Hidden Costs You Should Know When Buying A Home In Singapore

Written by 1AP Credit on November 18, 2021
Hidden-Costs-You-Should-Know-When-Buying-A-Home-In-Singapore-1AP-Capital

Buying a house will likely be the biggest big-ticket item purchase in our life.

We may take years of planning and saving in order to get the money needed.

When you are buying a property in Singapore, you need to consider some hidden charges. If you don’t prepare yourself for that, you will be in a financial crisis! This is especially troublesome because couples will need to prepare another sum for their home renovation.

But don’t worry; 1AP Capital, a long-standing financial institution in Singapore is here to save you from that ordeal. Here we’ll tell you about all the hidden costs that might get added to your bill while getting a house.

So, without wasting much time, let’s get started.

The Hidden Costs of Buying Residential Properties in Singapore

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In Singapore, there are two types of housing you can get. You can either purchase HDB flats provided by the government or go for a resale flat / private property.

If you decide to purchase HDB flats, the prices will be affordable. However, ownership comes with plenty of restrictions, and it isn’t easy to get.

In contrast, private properties are pretty expensive. But the buying procedure isn’t that complicated, and the resell value will increase over the years.

It doesn’t matter which type of property you choose; there’ll always be some hidden charges. So, if you don’t want to become penniless right after buying your house, you should keep yourself prepared.

But what will be the charges? How much will you have to pay? Let’s get to know that in the next segment.

1. Real Estate Agent Commission

While dealing with the properties, you’ll need to go through an agent from selling to buying. They will help you sell or purchase your house, and you need to pay them some fees to get your work done.

When you sell your HDB property, usually, you have to pay around 2% of the selling price to the agent. And while buying a place, the agent will charge you around 1%.

Here is an example for you. If you are trying to sell a house for $500,000, you will get $490,000 after paying a 2% commission. And when it comes to buying an HDB flat, you’ll have to pay $505,000, including commission.

For private properties, the buyer generally doesn’t pay any commission. The seller’s agent will split the commission with the buyer’s agent; that’s the rule.

However, there is no fixed commission rate in Singapore. The fees vary from agent to agent, so learn about the rates before you make the deal.

2. Buyer’s Stamp Duty

If you buy a property in Singapore for the first time, you need to pay the buyer’s stamp duty. It is a tax on purchasing and selling properties.

Here is an idea of the possible BSD you’ll have to pay while sealing the deal. This is their buying price and their BSD rate.

First $180,000: 1%

Next $180,000: 2%

Next $640,000: 3%

Remaining Amount: 4%

3. Legal Costs

To process your papers, you will need to hire a lawyer. If you deal with private properties and appoint bank lawyers, the legal fees will cost you around $2,000-$3,000.

However, when it comes to HDB, the cost can be higher as the procedure is a bit complicated. For more information, you can check out the HDB website.

4. Valuation Fees

Most of us will require a home loan to buy our desired place. In that case, the bank will evaluate your asset and grant you a loan according to that. And after doing this valuation, the bank may charge you some fees.

5. Administrative Fees

If you are going for an HDB flat, you may need to fill up forms and submit applications. And these procedures will require some extra costs.

6. Insurance Premium

Well, how can we forget about the insurance premiums?

While buying HDB flats, you need to get mandatory fire insurance. And the cost will depend on the size of your housing. The bigger the place, the larger the amount will be.

7. Home Loan Interest

After getting a home loan, you can get ownership of your place without any trouble. But you will have to pay installments every month to repay that debt. And that cost will be added to your monthly expenditure.

So, before you go to buy your own house, make sure you have the capabilities to pay your installments without any issue. Otherwise, you will lose your house if you keep skipping installments, and you don’t want that!

8. Renovation Cost

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When you are done with the purchasing process, you cannot just move into your new place. It would help if you got it ready for comfortable accommodation. Hence, you need to set aside some dollars to finish the renovation task.

In Singapore, an average renovation cost can be around $50,000 to $80,000. Thus, while saving money for your condo, make sure you have enough budget to make it suitable for you or you can apply for a lower interest renovation loan.

9. Furnishing Cost

If you already have all the furniture you need, you won’t need to keep this thing in mind. However, you may require some appliances or furniture such as a new sofa or bed in your new place. So yes, add the furnishing cost to your list.

10. Service and Conservancy Charges

These charges are applicable for HDB flats only. For the maintenance and preservations of HDB, you will have to pay service charges.

For condos in Singapore, they will be obliged to pay monthly maintenance fees as well.

11. Stamp Fee

As we have told you earlier in the article, you will pay some fees and hire a lawyer to complete the legal procedure. Even if you spend money on this task, you will have to pay for the stamps separately.

In Singapore, the stamp fee is fixed; it will cost you $500.

12. Additional Buyer’s Stamp Duty (ABSD)

This charge is only applicable while buying your second property. Yes, if you already have a house and trying to get a new one, you will have to pay ABSD. Take a look at the table below for a better understanding.

Buyers ProfileABSD
For the first residential property0%
For the second residential property12%
For the third residential property15%

The Bottom Line

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As you can see, when you are buying HDB flats, there will be more hidden charges than the private ones. However, the initial price of the HDB units is comparatively low, which is a relief.

Whether you are getting private condos or HDB housing, you will always have to pay some additional charges. So, while preparing for house ownership, save a larger amount than the cost mentioned on paper.

To be prepared for unexpected costs, it is better to have larger savings. This means that to clear your debts or to even take on a personal loan when necessary.

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