New launch vs resale units
Despite being land scarce, Singapore is never short of properties to buy. Condo buyers are simply spoilt for choice, which makes choosing one somewhat of a tricky task. For starters, would-be condo buyers often question themselves whether to buy a new launch or a resale unit. The answer lies in individual needs, preferences, and financial situation.
Plenty of high rise properties to choose from in Singapore.
If you need to move in pronto, want to see the real thing before making a commitment, have cash or CPF monies to spare, are willing to take a bigger housing loan, and enjoy negotiating, then naturally a resale unit would be a better choice for you.
However, if you can wait a couple of years before receiving your keys, prefer moving in to spanking new premises, need time to set money aside, then a new launch condo is more suited for you. Let us elaborate on the last two points.
Firstly, the privilege of moving in to spanking new premises. Common sense will tell you that new launch condos come with NEW everything. The latest designs, state-of-the-art features, and better facilities. Wouldn’t that be more enticing as compared to moving in to a new home with the design, features and facilities of yesteryears?
Secondly, needing more time to set money aside. Under the Progressive Payment Scheme (PPS) which only applies to buildings under construction, your payments are stretched over multiple stages. You only pay when the construction reaches a certain milestone (more on this later). However, with a resale unit, you need to make a 25% down payment and immediately begin servicing your housing loan.
Aside from what has been mentioned, the privilege to choose could be another reason why you may prefer to go for a new launch condo. If you book your unit during or soon after the launch date, you will naturally have a higher chance of getting the unit you desire in terms of view, facing direction, and which level it is at.
Lastly, you may want to choose a new launch condo for all the discounts that the developer throws in. Yes, that’s right! With new launch condos, you may be pleasantly surprised by good news of early bird’s discounts, which are normally given just before the launch date.
So there. We’ve given you the arguments to buying a new launch or resale condo. It may be an easy or tough decision, but whatever it is, take your time to make up your mind on this. Once you’ve decided, then it’s time for a financial health check.
How much can you afford?
Unless you fall into the ultra-rich category who can afford to buy properties in cash without batting an eyelid, it goes without saying that buying a property is no ordinary purchase. For a new launch unit, expect to pay more than 20% of the property price as down payment. This amount covers the 5% Option Fee, 15% Exercise Fee, legal fees, Buyer’s Stamp Duty (BSD), and Additional Buyer’s Stamp Duty (ABSD) if it applies to you.
Visit several banks before deciding on your housing loan.
Then comes the housing loan. For this, visit several banks to see how much each is willing to loan to you, and if you can afford the monthly instalments. Among other things, your Total Debt Servicing Ratio (TDSR), Loan-to-Value limit (LTV), CPF funds, and cash in hand will be taken into consideration. On your part, you will need to think long-term. Think of your job security, personal and family obligations, and other commitments, and finally decide if this is what you’re comfortable paying years (more likely, decades) down the road.
The loan amount and interest rates may differ from bank to bank. So choose one that gives you the best value. Once you’ve decided, you may choose to get an Approval-in-Principal (AIP) for a bank loan. Since the AIP is valid for only 30 days, you may also leave this to later when you’ve identified the property you want to purchase. The AIP lets you know how much the bank is willing to lend you, and how much your monthly payments will be.
With your financials settled, here comes the exciting bit –getting down to choosing your dream home or investment property in a price range that you can well afford!
Where do you look for your property?
Let’s say you’ve decided to buy a new launch condo instead of a resale unit. Let it be known that one of the best places to scout for that new launch condo is right here on our website. Here you can find in- depth analysis of up-and-coming projects, detailing the location, unit sizes, interiors, facilities, and developer background of each property. Not only that, you can connect with our experts who will share their insights on capital appreciation, rentability, and even the environment where the condo will be sited.
Based on your needs and preferences, our property consultants can even help you to identify the property that’s best suited for you. If this is your first purchase, they can also advise you on the steps that will follow or even accompany you to visit the show flat.
When do you book that new launch condo?
Expect a crowd both on the launch day and show flat viewing day.
Developers will announce their show flat viewing and launch dates of their condos. Usually these two events are one to two weeks apart. The launch date is the day when buyers select their units and pay the 5% deposit.
Prior to the launch, the show flat viewing period allows would-be buyers to visit the show flats to have a feel of their future home. A word of caution though. Please do not be overly taken in by the décor of these show flats. Picture how practical each layout and space would be to your needs. Some show flats do not come with certain fittings like doors (or even walls), which give an impression of a more spacious layout than it actually is. Always check the floor plans.
Another important point to take note of: show flats may not be at the actual site. So, if your show flat is located in a part of town that’s to your liking but not where the actual condo will be built, remind yourself that this is not where you’ll be moving in to a few years down the road!
When viewing a show flat, check out the layout, not the furnishings!
