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Buying a home in Singapore can be a complex process and may probably be the biggest purchase you will ever make in your life. Arrive at a prudent decision with
help from DBS Home Advice. Learn and understand the complex buying and conveyancing process in 10 simple steps!
Can I afford it? How much should I set aside? How much can I borrow? We understand buying a property can be a complicated process. So be it a private or HDB property you are purchasing, we are here to take you through, step by step. |
Afford a Home  |
Step 1: Determine how much you can afford
Your budget will be influenced by your financial ability to fund any upfront costs, ongoing home loan instalments and expenses.
Option Fee
A portion of the purchase price that must be paid before an Option to Purchase (OTP)* is issued. The amount is negotiable and typically varies from 1% to 5% of the purchase price. The OTP will be valid for a period agreed by you and the seller, during which you own the sole right to purchase the property. To exercise the OTP, you will have to pay 5% or 10% of the purchase price less the booking fee. The first 5% of the purchase price must always be in cash and the balance can be a combination of cash and/or Central Provident Fund (CPF) savings^.
Stamp Duty
Stamp duty is imposed on documents executed for the sale and purchase of a property. Duty will be computed on the purchase price or market value of the property (whichever is higher).
Computation of Stamp Duty*
Duty payable at ad valorem of the purchase price (PP):
| First $180,000 |
1% |
| Next $180,000 |
2% |
| Thereafter |
3% |
Stamp duty is to be paid within 14 days from the date of acceptance of the OTP or Sale and Purchase (S&P) Agreement. For more information, please visit www.iras.gov.sg.
* Stamp duty amount is subject to change.
Legal Fees
The costs for legal services rendered in the purchase of the property and preparation of mortgage documentation relating to the bank loan, which may be paid via CPF.
Housing Agent's Commission and Fees
A fee paid to the housing agent engaged for the purchase and/or sale of the property. The quantum or amount of the commission is based on a certain percentage (varying from 1% to 2%) of the purchase price.
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An OTP is a right or option given by the vendor of a property to an intending purchaser to buy the property at a specified price within a specified period of time (the validity period of the option). |
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Only the amount in your CPF Ordinary Account can be used. |
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An S&P Agreement is a formal contract between the buyer and seller for the sale and purchase of a property. |
As a general guide, your monthly long-term repayment commitment should not exceed 40% of your monthly income.
Disbursement of Loan Amount
- For completed properties*, the loan will generally be disbursed in one lump sum when you take over the property (also known as legal completion).
- For uncompleted properties^, the loan will be disbursed in stages (progressively), depending on the stage of construction of the property.
General Schedule for Progressive Payment(s)
| Stage of Construction |
% of Purchase Price |
| Upon grant of OTP |
5% to 10% (Booking Fee) |
| Upon signing of Sale & Purchase Agreement or within 8 weeks from option date |
20% less Booking Fee |
| Upon Completion of: |
| a) |
Foundation work |
10% |
| b) |
Reinforced concrete framework |
10% |
| c) |
Brick walls of unit |
5% |
| d) |
Roofing / ceiling of unit |
5% |
| e) |
Electrical wiring, internal plastering, plumbing and installation of door and window frames |
5% |
| f) |
Car park, roads and drains serving the housing project |
5% |
| g) |
Notice of Vacant Possession |
25% |
| h) |
On completion date (Certificate of Statutory Completion) |
15% |
Loan Tenure
Banks generally grant loans with a minimum tenure of 5 years up to a maximum of 40 years, provided that you must not be more than 70 years old by the end of the tenure.
Interest Rate
The interest rate varies depending on the type of property and the type of home loan package. Please check with your bank for the applicable interest rate package.
Your monthly mortgage instalments can be paid in cash or with CPF savings .
To estimate your monthly mortgage instalment, please use our Monthly Repayment Calculator.
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Completed properties refer to properties that have obtained the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC). |
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Uncompleted properties refer to properties that are under construction and have not obtained the TOP or CSC. |
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The point in time when the developer is ready to hand over the vacant possession of the unit to the purchaser by the date specified in the S&P Agreement. |
Property Tax
The tax on all immovable properties (houses, buildings or land). All property owners are liable to pay property tax. It is payable based on a percentage (Tax Rate) of the Annual Value (AV) of a property. The AV of the property is the estimated annual rent of the property. The Tax Rate is 10% per annum but if you purchase and occupy a residential property, you can claim the concessionary rate of 4% per annum. For more information, please visit www.iras.gov.sg.
