Buying Your First Private Property before 35 years of Age

Buying a private property will involve more complex questions than when buying a HDB flat because there are more financing and holding options for buyers. This article will touch on 3 useful points for those who are buying their first private property before they turn 35 years old.

======================

     Table of Content

• How Much Downpayment Do You Need?
• What is Your Objective?
• Have an Exit Strategy?

======================

   📌 1. How Much Down Payment Do You Need?

• For private properties, you will need minimum 5% cash.
• The remaining 20% can be covered by CPF and 75% from bank loans.
• If your income falls shorts of the required amount for the 75% bank loan, you may consider using pledging or show cash methods.
• When you buy before 35, you can take the maximum 30 years loan tenure as allowed by law.
• See my article “Everything about Income Requirements & Loans for Your 1^st Condo” for more details.
• The very first step is to get your In-Principle-Approval (IPA) done with a bank to determine what is your maximum loan allowed.
• This loan amount will then answer your questions; How much cash do you need to come out with? What is the price range of the property that you should be looking at?

📌 2. What is Your Objective?

• What is your objective in buying?
• If you are buying to stay yourself or with your spouse, I will suggest at least a 2 Bedroom unit.
• Everyone is looking for more space in this post-covid era in Singapore.
• Work-from-Home or Home Based-Learning trends will remain. 
• A 2 bedroom will attract both investors and families buying for own use when you sell later.
• When buying as investment, be aware of undue influence from parents when making your final decisions. 
• Our aged parents are used to bigger spaces and tend to prefer enclosed kitchens and utility rooms.
• If you are not staying there, why do you need a big space?
• If you intend to lease this investment property, what your tenants like maybe more important than what you and your parents like.
• This challenge is real if you are looking to your parents for partial financial support.
• Investment is all about entering at the lowest possible point.
• For example, go for 2 bed 1 bath unit which will save you at least $100k for one-less toilet as compared to a 2 bed 2 bath unit

📌 3. Have an Exit Strategy

• The most important question in any exit plan is: how long do you intend to hold this property?
• If you are buying as investment and want a shorter holding period (e.g., 3-5 years), new launch condos or newer condos may be a better choice.
• You can buy a brand new 99-years condo and sell within 5 -10 years.
• Newer condo tend to have better capital appreciation.
• Lease decay is not a problem when the condo is below 10 years.
• Unlike HDB flats, there is no minimum occupation period for condo
• You can sell it after 3 years without incurring sellers’ stamp duties.
• If you intend to stay in the property for a longer period (e.g., >10 years), I will suggest a freehold property so as not to face any problems with regards to lease decay.
• Alternatively, you can look for an older 99 years condo.
• These condos will be more spacious and affordable with greater en bloc potential.
• After you have found an ideal resale condo, be sure to check out my article “Buying a Resale Condo: 4 Powerful Negotiation Tips” before putting up any offer

Like this Article or Video?

Check out more insights for First-Time Buyer