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Copyright2011byPropwise.sg Allrightsreserved.Nopartofthispublicationmaybe reproduced,storedinaretrievalsystem,or transmitted,inanyformorbyanymeans,electronic, mechanical,photocopying,recordingorotherwise, withoutthepriorpermissionofthepublisher.

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Introduction
TheSingaporePropertyBeginnersGuidewaswritten tohelptheabsolutebeginnerunderstandthe Singaporepropertymarket.Buyingahomeisthe biggestpurchasemostofuswillmakeinourlives,yet manypeopledonothavethebasicknowledgethey needtomakeaninformeddecision. Ivewrittenthisguidetochangethat.Itcomprisesthe mostrelevantpostsonmyblogforthosejuststarting out.Hopeyoufinditusefulandgoodluckonyour propertyjourney! Towisdomandbeyond, Mr.Propwise

AboutPropwise.sg
Propwise.sgisaSingaporepropertyblogdedicatedto helpingyouunderstandtherealestatemarketand makebetterbuying,selling,rentingandinvesting decisionsminusallthehypeandmisinformation. Ifyouhaventdonesoalready,dontforgettohead overtowww.propwise.sgandsignupforour newslettertogetourfreereportsandupdates.
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Contents
Typesofhomes ................................................5 . DistrictsandPlanningAreas...........................12 Majorplayersinthepropertymarket............18 Knowyourpropertylingo...............................24 The10StepSystemtoBuyingaPropertyin Singapore........................................................28 HowtoChooseYourMortgage......................34

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Typesofhomes
Whatarethedifferentofhousingoptionsavailablein Singapore?Wecanbroadlysplittheoptionsinto Public/Quasipublicandprivatehousing.

Publichousing(HDB)
HousingandDevelopmentBoard(commonlyknown asHDB,astatutoryboardoftheMinistryofNational Development)flatsareregulatedandmaintainedby thegovernment.Theyaremeanttobeanaffordable housingoptionforSingaporeresidents,and governmentsubsidiesareavailableforthepurchase andfinancingofthese.Theyaretypicallylocatedin selfsufficientclustersknownashousingestates whereaconcentrationofHDBblocksaresupported byamenitiessuchassupermarkets,foodcourts, coffeeshops,clinics,malls,parksandagoodpublic transportationnetwork(viatrainsandbuses). Morethan80%ofSingaporeansliveinHDBflats,with morethan90%ofthemowningthehometheylivein. TobuyanHDBflat,youneedtomeetanumberof eligibilityrequirements,theprimaryonebeingthe possessionofaSingaporeancitizenshiporPermanent
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Residence(visitwww.hdb.gov.sgformore information).

TypesofHDBflats Studioapartments Studioapartmentsizesrangefrom377484square feet,andaremeantforseniorcitizenswhowantto liveindependently.Theyarerenovatedwithelder friendlyfeaturesandaresoldon30yearleases, makingthemmoreaffordablethanotheroptions. 2roomflat 2roomflatsareusuallyunder500squarefeetand containamasterbedroom,kitchen,livingareaand storeroom.Theyaremeantforlowerincome
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households.Theyaretheprivatehousingequivalent ofaonebedroomapartment. 3roomflat Thefloorareaofnew3roomflatsrangefrom646to 700squarefeetandtheycomewithonemaster bedroom,onecommonbedroom,akitchen,living area,commonbathroomandstoreroom.Theyarethe privatehousingequivalentofatwobedroom apartment. 4roomflat 4roomflatsaretypicallyunder1,000squarefeetin size,andhaveamasterbedroom,twocommon bedrooms,akitchen,livingareaandstoreroom.They aretheprivatehousingequivalentofathreebedroom apartment. 5roomflat 5roomflatsarearound1,200squarefeetandhavea masterbedroom,twocommonbedrooms,kitchen,a separatelivinganddiningarea,andstoreroom.They aremeanttoprovidealargerlivingspacefor extendedfamiliesof45members.Theyarethe privatehousingequivalentofalargerthreebedroom apartment.
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Executiveflats Executiveflatsaretypicallyaround1,400squarefeet insize,andhaveamasterbedroom,twocommon bedrooms,akitchen,separatelivinganddiningarea, storeroom,andspaceforastudyroom.Some executiveflatscomewithabalconyaswell.Theyare theprivatehousingequivalentofa3+1orfour bedroomapartment. DBSSflats Design,BuildandSellScheme(DBSS)flatsarebuiltby privatedeveloperswhohavetobidfortheland, designandconstructtheflats.Theyusuallycomewith minimalfinishingsandlookmorelikeprivatehousing butwithoutthefacilities.TheHDBprovideshousing loanandconveyancingservicestoeligiblebuyers.The incomeceilingtobuyDBSSflatsisalsohigherat $10,000insteadoftheregular$8,000.