Fire Insurance
An insurance policy that covers the reinstatement value or outstanding loan, whichever is lower, in the event that the property it insures is destroyed by fire. The coverage does not include home renovations, moveable household contents and personal belongings.
Mortgage Insurance
A mortgage reducing term insurance policy that provides for the repayment of your outstanding home loan in the event of Death, Terminal Illness or Total and Permanent Disability.
The insurance payment may be higher or lower than the outstanding home loan, depending on your choice of interest rate and the initial sum insured. To find out more, click here. For home contents coverage, click here.
Conservancy or Maintenance Fees
Fees collected for the purpose of maintenance and use of common property (e.g. tennis courts, lifts, common areas, etc).
Step 2 : Choose a home loan that fits you best
Approval-In Principle
To ease your mind, you can obtain an Approval-In-Principle* (AIP) from the bank for your financing before you commit to your purchase. This will give you a clearer picture of your loan eligibility.
Credit assessment checks that you will be subject to upon your request for a loan:
- Proof of regular income (e.g. Income Tax Notice of Assessment / latest computerised payslip / CPF contribution statement for the last 12 months)
- Credit bureau checks (e.g. Good payment records for credit cards / previous or existing loans, no previous blemishes such as discharged bankrupts)
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An indication by the bank of the amount of loan that you are eligible for. However, an AIP does not constitute a binding loan offer. Further checks and conditions may be imposed by the bank, and the terms of the formal offer will also depend on the property that you intend to buy.
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Two main criteria banks use to access your loan eligibility:
- Financial Commitment-to-income Ratio
A computation of your total monthly debt obligations (e.g., other home loan commitments, car loan, overdraft facilities, etc) to your total monthly gross income. This is to determine your repayment ability.
As a rule of thumb, your total financial commitment for loans per month should not exceed 40% of your household income.
- Loan-to-value (LTV) ratio
The amount of loan on a property in relation to its value expressed in percentage. The maximum LTV at which banks in Singapore may finance your first property is 80% of the purchase price or property's current market value whichever is lower. However, if you have any existing home loan(s), based on recent government rulings, you are only eligible for financing up to a 60% LTV. To find out more, click here.
As a rule of thumb, your total financial commitment for loans per month should not exceed 40% of your household income.
Factors that determine the LTV:
- Use of property for owner-occupation or investment
- Existing loan(s)
At DBS, we offer a comprehensive range of home loan packages, with customisable rates, to suit your unique financing needs. In addition, we offer attractive renovation loans as well as bridging loans to help ease your cash flow as you wait for your property sale proceeds.
Step 3 : View your dream home
Fix an appointment with the seller of the property to view the property, ensure it is in a satisfactory condition and check the asking price.
Step 4 : Obtain a Current Indicative Value for your property
The Bank will provide an indicative value of the property from its panel of approved valuation companies.
You have to ensure that the following details provided are correct for an accurate indicative value:
- Address of property
- Property type (landed, condominium, others)
- Land / built-in area
- Freehold / leasehold (999 years / 99 years)
- Renovation (how much was done and when)
- TOP Date
- Age of property
For the list of details required, please refer to Your Dream Home Checklist.
What if the Bank's valuation of the property and purchase price differ?
In the event the Bank's valuation is lower than the purchase price, the purchaser has to pay the difference between the purchase price and the Bank's valuation using cash. As such, the cash required up-front will be higher so it is always important to know the valuation of the property before making any offer.
For a CIV of your property, click here.
Step 5 : Appoint a lawyer to coordinate your purchase
You will need to appoint a lawyer to do the following:
- Title search on the property to determine if the seller is in fact the rightful owner and whether there are any encumbrances on the property
- Bankruptcy search on the seller to ensure that he is not bankrupt
- Requisition searches (e.g. road lines and drainage which may affect the value of the property)
- Vet through the Option to Purchase (OTP) to ensure that it is in order
Step 6 : Make an offer to the seller
To make an offer, you have to place an option fee which varies:
- Buying a private property directly from the resale market:
Usually 1% of the purchase price. To exercise the OTP, you would have to make a further payment, usually 5% or 10% of the purchase price, less the option fee.
