Staying in a condominium feels different from staying in a HDB flat. There is security, a swimming pool, a gym, barbecue pits and also the feeling of a high end living environment. It gives someone a rich feeling perhaps? Nowadays condominiums are going high tech. My uncle's condominium, which he just bought last year, has an auto lock door function.
Now, you may be looking at one of these condos:
Nice to have a gym with a nice urban scenery? How much is the price?
Here you go:
Credits: http://www.sgnewpropertyproject.com/listing/the-panorama/
I hope you expected that it was this price. Did it dash your hopes of buying a condominium? Time to break down the money you need in order to own one of these.
Most likely an average person will go for a 2 bedroom or a 2 + Study type. Let's make the price at $900,000 for easier calculations.
Can you afford a $900,000 condominium in Singapore?
Maximum loan tenure you can take from the bank is at 35 years now. The maximum loan amount you can take is 80% of the market value of the house. This is only for loan tenure of up to 30 years. If your loan if more than 30 years, you can only borrow 60% of the market value of the house. This is the Loan to value (LTV) ratio.
Another thing to take note is the Total Debt Servicing Ratio (TDSR). It is at 60% currently. This means you can only use a maximum of 60% of your gross monthly income to pay for all loans. This include all your other loans including car loans, credit card debts, students loans and personal loans etc.
Let's say you do not have any other loans currently so you can use up fully the 60% ratio. You also take the maximum LTV ratio at 80% so loan tenure is 30 years.
Below are the summarised details:
- Property Price: $900,000
- Loan tenure/period: 30 years
- Loan amount: $720,000 (80%)
- Down payment: $180,000 (20%)
The monthly repayment when calculated based on a 2% interest will be $2661/month.
You can only use 60% of your gross income to pay the loans. This means you need a monthly gross income of $4435.
*However, MAS requires financial institutions (FI) to use a higher interest rate of 3.5% when calculating monthly loan repayments. Thus, at 3.5% you're require to have a gross monthly income of $5388.53 to qualify for a $720,000 loan for 30 years.
*However, MAS requires financial institutions (FI) to use a higher interest rate of 3.5% when calculating monthly loan repayments. Thus, at 3.5% you're require to have a gross monthly income of $5388.53 to qualify for a $720,000 loan for 30 years.
Now, having a income of $5388.53 sounds quite easy especially if you are a degree holder working at the manager level. But don't forget, you still need to pay 20% down payment. This amount is $180,000. Now, it doesn't look that cheap any more. Furthermore, you can only pay 15% of the 20% downpayment by CPF and you'll need to pay 5% of it by cash or cheque. This is 75% of $180k by CPF and 25% by cash. This sums up to $45k by cash.
In any case even if you can afford the down payment, i don't think you'll want to use 60% of your income to pay the monthly instalment. By the end of every month, you'll be left with nothing much. It is also dangerous to have such high ratios of debt to income. In the event you lose your job, you'll be stressed out.
Probably an income of $8870 would be comfortable to own a condominium. In this way, you'll only be using 30% of your income for the property.
P.S: If you're unsure about your loan eligibility or wish to apply for a new housing loan, contact me at sgyi@homeloanwhiz.com.sg for a complimentary consultation today. I'm a mortgage broker who compare the rates against 16 different banks and financial institutions in Singapore to provide you the best housing loan package at the lowest interest rates. Refinancing enquires are welcomed too. Click here for more information on the services I provide.
*Do take note that there is a Mortgage servicing ratio (MSR) of 30% for Executive Condos (EC) bought directly from developers. This means you can only use 30% of your gross monthly income to pay for EC housing loan instalment. The above condo, The Panorama, is used for illustrations only. If it is an EC, then the respective 30% MSR applies.
*Disclaimer - The above calculations are used for illustrations only. It does not reflect the actual loan that you will qualify. When in doubt, check with a licensed financial institution for more information.
*Disclaimer - The above calculations are used for illustrations only. It does not reflect the actual loan that you will qualify. When in doubt, check with a licensed financial institution for more information.
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