Quasipublic
ExecutiveCondomniums ExecutiveCondominiumsareahybridbetweenpublic andprivatehousing.Theywereintroducedbythe HDBtocatertoyounggraduateandprofessional Singaporeanswhowantedhigherqualityhousingbut
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couldnotaffordprivateproperty.Theyarebuiltby privatedevelopersandhavecondominiumfacilities, andtheincomeceilingtobuythemis$10,000.But theyalsohaverestrictionssuchastheMininum OccupationPeriodof5yearsbeforetheycanbesold, andfromYear6to10canonlybesoldtobuyerswho meetHDBseligibilityrequirements.Fromthe11th yearallrestrictionsareliftedandtheycanbebought andsoldfreely,evenbyforeigners.

Privatehousing
Privatehousingcanbroadlybecategorizedintonon landedandlandedproperty. Nonlanded Condominiums Condominiumsarehighriseresidentialdevelopments thatusuallycomewithfacilitiessuchasaswimming pool,gym,security,BBQareaandsoon.Technicallya developmentisonlycalledacondominiumifitsitson asitethatislargerthan4,000squaremeters(43,056 squarefeet).

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 Apartments Apartmentsaremediumtohighriseresidential developmentsthataresituatedonasmallerplotof landthancondominiumsandtypicallyhavefewer facilities. Landed Terrace Thesearehousesthatsharecommonwallswith neighboursonbothsides,unlessattheendofarow. Semidetached Thesehousesshareonewallincommonwitha neighbour. Detached/Bungalows Thesehousesdonotshareawallwithotherhouses andarelocatedontheirownpieceofland.
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GoodClassBungalow GoodClassBungalowsareanexclusivecategoryof detachedhomeswithaminimumlandplotsizeof 1,400squaremeters(15,070squarefeet)inprime landedareassuchasNassimRoad,ClunyRoad, TanglinRoad,DuchessRoadandKingAlbertPark. Shophouse AuniquearchitecturalfeaturetoSoutheastAsia, shophousesareterracedrowsoflowrisebuildings withnarrowfrontagesbutdeeprears,andtypically haveshopsonthegroundfloorwithaccommodations ontheupperfloors(hencethename).

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DistrictsandPlanningAreas
Whiletherearenolongeranyofficialdistrictcodes usedinSingapore,manypeoplewilloftenrefertoa propertybeinginaspecificdistrictwhenbuyingor renting.Thesecodeswereoriginallyusedforthe postaldistricts,butwerereplacedbythe6digitpostal codesanumberofyearsago.Herearethegeneral areasthedistrictcodesreferto:

01RafflesPlace,Cecil,Marina,People'sPark 02Anson,TanjongPagar 03Queenstown,TiongBahru,Alexandra

