Should you buy a second home as an investment?? (Part 1 – Cost)

Is it impo@ssible to buy two house in singapore???

As there will be too many numbers, this topic will be a two part series with the final one connecting all of them together.

Before buying it is always important to know ALL costs/factors behind them.

Cost Factors – Upfront fees before getting your keys

  • Buyer Stamp Duty Tax (BSD) – On property price
    • 1% for the first 1$80k
    • 2% for the next $180k
    • 3% for the remaining amount
  • Additional Buyer Stamp Duty Tax (ABSD) – On property price [On top of your BSD]
    • 7% (Second Property) – Singaporean Rate
    • 10% (Third & Subsequent properties onward) – Singaporean Rate
    • 5% (First Property) – Singapore PR
    • 10% (Second Property & Subsequent properties onward) – Singapore PR
    • 15% (First Property & Subsequent properties onward) – Foreigners
  • Legal/Valuation/Fire insurance FeesUSED TO be absorbed by the banks (Now you have to pay)
    • Market Rate for legal fees are 0.4% of the property price
    • Valuation fees are done by the bank before providing loans – $200 to $500
    • Fire Insurance range from – $100 to $300 per anum
  • Condo Payment
    • Option Fee – 1%
    • Options Exercise Fee – 4%
    • Downpayment – 15%

Other Factors – How many people you can rent it to/Loan

  • Total Debt Servicing Ratio (Everyone living in Singapore is tagged with it to prevent over borrowing/ debt repayment failure)
    • Capped at 60%
    • Meaning, money used to service the loan cannot exceed 60% of your total income.
      • Example : You are paying $1,000/monthly for your HDB Loan, $1,000/Monthly for your Car Loan and $400 Credit Card Loan/Monthly with a monthly Salary of $7,000.  Which means you can only loan $1,800  [$7,000 x 0.6 =$4,200 – $2,400 (current loan) = $1,800] – Computation is based on a FIXED monthly income.
        • TSDR considers your gross monthly take-home income (EXCLUDE CPF Contribution by employer) | Plus it also considers your Annual Variable Income ( Bonuses, Commissions and Rental income) at 5.8%  & if your bonus and commissions are fixed they would be calculated at 1%. [Situation where you have both fixed monthly income and variable income] – Thanks CORY 🙂 
        • If all these are too confusing for you, you can just type all your numbers down and it will crunch it out for you HERE
        • If your salary is a variable one, you have to first minus 30% of it which leaves you 70% of your variable monthly income. Then computate 60% of it(70%)!
  • Loan-to-Value (LTV) limit (How much percent can you loan from your property price)
    • First House – 80%
    • Second House – 50%
    • Third House – 40%
  • Renting 
    • HDB  – Minimum Occupation Period of 5 years ( You have to stay for 5 years before subletting out your flat, Including RESALE FLAT – Thanks Foolish Chameleon!)
      • 1/2 Room – 4
      • 3 Room – 6
      • 4/+ room – 9 (you can click to check the HDB board)
    • Condo/Landed
      • Maximum 8 people (No matter how big the unit is) – Each occupant should have at least 10 Sqm of space.
    • All have to be rented out for at least 6 months and max at 3 years


As daunting and intimidating as the cost can be, is there a way around it??? hmm?

p.s Do let me know if there are missing information!

+1 knowledge point



6 thoughts on “Should you buy a second home as an investment?? (Part 1 – Cost)

  1. Pingback: Should you buy a second home as an investment?? (Part 2 – Revenue) |

  2. Pingback: Should you buy a second home as an investment?? (Part 2 – Revenue)

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