After viewing the show flat, and you’re certain that this is the ONE – identify a few units that you are interested in. Then submit an Expression of Interest form and a blank, unsigned cheque to the developer. You will be paying the 5% deposit with this cheque on the launch day.
Take note that the actual price of each unit would not be revealed during the show flat viewing period. Only an “indicative price” will be given to give you a rough idea of what to expect.
What do you do on the launch day?
On the launch day, all potential buyers who have filled out the Expression of Interest form and attached a blank, unsigned cheque will be given a number to participate in the balloting exercise. If your number is called early, you will have a higher chance of buying your first-choice unit. If your number is called later, you will have to settle for your second-, third-, or fourth-rated choice. This is why it is important to make a few choices when you visit the show flat during the preview period.
Book your unit by filling out your blank cheque.
Supposing that you’re lucky and get to pick your desired unit, it’s time to book your unit by filling out the blank cheque. Once you’ve successfully booked your unit, the developer will give you a set of documents related to your unit. Called the Property Details Information (PDI) documents, this will consist of the floor plans and other details of the development. You will need to sign on each page of the PDI.
At this point, you will also receive the Option to Purchase (OTP) which means you’ve officially booked a unit. Should you decide not to go ahead with the purchase after this point, a portion of this option fee (typically 25%) will be forfeited. So think carefully before making that commitment.
Subsequently, what takes place and when?
Now it’s time to go back to your bank of choice with your OTP to obtain a Letter of Offer from them. Basically, the Letter of Offer contains all the terms of your home loan.
Next, engage a lawyer who will take care of all conveyancing matters on your behalf. You may choose one of the bank’s panel of solicitors or appoint one of your own.
Next comes the phase where you have to sign the Sales & Purchase Agreement (S&PA) and OTP and pay the rest of the down payment and stamp duties. Do take note of these milestones:
- You will receive the S&PA from the developer within two weeks of receiving your OTP
- You will have to sign the S&PA and exercise the OTP within three weeks of receiving the S&PA – You will have to pay the rest of the 15% down payment (exercise fee) by cash or CPF
- You will have to pay the Buyer’s Stamp Duty (BSD) (and Additional Buyer’s Stamp Duty (ABSD), if applicable) within two weeks of signing the S&PA
You get a little breather after settling the initial 20% of payments. But once the progressive payment period begins, it’s pay and pay all the way according to the payment schedule! While it may sound daunting at first, in actual fact, the Progressive Payment Scheme (PPS) has been devised by the Singapore government to safeguard homebuyers. It ensures that you are constantly making payment and do not face the risk of being unable to pay what’s required when the property is completed.
Here’s how it works. Whenever the developer reaches a certain milestone (such as the completion of foundation work, concrete framework, walls, roof, fixtures, infrastructure etc.), you will have to pay anything between 5% and 10% of your unit price. Normally, this works out to making a payment every 3 to 6 (or even 9) months. These progressive payments can be made in cash, by using your CPF monies, or through a bank loan.
b) On Receipt of copy of Certification by the Qualified Person engaged by the Developer that the Building and all Roads and Drainage and Sewerage works Serving the Housing Project have been completed and water, electricity and gas supplies have been conected to the Unit.
l) Where Completion of the Sale and Puchase takes place before the issue of Certificate of Statutory Completion (C.S.C):
a) 2% to be paid to the Developer
b) 13% to be paid to the Singapore Academy of Law as stakeholders to be dealt as follows:
i) 8% to be released to the Developer within 7 days of the receipt of C.S.C
ii) 5% to be released to the Developer on expiry of 12 months after the date of receipt of the Notice to take Vacant Possession.
OR:
ll) Where C.S.C is issued before Completion of the Sale & Purchase:
a) Within 14 days of receipt of a copy of C.S.C, 13% to be paid in the following manner:
i) 8% to be paid to the Developer
ii) 5% to be paid to the Singapore Academy of Laws as Stakeholders which shall be released to the Developer on expiry of 12 months after the date of receipt of the Notice to take Vacant Possession.
b) 2% to be paid to the Developer on Completion of Sale & Purchase
The final two stages would be when the Temporary Occupation Permit (TOP) and the Certificate of Statutory Completion (CSC) are issued. This is when you make your last payments for your unit.
After the TOP is issued, your developer will inform you when to collect the keys to your new property.
The day you’ve been waiting for – collect your keys to your new home!
A final word
Once you’ve received the keys to your unit, check for defects and, if you find any, inform the developer immediately. Normally, there’s a 12-month Defects Liability Period when the developer’s contractor is obliged to fix any defects without charge. Congratulations! You’re now the proud owner of a new launch condo!
And alas, if you find yourself stuck in a rut even after weighing all possible options, you may need a professional’s opinion. In this case, schedule a visit with us or book a free consultation with our trusted and renowned representatives.
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