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04TelokBlangah,Harbourfront,Sentosa,Keppel, MountFaber 05PasirPanjang,BuonaVista,Dover,WestCoast, ClementiNewTown 06HighStreet,BeachRoad,CityHall 07MiddleRoad,GoldenMile,Bugis,Rochor 08LittleIndia,FarrerPark,SerangoonRoad 09Orchard,Cairnhill,RiverValley 10Ardmore,BukitTimah,HollandRoad,Tanglin 11WattenEstate,Newton,Novena,Thomson 12Balestier,ToaPayoh,Serangoon 13Macpherson,Braddell,PotongPasir 14Geylang,PayaLebar,Eunos,Kembangan 15Katong,JooChiat,AmberRoad,MarineParade, TanjongRhu,Meyer 16Bedok,UpperEastCoast,Eastwood,KewDrive, ChaiChee,Siglap 17Loyang,Changi
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18Tampines,PasirRis,Simei 19SerangoonGarden,Hougang,Punggol,Sengkang 20Bishan,AngMoKio,Braddell 21UpperBukitTimah,UluPandan 22Jurong,BoonLay,Tuas,Lakeside 23Hillview,DairyFarm,BukitPanjang,ChoaChu Kang,BukitBatok 24LimChuKang 25Kranji,Woodgrove,Woodlands 26UpperThomson,Springleaf 27Yishun,Sembawang,Admiralty 28Seletar,YioChuKang Whilethereareatotalof28districts,youllmostly hearreferencestodistricts9(Orchard,RiverValley), 10(BukitTimah)and11(Newton,Novena)asthe traditionalhighendhousingareas,andtodistricts1 (MarinaBay),2(TanjongPagar)and4(Harbourfront, Sentosa)asthenewupandcomingluxuryareas.For amorerelaxedandlowerdensitylifestyledistricts14
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(Eunos,Kembangan),15(Katong,MarineParade, TanjongRhu)and16(UpperEastCoast,Siglap), broadlyknownasEastCoast,arealsopopular.

Districtcreep
Donotethatthereissomeambiguityaroundthe bordersofthesedistrictssooneareacouldcovertwo ormoredistricts.Infactinrecentyearsasthe propertymarkethasheatedupIvenoticeda phenomenonIcalldistrictcreep,whereproperties inalessprestigiousareaaremarketedasbeingina moreprestigiousonenearby. SoforexamplepropertiesinNewtonareadvertisedas beinginOrchard,propertiesinNovenaasNewton, andthoseinBalestierasbeinginNovena.Thisis probablyaresultofdeveloperswantingtopushup thepricestheycanchargebyincreasingthestatureof theirdevelopment,andofstatusconscious Singaporeanswantingtoshowcasetheirhomeas beinginamoreprestigiousdistrictbutnotbeingable toaffordone!

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UrbanPlanningAreasTheMaster PlanandConceptPlan
Distinctfromtheconceptofdistrictsthatare commonlyusedinthepropertymarket,theUrban RedevelopmentAuthority(URA)hasdivided Singaporeinto55urbanplanningareas,whichare organizedintofiveregionsCentral,East,North, NorthEastandWest.TheURAputstogethertwo urbanplans,theConceptPlanandMasterPlan,which cansignificantlyaffectthevalueoftherealestate whenanychangestotheplantakeplace. TheConceptPlanisthelongtermstrategiclanduse planwhichguidesSingapore'sdevelopmentovera fortytofiftyyearperiod.Reviewedeverytenyears,it providesforsufficientlandtomeetlongterm population,economicandqualityoflifegoals.Thelast ConceptPlanReviewwasin2001,andthenextone willbecompletedin2011. TheMasterPlanisthemediumtermstatutoryland useplanwhichguidesSingapore'sdevelopmentin overatentofifteenyearperiod.Reviewedeveryfive years,itrendersthebroadstrategiesoftheConcept Planintodetailedplansthatshowthepermissible landuseanddensityfordevelopmentsinSingapore.
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ThelastMasterPlanwasin2008,andthenextone willbecompletedin2013.

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Majorplayersintheproperty market
ThepropertymarketinSingaporeisdrivenbyfour majorgroupsofplayersthegovernmentagencies, developers,propertyagenciesandbanks.

