Buying a home is exciting, but the financial journey can feel complex and cause anxiety due to the huge monetary outlay. That is exactly why we created this Property Finance & Costs category which contains key information to help you confidently navigate the numbers behind your dream home.
Remember, understanding your cash flow is just as crucial as finding the ideal home and perfect floor plan.
Do not just look at the asking price! You actually need to budget for significant upfront expenses that demand immediate cash or CPF funds.
First, calculate the down payment. For a bank loan, you generally commit to 25% of the purchase price, and you must pay at least 5% of that in cash.
Next, you must factor in the taxes, which can be substantial. Therefore, you must accurately calculate the Buyer’s Stamp Duty (BSD) and any applicable Additional Buyer’s Stamp Duty (ABSD). These duties represent a substantial chunk of your initial outlay.
Finally, set aside funds for legal and conveyancing fees. You need to hire a lawyer to manage the paperwork and relevant payments, and they charge a few thousand dollars to complete the transaction smoothly.
Securing the keys does not mark the end of your financial commitments.
You now face recurring costs that impact your long-term budget. Crucially, you service your monthly mortgage instalment, and the type of housing loan and interest rate you choose directly affect your financial burden.
Furthermore, you must factor in annual property tax, which you pay to IRAS based on your home’s Annual Value. Also, remember the monthly maintenance fees – whether they are Service & Conservancy Charges (S&CC) for an HDB flat or a higher condo management fee.
Thus, it is imperative to ensure you always have cash reserves to cover these predictable, essential expenses.
How you finance your purchase profoundly shapes your journey. Indeed, you possess the power to choose between an HDB loan and a bank loan if you are purchasing a BTO flat or an HDB resale flat, each option presenting different interest rates and flexibility (Note: HDB loans are not eleigible for the purchase of private properties).
Consequently, you must shop around for the best home loan package and evaluate your Total Debt Servicing Ratio (TDSR) eligibility.
Ultimately, you need a solid financial plan that makes your asset progression sustainable, not stressful. We offer detailed guides on home ownership to empower your next steps.
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