How to Buy Your Second Property
Buying Your Second Residential Property: What Are Your Costs, Implications and How Much CPF Can You Use
Many Singaporeans dream of owning a second property, collecting rental and subsequently selling off the investment unit for a good capital appreciation and sitting on a tidy profit.
In this article, we explore a range of considerations that you may consider before taking the plunge. These include:
Loan to Value (LTV) Ratio
Taxes – Buyer’s Stamp Duties and Property Tax
Total Debt Servicing Ratio (TDSR)
Using Your CPF Funds
If you own a HDB flat or Executive Condominium (EC):
You cannot buy another property within 5 years due to the Minimum Occupation Period (MOP). After the MOP, you will be subject to TDSR (Total Debt Servicing Ratio) on the next property.
If you own a Private Property:
You are not eligible to buy a HDB or EC until after you have disposed of your current property. If you want to buy subsidised HDB/EC, you will have to wait 30 months.
Lastly, buying a second property requires more careful thought as the purchase will have less leverage and you have to fork out substantially more upfront cash.
Failure to keep up with the installments may lead to you losing both properties.
We urge you to go through your financial plan with a trusted real estate consultant in order to make sure your new acquisition enhances and progresses your portfolio.