1)Governmentministriesand agencies
ThegovernmentministriesandagenciesinSingapore shapepolicychangesthatcansignificantlyaffect sentimentinthepropertymarketandhencereal estateprices. Theministriescoordinatepoliciestocontrolor supportpropertypricesdependingontheirviewof thelevelofspeculationandassetpricestability.For example,abroadroundofpropertymeasuresthat affectedthenewandresaleHDBmarket,taxesand banklendingwasjointlyannouncedbytheMinistryof Finance(MOF),MinistryofNationalDevelopment (MND)andMonetaryAuthorityofSingapore(theMAS isSingaporescentralbankandfinancialregulator)on August302010.
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Whiletheministriescomeupwiththebigpicture policies,thestatutoryboardsundertheministriesare generallyresponsibleforissuingthedetailed guidelinesandimplementingpolicies. Thekeystatutoryboardsinclude: BuildingandConstructionAuthority(BCA) TheBCAisastatutoryboardundertheMNDwhose roleistoprovideguidelinesforbuildings,structures andinfrastructuresoastoshapeasafe,highquality, sustainableandfriendlybuiltenvironment. HousingDevelopmentBoard(HDB) TheHDBisastatutoryboardundertheMNDandthe publichousingauthority.Itsmissionistoprovide affordablequalityhomesforSingaporeansby planninganddevelopingvibrantpublichousingtowns withgreatamenitiesandcohesivecommunities.It alsopublishesstatisticsonthepublichousingmarket includingaquarterlyResalePriceIndex. SingaporeLandAuthority(SLA) TheSLAisastatutoryboardundertheMinistryofLaw focusedonlandresourceoptimization.Inits developmentalrole,itoverseesgovernmentland sales,leases,managementofstatelandandbuildings,
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acquisitionsandallocation,developingandmarketing landrelatedinformationandmaintainingthenational landinformationdatabase.Initsregulatoryrole,it actsasthenationallandregistrationauthorityand managesandmaintainsthenationallandsurvey system. UrbanRedevelopmentAuthority(URA) TheURAisastatutoryboardundertheMND,andthe nationallanduseplanningauthority.Itprepares mediumandlongtermstrategicandlocalplansfor landuseinSingapore,andhelpstoimplementthem. Atthemacrolevel,theURAcontrolsresidential developmentinSingaporeviauseoftheplotratioand buildingheight.Atthemicrolevel,itdevelops guidelinesonhousingtypeandform.Italsopublishes updatesontheprivatepropertymarketincluding priceindicesandindividualtransactions.

2)Developers
Thebasicroleoftherealestatedeveloperisto convertrawlandintoacompletedpropertyandlease orsellit.Todosotheyhavetoorchestratearangeof activities:buyland,financethedeal,workwith architectstodesigntheproject,obtainapprovalsfrom thegovernment,engageaconstructioncompanyto
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build,workwithagenciestomarketandsellthe propertyetc. Youlloftenhearnewsofdevelopersbiddingforland thatthegovernmenthasputupfortender. Developersneedtoconstantlybuylandtomaintain theirlandbank,thepipelineofprojectsthattheyhave underdevelopment.Thepricetheypayforlandisalso agoodindicatoroftheirviewonthemarketfurther downtheline,andwillgiveyouaroughideaofthe pricetheyhavetolaunchtheprojectforsaleinorder tomakemoney. ProminentpropertydevelopersinSingaporeinclude Capitaland,Centrepoint,FarEastOrganization,City DevelopmentLimited,GuocoLand,KeppelLand, WheelockProperties,AllgreenProperties,HoBeeand SCGlobal.

3)Propertyagenciesandagents
Propertyagenciesandagentsarebusinessesor peoplethatarrangetheselling,rentingor managementofproperty.Theyactasthe intermediary(middleman)betweenthebuyerand sellertheytryandmatchsellerswhowishtosell

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withbuyerswhowishtobuy,andtakeacommission foranysuccessfulmatches. TypicallyinSingaporepropertyagentswillchargea commissionof12%tothesellerofaprivateproperty, and1%tothebuyerand12%tothesellerforHDB flattransactions. Asofmid2010,thereareanestimated25,000 propertyagentsand1,700agenciesinSingapore. Somepropertyagentsarefulltimeprofessionals whileothersarejustmoonlightingasparttimers.The largeagenciesincludePropnex,ERA,HSR,DTZ,Knight FrankandDennisWee.Manyoftheagenciesareone ortwomanoperations. Foralongtimethereputationoftheindustrywas tarnishedbytheactionsofasmallgroupof unprofessionalrealestateagents,withmanycalling forgreatergovernmentregulation.Thuson September15th2010,thegovernmentintroducedthe EstateAgentActandsetupanewstatutoryboard calledtheCouncilforEstateAgencies(CEA)thatwill regulateagentsandtheagencies.Therearealsonew entrycriteriaandamandatoryexamthatallagents mustpassbytheendof2011.Theserequirementsare
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expectedtoreducethenumberofagentsand agenciesby30%.

