When planning a property purchase, most buyers solely focus on the price tag of the home. However, in the context of Singapore, making a home purchase often comes with a long list of hidden costs that can add tens of thousands of dollars to your budget.
When overlooked, these hidden costs can add up and lead to shocking surprises. Thankfully, this guide will help you avoid running into such shocks by breaking down the most important hidden costs prospective home buyers should budget for, how to calculate them using tools such as a buyer stamp duty calculator, and how to budget smartly.
Stamp Duty
Buyer Stamp Duty (BSD)
When buying property in Singapore, every purchase comes with a Buyer Stamp Duty (BSD) — a tax payable to the Inland Revenue Authority of Singapore (IRAS). The BSD rate is progressive i.e. the more expensive your home, the higher the BSD tax. It is thus not uncommon for the BSD to exceed $100,000 for higher priced properties in Singapore.
Let’s use a $1.2 million condo in Singapore as an example. The BSD is calculated using a tiered system: 1% on the first $180,000, 2% on the next $180,000, 3% on the next $640,000, and 4% on the remaining $200,000.
Here is the step-by-step calculation:
- First S$180,000: 1% x $180,000 = $1,800
- Next S$180,000: 2% x $180,000 = $3,600
- Next S$640,000: 3% x $640,000 = $19,200
- Remaining amount: $1.2 million – $180,000 – $180,000 – $640,000 = $200,000
- Next $200,000: 4% x $200,000 = $8,000
Total BSD payable: $1,800 + $3,600 + $19,200 + $8,000 = $28,600
When factoring the BSD amount into your housing budget, do note that the BSD must be paid in cash even if you intend to use your CPF Ordinary Account savings for your mortgage.
To make budgeting easier for you, skip manually calculating your BSD and use the buyer stamp duty calculator from Moneysmart instead.
Additional Buyer Stamp Duty (ABSD)
For Singaporeans buying a second property, or foreigners buying residential property, an Additional Buyer Stamp Duty (ABSD) applies. This can rake up a huge additional cost of up to 20% for some buyers.
How much ABSD to pay depends on a home buyer’s citizenship and property ownership status, with rates generally ranging from 0 to 60%. A Singapore Citizen buying their second property would have to pay an additional 20%, a Singapore Permanent Resident (PR) buying their first property would have to pay an added 5%, and a foreigner would have to pay an extra 60% in ABSD on top of the standard BSD.
To better put numbers into perspective, here’s an in-depth cost breakdown using the same $1.2 million condo as an example:
| Citizenship Status | ABSD First Property | ABSD Second Property | ABDS Third and Subsequent Properties |
| Singapore Citizen | No ABSD | 20% x $1.2million = $240,000 | 30% ABSD |
| Singapore PR | 5% x $1.2million = $60,000 | 30% ABSD | 35% ABSD |
| Foreigners | 60% x $1.2million = $720,000. | 60% ABSD | 60% ABSD |
Renovation & Furnishing Costs
Most resale flats and new condos typically require some extent of renovations. A modest renovation in Singapore can easily cost up to $30,000 while luxury upgrades may even exceed $100,000. Not forgetting, new furniture, appliances, and fittings also add on to your housing budget.
Legal & Miscellaneous Fees
When budgeting for a home, most homebuyers often merely focus on the down payment and monthly mortgage but overlook the “one-off” legal and miscellaneous costs that come at the start. While named miscellaneous, these aren’t optional — they’re essential to complete the paperwork and transaction.
Conveyancing or legal fees
Depending on whether you’re engaging a private lawyer or using the bank’s panel of law firms, legal fees typically range between $2,500 and $4,000. These fees cover the legal work of transferring the property title to your name, ensuring there are no encumbrances on the property, and managing the mortgage documentation.
Valuation fees
Coming at around $500, the valuation fee pays for an independent valuation to confirm the property’s fair market value. This is required by banks before approving your loan so they can make sure they’re not lending more than what the property is worth.
Application fees
Application fees vary across banks — some may waive them as a promotional perk while others may charge a few hundred dollars. While often overlooked, these fees can easily add up especially when borrowing across multiple lenders.
Individually, miscellaneous fees may seem small compared to a six-figure down payment. Yet collectively, they can significantly stretch your upfront budget. Planning for them in advance ensures no unpleasant surprises when it’s time to sign the deal.
