Buying a home needs careful planning. Find out what you have to pay upfront and on a monthly basis, and why you should be insured.
Key takeaways
- Be prepared for one-time downpayment and recurring costs.
- Find out what you can afford before deciding to buy.
What do you have to pay?
Buying a home is a big financial commitment that needs careful planning.
The home that you buy should meet you and your family's needs now and in the future. With this in mind, take a moment to think about what's important and what's nice to have.
Before looking for a home to buy:
- Do your sums and look at what you can afford
- Find out what your mortgage payments will look like
What you can afford depends on your income, expenses, debts and savings as well as the amount you may be eligible to borrow. You'll need to make some upfront payments, and keep up with monthly housing loan instalments, and other recurring charges.
Upfront payments
The payments you need to make to purchase your home include:
- Option fee
- Downpayment
- Buyer's stamp duty
- Additional Buyer's Stamp Duty (for a second and subsequent property if you're a Singapore Citizen)
- Legal costs, including stamp fees
- Agent's commission and fees
- Other miscellaneous costs
Let's look at a few of these in detail.
Option fee
You pay the option fee to reserve the property of your choice. The tables below show the option fees for the various housing types, all payable in cash. If you choose not to exercise the option, you must be prepared to forfeit the option fee paid.
For an HDB flat:
New 4-room, 5-room, Executive Flat | $2,000 |
New 3-room | $1,000 |
New 2-room | $500 |
Resale flat | Up to $5,000 in total, comprising:
|
Learn more: Costs and fees when buying an HDB flat.
For an Executive Condominium (EC) or private property:
EC or private property | 5% |
Resale EC or private property | 5% comprising:
|
Downpayment
How much downpayment you have to pay in cash or from your CPF savings depends on:
- The value and type of property.
- Whether you have an existing housing loan and the tenure of the new loan (capped at 25 years for HDB flats and 30 years for private properties).
- The loan-to-value (LTV) limit (loan ceiling) of the property.
For an HDB loan
Build-To-Order Flats (BTO) | 20% of purchase price Includes booking fee and balance (both only in cash and/or CPF) |
Resale | 20% of purchase price Includes booking fee and balance (both only in cash and/or CPF) |
For a bank loan
Minimum cash downpayment |
| 25% | 25% |
Rest of downpayment | Can be paid using cash and/or CPF |
Third-party costs
Valuation fee | Professional appraiser | Valuation report on the property to be financed. |
Legal fee | Lawyers | Processing the mortgage over the property to be financed. |
Stamp duty | Government | A tax payable for registration of the mortgage. |
Insurance premium | Insurance company | Insurance cover for your property against fire and other damage. Lenders will require you to adequately insure assets being financed. |
Recurring payments
In addition to your monthly home loan repayments, you'll also want to budget for other recurring costs that come with owning a home. These include:
- Maintenance, conservancy charges and utilities
- Property tax
- Mortgage insurance and other home-related insurance
Maintenance, conservancy charges and utilities
HDB homeowners pay monthly service and conservancy charges to their town councils for maintaining their housing estates. You pay a higher fee for a larger flat.
Owners of private properties such as condominiums and apartments typically pay monthly maintenance fees.
Utility charges (power, water and gas) depend on their usage.
Property tax
The property tax payable annually is computed based on a percentage of the annual value of the property. The annual value is the estimated annual rent that your property can fetch, regardless of whether you rent it out or not.
Find out more about property tax from the IRAS website.
You pay lower property tax if you live in the property you own, compared to if you rent out your property.
Mortgage insurance
For HDB flats
If you're buying an HDB flat and using your CPF savings to pay your monthly instalments, you must be insured under the CPF’s Home Protection Scheme.
This insurance scheme protects you and your family against losing your home should you become permanently disabled, or pass away before the housing loan is paid up.
Even if you're not using your CPF monies to pay for your monthly instalments, you're still encouraged to be insured under the Home Protection Scheme. You can use your CPF monies to pay for this.
For private properties
A mortgage reducing term insurance protects your dependants if you (the borrower) should pass away or become permanently disabled and can no longer service the loan.
All properties
If your property is mortgaged to a bank, you may be required to take up a mortgagee interest policy.
Insurance for your home
For peace of mind, it's a good idea to insure your home against fire and other perils. The cost of such insurance is generally low relative to the potential loss.
Some policies, like fire insurance and mortgagee interest policies, may be required by your bank. Here's a comparison of the different types of home insurance and what they are for:
Fire insurance
Who should buy | Homeowners. Recommended for all properties. |
Mandatory? | Mandatory for HDB flats. |
What is covered | Fire and extraneous perils. |
Amount to insure | Covers the cost of reinstating the damaged structures. |
Home contents insurance
Who should buy | Homeowners and tenants. Recommended for all properties. |
Mandatory? | No. |
What is covered | Fire, extraneous perils and home contents. |
Amount to insure | Up to your requirements (based on estimated value of fittings, furniture and valuable appliances). |
Mortgagee interest policy
Who should buy | Borrowers. Policy is usually required for home loans from banks. |
Mandatory? | Required by most banks for existing home loans. |
What is covered | Loan default in the event of a fire. |
Amount to insure | Based on reinstatement value or outstanding loan amount whichever is lower. |
Note: Extraneous perils include earthquake, windstorm, flood, riot and strike damage, landslip, smoke, damage, sprinkler leakage, explosion, water damage due to overflowing or bursting water tank. These are subject to policy terms.
Find out more
Getting Married - Planning your finances together booklet - A booklet targeted at couples who are planning to get married or newly married. The booklet provides financial planning tips on the various financial decisions that couples have to make in their marriage journey.
Download : Getting Married - Planning your finances together