4)Banks
Bankprovidethepetrolthatdrivesthewholereal estatemachinemoney.Theyfundtheproperty projectsofrealestatedevelopers,andextend mortgagestoqualifiedbuyerssotheycanpurchasea property.Theiraimistomakeaspread(the differencebetweentheinterestratestheychargeto lendmoney,andtheratestheypayforyourdeposits), andminimizetheriskofanylosses(e.g.frompeople defaultingontheirloans). ThetoplocalbanksinSingaporeincludeDBS,UOB andOCBC.TheactiveforeignbanksincludeHSBC, CitibankandMaybank,amongstmanyothers. Togetherthesefourplayersdrivethefunctioningof thepropertymarket.Thegovernmentsetsguidelines andprovideslandfordevelopment.Developersbuy landandtransformitintoproperty.Agenciesand theiragentshelptomarketandsellthisproperty,and banksprovidethefundingthatmakesitallhappen. Phew,thisisalongarticle,butIhopeitprovidesyou withahighlevelperspectiveofhowthemarketworks!
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Knowyourpropertylingo
Thepropertymarkethasitsownjargonandacronyms thatcanbeconfusingtothebeginner.Nofear,the termsbelowwillcoverthemostcommonlyused jargonyouwillhearwhenpeopletalkaboutthe market,andwillencounterifyouarebuyinga property.

CSC
TheCertificateofStatutoryCompletion(CSC)isissued bytheCommissionerofBuildingControloncethe buildingworkshavebeencompletedandall requirementshavebeencompliedwith.Itdenotes legalcompletionandisusuallygivenafterthe TemporaryOccupationPermitisissued.

Downpayment
Thisistheinitialupfrontportionofthetotalamount duewhenyoupurchaseahouse.Thedownpayment canusuallybepaidpartlyincashandpartlyusingyour CPF.

Enbloc
Enblocisthecollectivesaleofanumberofownersof separateunitsinaprivateresidentialorcommercial
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building.Unitssoldinanenblocsaleusuallyfetcha higherpriceversuswhatthemarketpricewouldbe, asthedeveloperneedstoofferapremiumto convincealltheownerstosell.

Freehold
Freeholdisaformofpropertytenurewhereyouown thepropertyforanindefiniteperiodoftime.

Leasehold
Leaseholdisaformofpropertytenurewhereone partybuystherighttooccupylandorabuildingfora givenlengthoftime.Commonlengthsoftheleasefor residentialpropertyare99yearsand999years.

LTV
LoanToValue(LTV)isthemortgagequantumdivided bythetotalappraisedvalueofrealproperty.LTVis oneoftheriskfactorsthatlendersassesswhen qualifyingborrowersforamortgage.

OTP
TheOptionToPurchase(OTP)isarightgivenbythe vendorofapropertytoapurchasertobuythe propertyataspecifiedpricewithinaspecifiedperiod oftime(thevalidityperiodoftheoption).The
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purchasermustpayabookingfeetoobtainthisright, andhastoexercisetheOTPwithinitsvalidityperiodif hedecidestobuytheproperty.

MOP
TheMinimumOccupationPeriod(MOP)isthelength oftimeabuyerofanHDBflathastostayinitbefore hecansellit.

Plotratio
Theplotratioisthetotalcoveredareaonallfloorsof allbuildingsonacertainplotdividedbytheareaof theplot.Theplotratiotellsthedensityofthe developmentonthatpieceofland.

Psf
PerSquareFootisaunitofmeasurementofarea,and $/psfisthetotalpriceofthepropertydividedbythe landarea(insquarefeet).

