The process of buying

Ok, I promise to go study after this, but since I'm so 'engagingly distracted' by the internet now, let me just write a little about the property buying process in Singapore (since when we started out we were practically almost clueless and had to ask around and google for any type of advice we can get. Thankfully one of my consultants is very knowledgeable regarding the process and was extremely helpful.) It is actually a rather simple process, but for someone who is "clueless" there can be a lot of anxiety involved. Uncertainty about money always make people anxious.

First of all, have to put disclaimer first. I'm writing this from what I can remember (and for fun, hopefully I can help someone reduce their anxiety), so the nitty gritty details may not be 100% accurate.

2nd, we bought the house when we were both Employment Pass(EP) holders in Nov 2011, just weeks before the Additional Buyer's Stamp Duty (ABSD - an extra 10% stamp duty imposed on foreigners, but not permanent residents) was imposed.

3rd, we were naive 1st time house buyers in Singapore. A lot of things could have been done better in retrospects, hence also the reason for this post.

4th. We bough a private property (only (married)PRs/citizens qualify for HDBs), so no HDB rebates/whatever rebate/subsidy stuff for us.

So here goes:

1. View the house, and decided we want it.

2. Call the agent (negotiate a price, we negotiated with an agent rather than the house owner, she called him and called us back, blah blah... not sure if we could have negotiated a better price if we had spoken directly to the owner)
*To decide whether the price is reasonable, refer to this website URA. It gives a history and psf price of transactions within a development, so you can know whether you're being ripped off or getting a good deal. (We only found out about this website after we put the 1% down, else we'd have negotiated for less!)

3. Put the 1% downpayment (eg, if the house costs 100k, 1%=$1000. This money is not refundable, even if you decided not to purchase in the end.)

4. Once the 1% in put down, you will be given something called "Option to Purchase". It's a 2 page (or was it 1 page) letter stating your intention to purchase, the owner's name and the exact address of the property. And the agreed purchase price.

"Practicing the option"
5. We're given a 2 week period to "practice our option". If I'm not mistaken this is standard. Hence started our hunt for a bank loan.
In retrospect, a bank loan should be "obtained" before you put the 1%. It's called "in principal approval-meaning the bank agrees to loan you a certain amount of money "in-principal". This is a no-strings-attached service provided by banks, so do not hesitate to get you 'in principal approval" before you even start property hunting.

6. The job of hunting for an appropiate bank was delegated to my husband. At first we called a few banks up, in the end he went down to the respective banks and finally we decided on DBS. They have different loan types - the board rate, floating rate, bla bla rate (3 types in all I think). I'm a dummo in these things so I shall refrain from commenting further.

7. Our bank loan gets approved in 2 days, and they threw in free lawyer's fee of up to SGD2500 (don't be so happy they gave it for free, this is standard. And apparently, you can ask for shopping vouchers too sometimes!). We don't know which lawyer to choose, so we asked the bank to recommend one near where my husband works, for convenience sake.

8. We meet our lawyer, a young chap who probably just graduated from law school. The secretary seems to be more experienced. During this 2-week option period the law(yer)/ firm will make sure the owner is not the bankrupt, nothing illegal in the transaction, etc.

9. Within the 2-week period another 5-10% of the purchase price needs to be paid up. Also, remember to factor in an additional 3% stamp duty (applies to all including citizens and PRs) - which is payable to the government. They have a special formula 3%-$5ooo or something like that, so in the end it amounts to slightly less than 3%. We gave all these things in cheque to our lawyer (so ya, a cheque book is kinda necessary too). They will settle the rest.

10. Once the 2 week period is up, there will be a 10 week completion period. Not too sure what really happened during this period, but it was good for us as it gave us time to start digging into our resources for the rest of the 20% downpayment!

11. By a week before the completion period ends, the lawyer would have sent you the payment instructions (i.e whose name to buy a cahier's order in). 3 days before the completion period, my husband went to buy Cashier's Orders from the bank (no cheque allowed this time, in case they bounced!).

12. On completion day, we got our keys.

THE END OF THE BEGINNING

Add: The maximum home loan amount allowable (by law) is 80%