For those looking to buy or invest
Things to look out for when buying
For buyers - Tips and things to look out for
AIP and Mortgage Loans – Confirm loan eligibility before paying option fees
For buyers, it is recommended to fill out the actual AIP application and provide the bank a complete set of documents. AIP can be conducted in written format or verbally, and is only based on the information the buyer provides the bank. The loan amount stated in the AIP is not a guaranteed amount offered to the buyer. Banks may end up making very different assessments on a borrower’s eligibility if the original AIP is based on incomplete information. Providing a complete set of documents allows for a more accurate estimate of the amount that the bank is willing to lend.
There have been instances where buyers obtain an AIP based on verbal or incomplete information that they provide. After paying the option fee, they realize that they are eligible for a much lower loan amount than what was stated in the AIP. These buyers may have to forfeit the option fee that they have paid if they are not able to fully finance the house. Hence, buyers should always ensure that they are truly qualified to secure a loan before paying for the option fee – and to avoid any unpleasant surprises.
Cash flow requirements and housing policies – Plan your finances and budget
Buyers are also advised to work out all the cash flow requirements, deadlines, modes of payment, and their ability to pay the relevant charges and loans. For example, some buyers may not be aware that Stamp Duty has to be paid in cash first, before getting a refund from their CPF (for Singapore Citizens and Permanent Residents). In such cases, when cash needs cannot be met, the buying process becomes problematic. Buyers should therefore read up on housing policies, cash flow requirements and carefully plan their finances and budget before committing to a home purchase
Research – It is not just about prices and some things cannot be quantified
When researching on a property, there are many things to look out for. While some information such as prices and distance to MRT stations can be expressed in numbers, many other factors such as furnishing, facing, and surroundings cannot be quantified. However, these factors are equally important in determining whether a unit is a good deal. DREA’s property pages summarize everything you need to know, from prices to on the ground reviews.
Remember to do your research on cash flow requirements and policies before committing to a purchase
Ownership Check – Do so before paying the Option Fee
Before paying the 1% Option Fee, buyers should do an ownership check on the property to ensure that the seller actually owns the property. While cases like these aren’t very common in Singapore, it’s always better to be safe than sorry. Ownership checks can be easily done through SLA’s web portal.
Offer to purchase – Be specific with what is required and get help if possible
We typically recommend getting a property agent to assist you with all the paperwork however it is possible to do it on your own. For Buyers purchasing a unit without an agent’s help, do a thorough read and review of your Offer to Purchase letter. Some Offer to Purchase templates found online may not be valid in Singapore. Even if these templates are valid, some clauses in the templates may not be the norm for the Singapore property market, and buyers may end up losing out.
The Offer to Purchase letter is also important because it specifies the “wants” of the buyer. In the Offer to Purchase, buyers should state all the fixtures and requirements that they want and expect to have. For example, the in-build oven in the kitchen. It also sets the basis for negotiation.
Purchase of units with tenancy – Always fact check the tenancy agreement
When purchasing a unit with tenancy, buyers are always advised to review the tenancy agreement and look out for clauses that might potentially be a problem. For instance, buyers should look out for any escape clauses which would allow an existing tenant to terminate the contract at any time. In addition, it is advisable to fact check the rental rate to see if it is inline with market prices.
Pictures – They can be helpful for resolving disputes
One tip for buyers when purchasing a resale property, is to take detailed pictures of the unit before paying the option fee. This is useful in the event that problems such as faulty power outlets or cracks in the wall are found after moving in. With pictures as evidence, many arguments can be avoided.
Read through your Offer to Purchase letter and review the rental contact (if buying a unit with tenancy)