SIBOR
TheSingaporeInterbankOfferedRate(SIBOR)isa dailyreferenceratebasedontheinterestratesat whichbanksoffertolendunsecuredfundstoother banksintheSingaporewholesalemoneymarket(or
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interbankmarket).Itissimilartotheinternationally usedLIBOR(LondonInterbankOfferedRate).

Stratatitle
Stratatitleisaformofownershiptypicallyusedfor apartmentblocksorcondominiums.Typicallya projectisdividedintolots(unitsorapartments),and eachlotwillhaveashareoftheentireproject.Thisis distinctfromlandedpropertywheretypicallythe ownerwillhavetitletotheland.

TOP
Abuildingcanonlybeoccupiedbytheowneror tenantswhenitreceivestheTemporaryOccupation Permit(TOP),whichisgrantedbytheCommissioner ofBuildingControloncecertainrequirementsaremet.

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The10StepSystemtoBuying aPropertyinSingapore
Buyingahomeisthebiggestpurchasemostofuswill makeinourlives.Yetmanypeoplerushtobuya propertywithlesspreparationthantheywould planningaholiday.Thiscanhavefinanciallydisastrous consequences,especiallyinlightofthemeasures announcedbythegovernmentonAugust30th2010, whichhavecreatedalotofuncertaintyinthe marketsdirection. FollowthestepsIvelaidoutbelowwhenbuyinga propertyandyouwillbemuchlesslikelytomakean expensivemistake.

Step1Decidewhetheryouwantto rentorbuy
Buyingahomeisoftenanemotionaldecision.Thats finejustmakesureitsarationalonetoo.Honestly askyourselfifyouneedtobuyahome,andwhether rentingmightbeaviableoption.

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Step2Calculatehowmuchyoucan afford
Firstlookathowmuchmoneyyoucurrentlyhave, includingcashandCPF.Notethatbasedonthe governmentspropertymeasures,ifyoualreadyhave atleastoneloanoutstanding,yourminimumcash outlaywillincreasefrom5%to10%.Nextfigureout howmuchyoucanborrow,takingallyouroutstanding debtsintoaccount.Youcanworkwithabanker,or usetheaffordabilitycalculatoravailableonLoanguru. Mostbankswillonlylenduptoa3550%DebtService Ratio(yourtotaldebtpaymentsdividedbyyour monthlyincome).

Step3Figureoutwhatsortofhome youwant
Whatareyourcurrentandfutureneedsforhousing? Forexample,anewlymarriedcouplethatbuysa studiooronebedroommightfindwithinayearortwo thattheyneedatwoorthreebedroomapartment onceababyisontheway.WouldyoupreferHDBor privateproperty,ifyoucanaffordit?Whichdistricts orareasdoyouprefertolivein?Whatarethe amenitiesandpublictransportationoptionsyouwant?
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Step4Buildalistofoptions
Youcanchoosetoeitheruseabuyersagentand/or goDIY.Lookatbothoffline(e.g.classifiedadsinthe newspapers)andonline(propertywebsites)sources togetthelargestpooltochoosefrom.Basedonwhat youvefiguredoutfromSteps2and3above,comeup withalistofpotentialprojectstoconsider.

Step5Domarketresearchand narrowdownyourchoices
Checktherecenttransactedpricesoftheseprojects fromtheURAwebsite.Comparepricestherewith surroundingprojects.Comparethetransactedprices withtheaskingprices.Ifyouarebuyingfor investment,lookatthemarketrentsandrentalyields. Eliminatetheprojectsthatdonotlookattractive.

Step6Goforpropertyviewings
Basedonthissmallerlistofprojectsarrangeviewings ofatleastafewdifferentunitsineachproject.Its helpfultotakephotosandnotestohelpyou rememberwhatyousaw.Visiteachprojectat differenttimesofthedayandnighttoseeifitisnoisy orotherwiseunpleasant.Narrowdownyourlistto
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yourtopfewunitsanddoasecondviewingif necessary.

