So, you have gone through brochures and are now ready to visit the exquisite showflat of your choice. Just don’t be in a hurry because there is some homework to do before you make that trip to the showflat. No matter how worried you are about other prospective buyers beating you in the purchase, you must ponder over certain things.
Home Financing Math
Making sound financial decisions in matters of property investment is a must! Before jumping into the purchase, checkout how much loan can you get from the bank?
Maximum loan caps are not the only criteria for taking a loan; you need to consider your monthly income and existing financial commitments. Don’t forget to consider the down-payments, other related costs fees, monthly maintenance fees, and your capability of paying them within the timeline. The wise thing to do is to get quotes from different banks and compare the monthly repayment amount.
These are the 5 steps to follow to ensure smooth operations in the house hunting process.
Identify How Much CPF you Can Use
If you are depending on your Central Provident Fund (CPF) for buying that condo, do not keep guessing how much of the amount can you use. Act well in time, log on to your CPF account and see exactly how much can you use for purchasing the property. Avoid “surprises’. Plan your budget and be certain about money matters when it’s time to make deals.
In case this is your first property purchase, the maximum amount you will be able to use from your CPF is your whole Ordinary Account (OA) funds.
If this is the second property buy for you, you will be required to make sure you have a minimum sum of $75,000 (as of 01/07/2013) in your Ordinary Account and Special Account (SA) combined.
Housing Loan (AIP) Plan
Before moving ahead with a property purchase loan approval-in-principle (AIP) is of vital importance. It gives you a fair idea about what loan amount, can you get from the bank. Without doing it first, setting a budget will almost become unworkable.
This is a free service which takes about three working days to be processed.
The good news is, for Singaporeans no ABSD has to be paid for the first property. But, if this is your 2nd or 3rd property you have to pay a substantially higher amount at 7% and 10% of the purchase price respectively.
Normal Progressive Payment Scheme (NPS)
The NPS is the ongoing standard payment scheme for most of the new condominium projects. It is better to be clear about the sequence of the payments that you are supposed to make at specified intervals. This will give you a fair idea about the cash-flow during the property purchase.
The balloting system gives potential buyers the chance to register for non-obligatory seats during the show gallery preview period. This gives eligibility and an opportunity to buyers, to register for limited units prior to the official launch date. On the launch day, the balloting allows buyers to purchase units on a first come, first serve basis. In several occasions, lucky buyers get attractive early bird discounts for their purchase on the launch day.
Knowing the basics give showflat buyers the advantage to prepare themselves, gather required documents for all the processes and plan their property purchase finances better.