Buying A Condo For Dummies – 6 Easy Steps

Purchasing a resale condo in Singapore is one of the best investments one can make especially if it is their first time buying or investing in a home.

However, owning a condo also has its challenges especially if this is your first time to own a property in a condominium unit.

This guide on Buying a condo for dummies will provide all the information you require to purchase a resale condo in Singapore including the market, how to go about it, and the process for the purchase.  

Understanding the Singapore Condo Market

Before diving into the process of Buying a condo for dummies, it’s essential to grasp the fundamentals of the Singapore condo market.

Condos are private homes characterized by several unique features for example, the residents own their homes but the facilities are shared.

Condos are most often built in Singapore being high-rise structures that contain diverse amenities including swimming pools, gymnasiums, function halls, and security. 

Condos in Singapore include new launches and resale markets, and both are fast-developing markets. New launches are sold through the developers themselves sometimes before the projects are fully built, and may entail reasonable prices and milestone payments for the units.

Resale properties are owner-owned and are sold in the market years after their construction. The latter is an advantage since when one purchases a resale condo, they get the true feel of the unit and get it in the actual condition that is required without having to do intermediate renovations.  

Buying a condo for dummies #1

For the first step of Buying a condo for dummies, an important task you must complete before beginning the search for a condominium is determining your budget and exploring your financing options.

The amount of money, that should be set aside for the acquisition of a condo, depends on factors like income, savings, credit history, and financial planning for the future.

In Singapore, there are three major ways to pay for the condos; using cash, CPF savings, or acquiring a bank loan. Here’s a breakdown of these financing options:

1. Cash: For resale condos, you must come up with not less than 5% of the property price in cash down payment not forgetting the current Loan-to-Value (LTV) limitations set by the Monetary Authority of Singapore (MAS). 
2. CPF Savings: You can utilize your OA monies to pay up to 20% of the residential property purchase price for which you have sufficient OA balance and the remaining lease.
3. Bank Loans: You can borrow from the banks to secure a loan of up to 75% of the property price based on the LTV and TDSR restrictions. The TDSR limits the total monthly loan repayings which includes the condo mortgage to 60% of the gross monthly income.

A person should consult a financial planner or a mortgage banker concerning the financing plan and the feasible budget to apply for before purchasing a condo.

Buying a condo for dummies #2

The next step for Buying a condo for dummies is to select the location. Location is a crucial factor when buying a resale condo in Singapore. It’s vital to account for the expectations of the kind of lifestyle, work arrangements, and family preferences in a specific location. Some key factors to consider include:

1. Accessibility to public transport such as MRT stations and bus interchanges. 
2. Distance from your workplace, school, and other critical facilities such as hospitals, and shopping centers. 
3. The proximity to parks, sports facilities, community clubs, and other recreational facilities. 
4. Further development and possible appreciation of the property that surrounds the area according to the URA Master Plan.

When searching the list of condo developments for shortlisting, pay attention to the reputation of the developer, condition of construction, services, utilities provided, and others.

This can be done by touring the developments to get a feel for the environment and speaking to the current residents/property managers/agents to get to know the lifestyle of the development and some of the demerits.

Buying a condo for dummies #3

The third step of Buying a condo for dummies is to assess the condition of the resale condo. It is important to evaluate the state of the condo and consider the market price when purchasing a resale condo. Here are some steps to follow:

1. Property Viewing

Schedule several visits to the condo unit at different times and on different days to see the degree of lighting, noise level, and traffic movement during the most important times of the day. Look for abnormalities that would require repair and inferiority in the doors and windows of the buildings.

2. Property Inspection

Hire a home inspector who will check the condition of the condo unit and give their opinion on the state of electrical, plumbing, and structural work. An inspection report is beneficial for making a competent choice and entering negotiations related to repairs with the seller or a price change.  

3. Valuation

Get an appraisal done on the condo unit by a licensed appraiser to assess the present value of the condo unit. Compare the offer with the past sales price of other units in the development and within the area to ensure you are not overpaying.  

4. Resale Checklist

Consult the checklist of resale documents for a condo development; these are the title deed, floor plan, the most recent audited financial statements, and the balance on the maintenance fees. Make sure that the seller has no unpaid bills/lawsuits and that the management of the condo is efficient and financially sound.

