If after wasting what feels like a lifetime in the quest process, you have finally found your dream house, congrats! You are now closer to becoming a homeowner, but don’t neglect to adequately prepare and take into consideration the following secret expense of property that might just transform your dream house into a nightmare of money-hemorrhaging.
1) Option Fee and Exercise Fee
The incentive fee applies to the Option to Buy (OTP)-the sellers are “locked in” after you have charged this fee, in other words, contractually obliged to make the property accessible to you. This is usually 1 percent of the selling price of the house, with $1,000 being the highest sum. On top of the choice charge, anytime you practice your OTP, you’ll still have to pay the option exercise fee.
Assume, for starters, you’re paying $400,000 for a resale flat. Since 1% of $400,000 reaches $1,000, you would just need to pay a $1,000 choice charge. The exercise fee for your choice is agreed between you and the vendor, so the amount of the exercise fee for your option and the already paying option fee will not surpass $5,000, which ensures that you can pay out a limit of $4,000 more.
2: Stamp Duty and Additional Buyer Stamp Duty
Stamp duty is a levy on Singapore land related papers, and the sum you will need to pay is determined on the basis of the selling price of the item:
- For the first S$180,000, 1 percent
- For the next S$180,000, 2 percent
- For the balance of the sales amount, 3 percent
Again, assuming you are paying $400,000 for your flat for resale. It would measure the stamp duty as follows:
- 1% of $180,000= $1,800 = $1,800
- 2 percent of 180,000 dollars = 3,600 dollars
- 3 percent of the $40,000 left = $1,200
Your stamp duty will work out to be $6,600
If you have more than 1 property, you are expected to apply for an Extra Buyers Stamp Duty (ABSD) in any situation, with the sum payable varying on whether you are a person, a permanent resident, or an immigrant, as well as the number of residential properties you possess.
3: Legal and Valuation Fees
Legal fees: You will have to employ a lawyer who will do background checks on the property and even pass the ownership title of the house. This will set you back about 0.4 percent of the price of the land.
Valuation fees: The valuation charge is somewhat self-explanatory-it is what you pay to valuate the land, which usually costs $300 to $500. What do you know about the intent of valuing your land, or what considerations affect the decision-making process? Learn this handbook.
4: Maintenance Fees
The purchasing of a condominium unit? Don’t forget to take the monthly maintenance charge into consideration, which varies from about $150 to $600, based on how swanky the facilities of the condo are. Here’s a helpful reference for more details about how these payments are measured.
5: Renovation Fees
Don’t get swept up in the lists you see on Facebook selling stunning apartments planned and constructed on a budget shoestring. Usually, the $30,000-$40,000 price tags you find in these stories include just simple renovation expenses, which do not depict the exact sum you are having to fork out.
More importantly, you would need to invest on extra expenses in addition to the standard renovation costs, such as building air-con systems, window grills, electrical installation, and more. To have contractors to dispose of the remains of hacking, you’ll also need to pay a freight tax. Add on the furniture payments, and at the absolute minimum, you can spend $50,000-$70,000.
It is possible that you would face a lot of tension in the process of purchasing your house without a detailed budget mapped out. If you ask us, going for a smaller and more accessible apartment is much safer if this ensures that you won’t stretch your budget.