Step7Getindicativevaluationsand yourmortgagepreapproved
Dontmissthiscriticalstep!Beforeyoumakeanoffer ensurethatyouhavegottenanindicativevaluation fromabankandaninprincipleapprovalfora mortgage.Youcanapproachthedifferentbanks yourselforuseamortgagebrokertosavetime.Based onthenewmeasures,ifyoualreadyhavean outstandingloanyourLoanToValuation(LTV)limit hasbeenloweredto70%from80%,soyoullneedto coughupmorecash. Also,bankswillonlylendtoyoubasedontheLOWER ofthevaluationlimitorpurchaseprice,soifyouare buyingabovethebanksvaluationyouwillneedto paythedifferenceincash.Ifyouaresellingyour existinghometopurchaseanewoneandhopeto borrowat80%LTV,younowneedtopresentproofto qualify(intheformofasignedpurchaseagreement foryourcurrenthomeandcertificationshowingthat stampdutyforyourexistingpropertyhasalready beenpaidforbythebuyer).
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Step8Makeanofferandnegotiate thepurchase
Onceyougettheindicativevaluationsandatleast onepreapprovedmortgagefromthebanks,youcan thenmakeanofferknowingyoucanborrowwhatyou need.Therehavebeenanumberofunfortunatecases ofbuyerswhohavelosttheirdepositsbecausethey realizedlaterthatbankswouldnotfinancetheir purchase.Whennegotiatingthepurchaseprice,it helpstohaveanumberofoptionsonhandsoyouare notforcedtooverpayduetoalackofoptions.

Step9SignandexercisetheOption ToPurchase
Iftheselleracceptsyourbid,typicallyyouhavetoput downa1%deposittogettheOptionToPurchase (OTP),andhave14daystoexerciseit,bywhichtime youwillhavetopayanother4%ofthepurchaseprice. Makesureyouhavethefundsonhandtodoso.Once yougettheOTPliaisewithyourconveyancinglawyer andmortgagebankertosettletheprocedures.

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Step10Completethesaleand collectthekeys
Beforethecompletiondate,doaninspectionofthe hometoconfirmthatallagreedonfixturesanditems arestillaround.Onthedateitself,collectthekeysand checkthatyouhaveacompleteset.Congratulations! Youaretheownerofanewhome.Timetothink aboutrenovationandfurnishing Iveputtogetheradetailedchecklistwithsubsteps foreachofthestepsabove.Youcandownloaditat www.propwise.sgbyenteringyouremailaddressin theformontheright. Gothroughthesestepswhenbuyingahomeitwill saveyoutearsandmoney!

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HowtoChooseYourMortgage
Choosingamortgagecanbeconfusing.Thereareso manyoptionstothinkabout:fixedorfloatinginterest rates,loanterm,lockinperiods,subsidies,penalties andotherspecialfeatures.Thereisntonebest mortgageoutthereitalldependsonyourneedsand preferences. Ifyoudliketocompareloansonlineandevengetfree cashrewardsifyoutakeupaloan,checkout http://www.propwise.sg/moneyiq/. Herearethemainoptionsyouneedtoconsiderwhen makingyourdecision:

1)Loanamount
Thelocalbanksusuallygivealoanofupto80%ofthe propertyvalueforfirsttimehomebuyers,butthe actualamountwilldependontheirassessmentof yourabilitytorepaytheloan.Theytypicallylookata debtservicingratioof3550%asaceiling.Tocalculate thisratio,theysumupyourlongtermliabilities (includingthepotentialmortgagepayment)and dividethatbyyourmonthlyincome.

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Alsonotethatthebankwillonlylendyouupto80% oftheLOWERofyourpurchasepriceortheirown internalvaluation.Soifyourpurchasepriceisabove theirvaluation,youwillhavetotopupthedifference incash.Asabestpractice,youshouldalwaysgetan indicativevaluationandinprincipleapprovalfroma bankbeforeyoucommittoapurchase.

