Let me start off by saying this: I’m excited for you!
You’re thinking about finally making that first purchase. And not an HBD flat, might I add, but an upper scale condo unit that you can now call your own.
Or maybe it’s not your first condo but actually a second one. Wow, you’ve really made it! You’re every bit as accomplished as you have hoped for and dreamed of. Congratulations.
And so now, for your first or second condo purchase, you’ve actually landed on a particular budget. You want to look for a condo for sale in Singapore for $600K. Seems pretty easy, right?
Not so fast.
It’s so easy to get lost in the hype of the moment. It is pretty exciting, don’t get me wrong. And you should be extremely proud of yourself.
But at the same time, you have to be level-headed in making this particular decision in your life. It is life-altering after all, with such a huge budget on the line and a long loan term that could last the majority of your lifetime.
Needless to say, purchasing a $600K condo is a decision that could really dictate your life.
Having said that, why wouldn’t you exert much effort in making sure that everything is in place and you’ve covered enough ground to make a sound decision.
And if I may use a more apt analogy, why not apply the science of real estate in making your decision? It’s going to help you secure a condo for sale in Singapore for $600K – your budget. Or it could even help you score an equally gorgeous and luxurious condo below condo below $600K in Singapore.
That would be awesome now, wouldn’t it?
Well, fret not. Let me help you with that by giving you this comprehensive guide to getting a condo for sale in Singapore for $600K. Or better yet, getting a condo below $600K.
So let’s carefully Review the process, your options, and the decision to be made so we can find the property that best fits you.
Step 1 – Check your current income.
Seems so elementary, I know. But you may be surprised at how some people already fail at this primary, elementary level. They’ve already gone to the dreamland and fantasized about their new condo, not knowing that their funds are not enough to sustain their monthly amortization for their property purchase.
Now, how much monthly income will you be needing to be able to buy a condo for sale in Singapore for $600K? We can answer this after going through steps 2 to 5. Hold on to your seat…
Step 2 – Take note of the LTV Ratio.
Because we are applying the Review phase of the REI Method (Review, Evaluate, and Identify), we need to look into your situation and the numbers.
You want to purchase maybe a condo below $600K in Singapore. You are looking into taking out a loan from the bank. Based on the prevailing loan to value ration (LTV), you are allowed to take out a maximum loan of 75% of the total amount of the property, payable in thirty years.
This is equivalent to $450,000. And this also falls on the numbers that you need to be mindful of, as advised by the Review phase of the REI Method.
Step 3 – Calculate based on your TDSR.
Next on the list of numbers that you must take into consideration is the Total Debt Servicing Ratio (TDSR). Currently, this is at 60% of your total income, meaning only 60% could be used to pay off housing and all other loans that you might have.
Though some might view this as a limiting or restrictive policy, it is actually a protective strategy that we should all learn to appreciate. The government is helping us to regulate our debts and makes sure that we don’t live beyond our means and have enough left over for daily necessities and emergency situations.
In short, we are being educated to prepare financially and not borrow money beyond what we can really pay for. This little policy right here – the TDSR? We should all be thankful for this financial guardrail.
Step 4 – Raise enough for the down payment and other fees after applying CPF
CPF covers 20% of the 25% downpayment, which means that you have to raise cash to pay off the rest of the 5%. There are also the legal and valuation fees that you have to pay for, so make sure that you have some cash left for this.
Now, some of you might have excess funds in your CPF Ordinary Account (OA). However, CPF rules stipulate that you will still be required to cough up the 5% cash for purchasing a condo for sale in Singapore for $600K, or for any other property for that matter.
In this case, the downpayment is $150,000, which will be paid through your CPF OA funds amounting to $120,000. This means you need to prepare $30,000 for the down payment alone, and about 2% to 3% for the incidental fees and charges.
Step 5 – Allocate your CPF OA funds to cover the 3% BSD (and ABSD, if applicable)
Singaporean citizens (SC) are required to pay an estimated 3% for the Buyer Stamp Duty (BSD) for your first property. Kindly note that the rate increases to 4% if you are to purchase a condo above $1m.
For Singapore Permanent Residents (SPR), you are required to pay an Additional Buyer Stamp Duty of 5% even on your first property purchase. While the rules suggest that ABSD should be imposed on succeeding property purchase, it is not the same with SPRs.
