check the market valuation for the property they want to buy. Valuation directly affects the amount of financing that can be granted for the property. Banks generally do not require a condition survey on the state of repair of a property. However, if there are serious known risk issues, banks may be reluctant to grant a mortgage. The condition of the property also affects market value and hence the actual loan amount that can be obtained under a mortgage.

The purchaser will also need to check if their credit status and income proof will enable them to borrow the amount required.

Note: For foreigners, too, major banks or financial institutions in Singapore can lend only up to 80 percent of the valuation or sale price (whichever is lower), and will require proof of earnings.
Enbloc sales prospect. It will not be as good an investment as a freehold property, unless there is a prospect of "enbloc sale" in later years whereby each owners walk away with as much as $2 million dollars for freehold properties in a case in Changi 2 years ago. The government is reported today to be passing a law to allow 75-80% of the owners to overcome objections by 1 or 2 individuals blocking "enbloc sales"

Difficult for prospective Buyer to get cheap financing. 10 years later, the lease will be 65 years old and only finance companies will consider mortgage, at higher interest rates, if present banking policies are still in existence. The higher financing cost and age of the condo will drastically reduces the pool of prospective Buyers unless the Sales price is very attractive.

Difficult to re-finance to obtain emergency funding. If the writer needs money, the bank can give an overdraft based on, say 50% of the valuation (assuming no outstanding loans). However, since the lease will be <65 align="center">