Insurance Costs
Insurance is another cost that many buyers underestimate. Beyond protecting homes, these policies are often mandatory and can affect the loan approval process.
Fire insurance
Fire insurance is compulsory for those taking an HDB loan. While basic coverage comes affordably at less than $10 annually, it only covers the structure of the flat sans the furniture, appliances, or renovations. Banks may also require proof of fire coverage for private properties before releasing the loan.
Mortgage insurance
Mortgage insurance such as the Home Protection Scheme (HPS) for HDB buyers, is designed to help pay off any outstanding loans should the homeowner pass away, suffer from total permanent disability, or a critical illness. This is an important safeguard for families as it ensures no one would lose their homes in the worst-case scenario. Those buying private properties can also consider mortgage reducing term assurance (MRTA) or similar products offered by insurers.
Insurance may not take up a huge part of your monthly housing budget but plays a critical role in protecting both your property and giving you a peace of mind. Treat them as part of your essential homeownership toolkit to be catered for rather than an afterthought.
Maintenance & Conservancy Charges
Once you’ve moved into your new home, the recurring upkeep costs begin. Monthly maintenance or conservancy charges may seem minor compared to your mortgage installments but can add up significantly over the years.
For condo owners, monthly maintenance fees typically range from $250 and $500 depending on the size of the unit and facilities provided. These fees go toward maintaining common facilities, landscaping, security, and sinking funds for major repairs.
The HDB equivalent would be the service and conservancy charges (S&CC) that usually come up to between $20 to $90 per month, depending on the flat type. The fees cover basic estate services like cleaning, rubbish collection, and lift maintenance.
While small in amount, ignoring these costs during affordability planning is a common mistake. For a 10-year condo resident, paying $400 per month in fees would have amounted to nearly $50,000 — the equivalent of a small renovation budget. By factoring this in early, you’ll avoid overstretching your finances down the road.
The Role of Finding the Best Mortgage Rates Singapore
One of the biggest and most unpredictable factors in calculating long-term affordability is your mortgage package. A small shift in rates can significantly alter your monthly repayment and total cost of borrowing.
For example, a $600,000 loan over 25 years at 2.6% interest costs about $2,720 per month. If rates rise by just 1% to 3.6%, the installment goes up to $3,030 per month — that’s an additional $310 monthly, or more than $90,000 over the full loan duration.
This is why stress-testing your budget against a higher interest rate is crucial. Always ask yourself if your household can comfortably absorb any increase without compromising on savings or lifestyle before sealing the deal.
HDB loans
HDB loan packages are pegged to the CPF OA rate plus 0.1% and are currently stable at 2.6%. While predictable, this can be slightly higher than introductory bank loan packages.
Bank loans
On the other hand, the bank mortgage loans are pegged to market benchmarks like SORA. They can start lower than the HDB loan rate, but may fluctuate so your monthly installments may rise over time.
The main takeaway — never pick a property that maxes out your current budget. Always buffer for interest rate fluctuations and review your mortgage for refinancing if you chance upon the best mortgage rates Singapore that could lower your long-term costs.
To help you better compare interest rates across banks and find options that keep your budget manageable, consider using tools from platforms like Moneysmart.
Tips for Budgeting Hidden Costs
Make sure to consider the following steps when planning your finances for your next home and you’ll steer clear of unexpected costs:
- Use calculators like a buyer stamp duty calculator.
- Add a 10 to 15% buffer on top of the property purchase price to your budget.
- Factor in long-term costs such as fluctuating interest rates, maintenance fees, and insurance premiums.
- Avoid overusing your CPF — keep some cash for flexibility.
Always Plan Ahead Before Your Purchase
Upfront property prices directly impact the affordability of your purchase but the hidden costs are what makes or breaks your budget. By planning ahead for BSD, ABSD, renovation, legal fees, insurance premiums, and finding the best mortgage rates in Singapore, you’ll conveniently steer clear of unpleasant surprises.
Budget planning for a huge purchase like a home can be stressful. Make sound calculations and confident decisions with Moneysmart’s buyer stamp duty calculator and loan comparison tools.
FAQs
Q: Are BSD and ABSD the same?
No. BSD applies to all buyers while ABSD applies only under specific conditions.
Q: Can BSD be paid with CPF?
Yes, though some fees (e.g. valuation) require cash.
Q: How much should I set aside for renovation?
5 to 10% of purchase price is a safe estimate.