Here’s a table of the BSD and ABSD for a much clearer presentation:
Table 1: BSD Calculation
| Payment Amount/ Schedule | % of Stamp Duty |
| First S$180,000 | 1% |
| Next S$180,000 | 2% |
| Next S$640,000 | 3% |
| Remaining Amount | 4% |
Table 2: ABSD Calculation (After July 2018 policy revisions)
| Type of Buyer | ABSD RATES | ||
| 1st Property | 2nd Property | Subsequent Property/ies | |
| SC | None | 12% | 15% |
| SPR | 5% | 15% | 15% |
There are also ABSD rates applicable for foreign buyers and developers, but for brevity, we opted not to show it anymore.
**Comment: Use the above image and recreate our own version that is a breakdown of the numbers
As a reminder, stamp duties are payable by CPF OA funds. However, we advise buyers to allocate cash or budget for this as well since it takes longer for the CPF board to release funding, so relying on them might cause delays in the process.
In this case, if this is your first purchase, then BSD is roughly around $18,000. Now, if you are an SPR, mandatory ABSD is estimated at $30,000.
You may use this online BSD/ABSD calculator to help facilitate your stamp duty requirements.
** Comments: we do not want to link unnecessary link of other websites unless its gov or news related general websites.
Just a quick moment. Go back to Step 1.
Remember earlier, when we were talking about the monthly income in Step 1 and determining if it’s enough given the requirements of your circumstances?
Let’s now apply Steps 2 to 5 to determine your eligibility to purchase a condo for sale in Singapore for $600K, or even a condo below $600K.
Quick View Summary:
| Property Price | $600,000 |
| Loan Period | 30 years |
| Maximum Loanable Amount | $450,000 |
| Down payment | $150,000 |
| Average Interest Rate | 2% |
| TDSR | 60% |
| Monthly Amort (at 60%) | $2,771.00 |
| Monthly Amort (at 30%, conservative and recommended) | $8,050.00 |
Now, why did we recommend only using 30% of your income although the TDSR allows 60%? Because we are promoting a more conservative approach that will give you enough cushion financially.
That even though you are paying off your condo monthly, you will still be able to live comfortably and have enough funds lying around in case of emergency.
**Comments: we will use a better illustration of the example in infographic approach. Take note the numbers above are incorrect as well. If you are able to find similar representation from singapore sites for infographic, we can make improve from there.
You may also use this online mortgage affordability calculator to get a head start with your financial preparations.
Step 6 – Determine the area you want that offers a condo for sale in Singapore for $600K.
This is probably the exciting part for most buyers – actually thinking about the location of the condo property.
Thinking about the expenses part may be a bit of a killjoy; however, it is the somewhat painful but necessary part about planning for your future property purchase.
But for Step 7, you can now outline your “wish list” or the factors and elements that will help you determine the location where you want to purchase your condo.
There are still condo units available at Riverfront Residences in Serangoon, The Tapestry in Pasir Ris, or Vibes @ East Coast (D15) Apartment in Joo Chiat. These are well within your budget of a condo below $600K.
Step 7 – Scout for your future condo property!
You’ve done the hard work. You’ve carefully studied all the factors involved in your purchase. You’ve computed, calculated, and carefully estimated.
You’ve reviewed all the necessary steps for your situation and the ran through the significant numbers that will have an impact on your decision.
Now comes the most fun part.
With everything in tow, you can now confidently and leisurely look for properties based on your parameters.
You need not worry about the availability of funds, loan eligibility, or the location where you want to buy your condo. You’ve done the research.
Bonus Step: Exit Strategy
Would you believe this astounding statistic: 81% of homeowners do not consider an exit strategy when they are purchasing their property?
Honestly, I can understand why. It comes with the thrill and excitement of it all. Like in an event, The ingress is always more exciting than the egress. Or in scientific studies, preparing for the experiment and conducting the actual experiment is always what we look forward to, not the part where you need to jot down your scientific observations and clean up your tools and equipment.
Many homebuyers only look into entering the deal and purchasing their home. But they did not consider in years to come, what will happen to the value of their property.
The Identify phase of the REI method guides homebuyers like you to establish the right timing for the entry and exit plans. With current measures and policy changes, we ease out of all unnecessary hiccups and roadblocks in the process by planning ahead.
By carefully reviewing the timing of your purchase, you can come up with predictable outcomes for your choices. As part of our rule of thumb in order to achieve the science of real estate, we always have the end objective in mind and this guides your decisions and choices instead of just buying into the property without knowing what will happen in the end.
So with these seven steps – and a crucial bonus step – you can enjoy a more hassle-free experience in purchasing your $600K property.
Happy hunting! Scout away.