- Buying an HDB flat:
Usually up to S$1,000. To exercise the OTP, you have to pay up to S$5,000 which includes the option fee.
Once exercised, the OTP will be valid for a period agreed by both the buyer and seller. During this period, you will own the sole right to purchase the property.
Step 7 : Apply to the bank for a home loan
For the bank to process your loan, you will need to submit these documents:
- Application Form
- Mortgage Application Form
- CPF Documents
- Contribution History up to the last 12 months
- Income Documents
- Latest Income Tax Notice of Assessment or
- Latest computerised payslip or
- Latest 2 years Income Tax Notice of Assessment (only applicable to self-employed/commission based customers)
- Option to Purchase (OTP) or Sale and Purchase (S&P) Agreement
Additional documents may be requested on a case-by-case basis. Upon approval of your application, you will receive a Letter of Offer (LO)* from the Bank, stating the details such as loan amount, tenure and terms and conditions. Before signing the LO, you should ensure that you understand its contents entirely, as it becomes legally binding upon acceptance.
Once you have accepted the LO*, the Bank will then instruct the law firm and valuation company to proceed with the necessary mortgage documentation and valuation report respectively.
A caveat^ will be lodged by your lawyer with the Singapore Land Authority against the property.
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An LO is a formal offer of home loan from the bank, setting out the terms and conditions governing the home loan offered therein. |
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A caveat serves as a public notice that the person lodging it is claiming an interest in the property, and it will lapse 5 years from the date of lodgement, unless it is discharged or renewed. |
Step 8 : Meet with your lawyer
Your lawyer will help you with the following:
- Exercise your Option to Purchase (OTP) / execute your Sale and Purchase (S&P) Agreement and apply to the CPF Board for the use of your CPF Ordinary Account savings towards the purchase of the property, the monthly instalments for the home loan and legal fees and stamp duties.
- Go through the mortgage documents in order to ensure that you fully understand all the terms and conditions stated therein.
Step 9 : Obtain a formal valuation for your property
- The Bank will arrange for a formal valuation of the property via physical inspection
- You need to inform the seller or the housing agent to allow the valuers access the property for inspection
- The valuers will then submit a copy of the valuation report to the Bank
For a CIV of your property, click here.
Step 10 : Pay legal fees and collect your keys
Your lawyer will ensure that all the titles, legal requisitions, etc of the property are in order for your purchase. Your lawyer will then receive the funds on your behalf from the Bank and CPF Board to complete the purchase.
The legal fees are usually payable at this stage. Please check you receive the following:
The completion statement will show you the balance of the purchase price that you must pay after deducting any deposit, pro-rated property tax and utility charges, maintenance charges, and other applicable charges as well as any fees payable to the agent and the lawyer.
It is usually sent to you a few days before the legal completion date together with instructions on the mode of payment.
After you have settled the outstanding balance of the purchase price, the sellers lawyer will hand over the house keys and Transfer Document to your lawyer. Upon receipt of the Transfer Document, you assume the title of Owner.
Your lawyer will apply for the CT to be issued by the Singapore Land Authority on the same day. He will safeguard the CT until it is handed over to the mortgagee (the financing bank) if the property is mortgaged.
Collect the keys to your new home from your lawyer upon completion of your purchase, and upon receipt of TOP for uncompleted properties.
Next Steps
- Call us, email us or SMS "Home<space>Name<space>NRIC" to 76060 for customised rates
- Email us
- Request a consultation
- Calculate your estimated monthly mortgage instalments
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Get our home loan application checklist for the documents you will need
- Download an application form
Disclaimer: This document is for general information only, and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. It should not be relied upon as legal or financial advice. Whilst reasonable care has been taken to ensure the accuracy of the information herein, no warranty or representation is made as to its correctness or completeness. Content herein may be modified at any time without notice. DBS Bank accepts no liability whatsoever for any direct, indirect or consequential loss arising from any use or reliance
Note: The Association of Banks in Singapore (ABS) has published a consumer guide on home loans. You are encouraged to read the guide before committing to any home loan. The guide is available on the websites of ABS (www.abs.org.sg) and the Monetary Authority of Singapore (www.mas.gov.sg) in the four official languages. You may also obtain a copy of the guide at any of our branches
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