2)Loanterm
Theloantermisthedurationoftimethatyoutaketo completelyrepaytheloan.Loantermsusuallyrange from10to35years.Thelongeryourloanterm,the smallerthemonthlyrepaymentyouneedtomake, butthehigherthetotalamountofinterestyouwill eventuallypay. Alsonotethatyouragemaybealimitingfactor bankswilltypicallycapthemaximumtermuptothe ageof65.Soifyoure50yearsold,youmayonlybe givenaloantermofupto15years.Youngbuyers lookingtomaximizetheamounttheycanborrowwill usuallyselecta35yearloanterm.

3)Fixedorfloatingrate
Fixedratesoffertheborrowersecurityandstabilityas theratedoesnotchangeoveracertainperiod.As
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interestratesarecurrentlyverylow,iftheyriseyou willbeprotectedfromupwardadjustmentsofyour monthlymortgagepayment.Butthiscomesataprice fixedratepackagesusuallychargehigherinterest thanfloatingratepackages. Borrowerswhobelievethatinterestrateswillfallor remainlowforalongperiodoftimecangofor floatingratepackagesastheycangetlowerinterest ratesupfrontandtheirmonthlypaymentswillfallif interestratesfall. Forfloatingorvariableratepackages,theyare typicallylinkedtoeitherofthetwomajorbenchmark rates:SiborandtheSwapOfferRate(SOR).These ratesaremainlyaffectedbyUSinterestratesand Singaporebankingsystemliquidity.Butdonotassume thattheywillalwaysstayatthelowstheycurrently areat(e.g.theSIBORisaround0.5%now)in2007 theywereashighas3.6%!Asaruleofthumb,you shouldlookatyourmonthlypaymentsusingratesof4% tomakesureyoucanstillserviceyourmortgagein caseratesspikeup.

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4)Otherspecialfeatures
Someloanshaveaninterestoffsetfeature,where depositsatthebankcanbeusedtooffsettheloan amountsoyouonlypaytheinterestonthedifference. Forborrowerswithlargeamountsofcashthatthey wanttokeepavailableforotherusesatamoments notice(e.g.investinginthestockmarket)thiscouldbe agoodoption. Somebanksalsoofferinterestonlypackages,usually onacasebycasebasis.Fortheseloans,youonlypay theinterestamountforaspecifiedperiodoftime,and afterthattheloanwillreverttoanormalinterestplus principleloan.Thisoptionmaybesuitablefor investorswhowanttominimizethecashoutflow duringtheinterestonlyperiod.

5)Subsidies,lockinperiodand penalties
Mostloanscomewithsomesubsidiesincludingthe legal,valuationandfireinsurancefees.When comparingmortgages,borrowersshouldcheckwhat thevariousfeesubsidyamountsare.Forexample, thereisusuallyacapof$2,0002,500onthelegalfee,

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andifyourlegalfeesexceedthoseyouwillhaveto topupthedifference. Thelockinperiodyoushouldchoosedependsonyour expectationofwhenyouwillsellthepropertyand alsoonyourviewofwhereinterestratesaregoing. Typicallytheshorterthelockinperiod,thehigherthe interestrate.Butifyourepaythemortgagewithinthe lockinperiod,youtypicallyhavetopayapenaltyof anywherefrom0.75%to1.5%,whichissubstantial. Somebankscanwaivethepenaltyifyouareselling yourhouse(asopposedtojustrepayingthe mortgage),somakesureyoucheckiftheywillinclude thisclause. Heresatiptosaveyoumoneysometimesthebank cangiveyouanadditionaldiscountofftheir advertisedinterestrates,especiallyifyouvebeena longstandingcustomer.Justask!Iveknownpeople whohavegottena0.05%discountthataddsupto someseriousmoney. Ifyoufeeloverwhelmedbyallthedifferentoptions above,youcanalsoconsiderengagingtheservicesof amortgagebroker,whowillhelptofiltertheright packagesforyoubasedonyourrequirements.You
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shouldnothavetopaythemanyfeeastheywillgeta commissionfromthebankiftheycansuccessfully arrangealoanforyou.Happymortgageshopping! Tocompareloansforfreeandgetcashrewardsifyou takeupaloan,checkout http://www.propwise.sg/moneyiq/.

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