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Buying a Home
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| 3-Steps of Buying A Completed Property |
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 | Step 1:
Consult Your Banker
Consult us for an assessment of your financial situation and borrowing limits.
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| Step 2:
The Option to Purchase
Once the purchase price is agreed, your seller's lawyer will draw up an Option to Purchase. It is an offer by the seller to sell his property to you and he cannot withdraw this offer during the period stated in the Option (usually two weeks). You will need to pay a fee (usually 1% of purchase price) to obtain (not exercise) this contract. When you exercise your Option, a sum equivalent to 10% of the purchase price less the 1% fee has to be paid. These have to be paid using cash or through the Bridging Loan granted by us.
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| Step 3:
On Completion
The remaining 90% of the purchase price is to be paid upon completion of the sale and purchase of the property which usually occurs within 10 to 12 weeks from date of exercise of the Option. At least 10% of the purchase price must be paid in cash with the remaining 80% consisting of loans obtained from the Bank, CPF and/or cash.
You will also need to make cash payments for the stamp duties and legal fees at this stage.
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| 4-Steps of Buying a Property Under Construction |
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| Step 1:
Consult Your Banker
Consult us for an assessment of your financial situation and borrowing limits.
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| Step 2:
The Option to Purchase
Once you have decided on a unit, you need to pay a booking fee of between 5% to 10% of the purchase price or such amount as determined by the developer. This amount must be in cash or by way of a Bridging Loan granted by us. It cannot be deducted from your CPF savings. Upon payment, the developers will issue you an Option to Purchase.
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| Step 3:
The Sale and Purchase Agreement
Within three weeks from the receipt of the Sale and Purchase Agreement, you will have to exercise your Option, i.e. pay the developers a sum equivalent to 20% of the purchase price less the booking fee together with the signed Sale and Purchase Agreement.
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| Step 4:
Progressive Payments
The remaining amount is payable in instalments at relevant stages upon completion of the construction works as certified by the developer's architect.
Payments for these subsequent instalments may be made from CPF, cash, and/or the Home Loan obtained from us. If you are planning to sell your current property upon issuance of TOP for the new property, we can structure a Short Term Loan that will be repaid from the sales proceeds of your current property.
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| Upgrading From One Property To Another |
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| Repayment Period
You have a maximum repayment period of six months. During these six months, you only need to service interest on the loan, in cash.
If you are purchasing a property under construction but do not require a bridging loan, you have up to six months after TOP to repay your Short Term Loan.
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| Special Conditions
To apply for a Bridging Loan, you must have a signed Sale and Purchase Agreement for your current property. Upon approval, funds can be released within a week. Funds are usually made out directly to the seller's lawyer, but if you have already paid for the downpayment, you may request that the Bank release the funds to you. This is not a standard practice and is subject to the Bank's agreement.
A Bridging Loan and Short Term Loan must be taken together with the same bank that is granting you your home loan.
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Who is eligible?
To be eligible to use your CPF funds to purchase a property, you must satisfy all the following criteria:
| You must be the owner of the property, i.e. your name is or will be in the title documents; |
| If the property is purchased jointly, joint owners must be immediate family members - spouse, parents, children or siblings. You will be required to submit documentary proof of your relationship with the joint owners, e.g. marriage certificate, birth certificate; |
| The property must have a remaining lease of no less than 60 years; |
| The property purchased is in Singapore, and the loan application is accompanied by a valuation report; |
| The applicant must not be an undischarged bankrupt; |
| CPF Savings cannot be used for:
o payment of deposit or downpayment of the purchase price
o payment of renovations carried out on the property
o sole payment of legal fees and expenses related to the purchase. Such fees must be combined with lump sum payment to seller or for servicing monthly mortgage instalments.
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How Much CPF Funds Can Be Used?
| Lump Sum Payment
You can use all the funds in your ordinary account as a lump sum settlement for your property purchase. You may also use the funds to make lump sum capital prepayments during the term of your loan.
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| Monthly Instalment Payment
You may use all your monthly contributions in the ordinary account to service your monthly instalments. Generally, this monthly contribution (employer & employee) in the ordinary account is equivalent to 22% of your monthly salary. However, if you earn more than S$5,500 per month, the total CPF contribution (employer & employee) is capped at S$1,815 per month. This cap does not apply to bonuses.
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You will need to appoint the following lawyers to act for you when you are purchasing a property:
| Solicitor to act in purchase |
| Solicitor to act in mortgage (if you are taking a loan from the bank) |
| Solicitor to act in withdrawal of funds from the CPF Board (if you are using CPF Funds)
You will need to pay the legal fees charged by the Bank's lawyer, as well as the CPF Board lawyer. There is no need to appoint three different lawyers. Generally, home purchasers appoint lawyers who can act for CPF Board as well as the particular Bank from which they are seeking financing. Not only is it more convenient, you save a bundle on legal costs too. |
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