Even as the Singapore government is building more homes in the central area of the island, there is a certain prestige of living in a condominium.
If you are a potential first time homeowner, a condo may just be a little out of reach. The government implemented Total Debt Servicing Ratio (TDSR) stipulates that homeowners are eligible to borrow up to 60% of their gross monthly income minus all outstanding debts to finance their mortgage. If you do the sums, this means that your household income should be at least $10,000 a month before you should even consider purchasing a private property (provided that the property costs around $950,000 and that you have no outstanding debts).
Still thinking of buying a condo? Here are some other things to note:
Condominiums can only be financed by bank loans or loans from financial institutions. A HDB loan at concessionary interest rate is not an option.
Restrictions on resale and rent
If you buy a HDB flat, you’d have to fulfil the Minimum Occupancy Period of 5 years before you can sell or rent it out. And if you do decide to sell, you’d need to find a buyer who meets the Ethnic Policy/Singapore PR quota. To rent, you need HDB approval. Also note that there is a resale levy which reduces the amount of grant you are eligible for for your next HDB purchase.
Condos have no such restrictions but there is a Seller Stamp Duty (SSD) which you have to pay if you sell it within the first four years.
HDB buyers are eligible for the CPF Housing Grant which they can use to pay the initial down payment or to reduce the mortgage loan. For private housing there are no grants. However, if you are buying an Executive Condominium (EC), you are still eligible for the Housing Grant.
Condos come with great facilities that can contribute to a higher quality of life. But these facilities need upkeep and you’d have to fork out cash every month to maintain them. Such fees start at $250 a month and can go up to $1,000 a month. Compare this to HDB Service and Conservancy Charges of between $19 and $95 for HDB units, depending on the town and type of flat.
You’d have to take this amount into your monthly household budget when deciding how much you can set aside to maintain your new.