Buying a condo for dummies #4

After assessing the condo’s condition and determining its value, the buyer and the seller come to the negotiating table to complete the transaction known as the purchase process. Here are the key steps involved in the fourth step of Buying a condo for dummies: 

5. Letter of Intent (LOI) 

Fill in and send out a “Letter of Intent” to the seller stating the offer price, the amount of money to be paid as a deposit, and any other provisions and conditions that apply to the offer. The LOI is an absent offer that is not legally binding but serves to prove your seriousness when purchasing the property. 

6. Option to Purchase (OTP) 

If the seller agrees to your LOI, you move to the “Option to Purchase”, a document that gives you a limited amount of time (about two weeks) exclusively to buy the property. It will be necessary to pay an option fee, of 1% of the purchase price, for the OTP.

7. Sale and Purchase Agreement (S&P)

Once the OTP is accepted, you must enter the “Sale and Purchase Agreement” with the seller. This creates a legal relationship between the parties to the sale. The S&P will state the detailed purchase price, the date on which the completion of the sale will take place, and all the other conditions that were agreed upon.

8. Payment of Deposit

When signing the S&P you have to transfer a deposit, (which is 4% of the purchase price less the option fee) to the seller’s solicitor, but it remains in a stakeholder’s account until completion. 

It is recommended that in the process of negotiating the transaction, a real estate salesperson or lawyer’s help is utilized. 

Buying a condo for dummies #5

After signing the S&P and paying the deposit, there are several steps to complete before taking possession of your resale condo in the fifth step of Buying a condo for dummies:

9. Financing

Secure your mortgage terms with your banking and/or financial provider and make sure that the money for the purchase price is transferred to the vendor’s solicitor before completion.

10. Legal Completion

On the agreed completion date, your lawyer shall attend to the conveyance with the seller’s lawyer, whereby, the legal documents include the title deed, and the transfer instrument will be exchanged for the balance of further payment. After the transaction is over, the condo will then be formally turned over to your name.

11. Handover and Possession

Schedule the signing of title deeds to the condo unit with the seller as they hand over the keys to you for a brief inspection. Be very careful that any agreed repairs/rectifications have been made and that the unit is in a reasonable state before you move in.

Buying a condo for dummies #6

Like any other condo owner in Singapore, you will have rights given to you by law and obligations that this mode of living provides. Here are some key aspects to be aware of in the sixth step of Buying a condo for dummies:

1. Condo Management

Your condo will have an MCST which will be in charge of the common property, the finances of the development, and the implementation of by-laws of the development. As a condo owner, you will be in a position to participate in the development through the conducting of Annual General Meetings (AGMs).

2. Maintenance Fees

Monthly fees must be paid to the MCST towards maintenance charges for the common property, repairs, and renovation of common property facilities. These are normally charged based on the area of your unit and the number of shares given to it.

3. Renovation and Alteration Works

If you are planning to hire some contractors and want to renovate or alter the work on your condo unit, the recommendation of the MCST, and compliance with the By-laws and Guides must be sought. These guidelines may outlaw the making of noise at certain times, the hours during which work can be carried out, and limit the kinds of materials that can be used. 

4. Community Living

After owning a condo house, the residents become a part of the community and share the property with the neighbors. Note down the rules and regulations on the usage of the amenities like the pool, gym, and halls for functions and social activities and also ensure that the relationship with the fellow inhabitants is pleasant.

Conclusion 

Purchasing a resale condo in Singapore is not as easy as it sounds; however, if done right, it can be a highly fruitful endeavor.

Learning about the market both in terms of timing and other external factors, setting up the financial plan including your budget and the possible sources of financing, ensuring that you select a good location and development, evaluating the status of the property and its worth, and considering the legal and bureaucratic inquiries of the reselling transaction will help you make a perfect decision on which resale condo to purchase. 

If you own a condo, understand that once you acquire the keys to your own home, you need to assume responsibilities, as well as develop new roles inherent in community living, and use all the benefits that the lifestyle, as well as privileges of condo life, has to offer. 

With this guide to buying a resale condo in Singapore, you are well-equipped to embark on your condo ownership journey with confidence and success.