Can I Afford This? Salary Benchmarks For Upgrading To A Condo In Different Districts

It is no secret that condos come with a hefty price tag, but just how much do they cost? We let you in on the costs of upgrading to a condo, including downpayment, stamp duty fees and the sky-high purchase prices.

There's absolutely nothing wrong with staying in an HDB flat. Aside from the affordable prices, the space is usually much bigger than that of a condo unit. But let's face it, who wouldn't want to purchase a condo unit if they had the financial means to?

However, upgrading to a condo unit isn't going to come cheap. Aside from the high purchase prices, there are also the stamp duty fees, downpayment, monthly repayments, maintenance fees, and the list goes on.

We've also included a rough estimate of how much you and your spouse should be earning to be able to afford a condo in different districts to put things into perspective.

Costs of upgrading to a condo

#1 Additional Buyer’s Stamp Duty (ABSD)

If you’re upgrading to a condo from an HDB flat, one of the biggest decisions you’ll have to make is whether you’ll buy your condo before or after selling your flat.

If you choose the former, you will be subjected to a 12% Additional Buyer’s Stamp Duty (ABSD) since it is your second property. That’s an additional S$144,000 assuming the condo you purchase is priced at S$1.2million that you will be paying with cash or CPF.

However, don’t fret. You will be able to get back this sum of money as long as you sell your existing HDB flat within six months of your upgrade, which is known as an ABSD remission. But if you want to keep your existing HDB flat, the money will not be reimbursed to you.

For those who don’t want to fork out the additional sum of money, you can always choose to sell your HDB flat before purchasing your new condo. However, this also comes at an additional cost as you may have to find temporary accommodation while waiting for your new unit to be ready. So it’s really up to you which you would prefer.

#2 Loan-To-Value (LTV) Limit and minimum downpayment

The LTV and the outstanding mortgages affect the minimum downpayment that you have to pay as well as the minimum amount you have to pay in cash.

This table is only for loan tenures that don’t exceed 30 years or for buyers that do not exceed 65 years old when the tenure ends.

In this case of an upgrade, if you take a home loan when you already have an outstanding one, the bank will only let you take a loan of up to 45% of the purchase price or valuation (whichever is lower). The downpayment that you will have to pay is 55%, which totals up to a whopping S$660,000 for a S$1.2million condo unit. What most homeowners would do is pay off the existing home loan first before taking up another loan.

#3 Prepayment penalty

This brings us to the next point. Once you sell your house, you will have to settle your outstanding home loan before taking up another loan for your new home. The good news is that if you took up an HDB loan for your existing flat, you won't incur any penalty fees if you finish paying off the loan earlier.

On the flip side, if you took up a bank loan, most banks impose a penalty fee to make up for the interest that they would lose by terminating your loan early. Usually, the penalty fee ranges from 1% to 1.5% of the outstanding amount, but it differs according to each bank. That’s an additional sum of money on top of the lump sum you’ll have to fork out for your outstanding loan payment, which isn't cheap.

#4 Other costs

On top of the costs mentioned above, there are still other costs that you have to factor in when you upgrade to a condo.

• Stamp duties and legal fees

Also known as conveyancing fees, it ranges from S$2,500 to S$3,000 depending on the kind of house you buy. Normally, the bank that you’re taking a loan from would already have a law firm that you can use by default. If you find a cheaper law firm, you can also request to switch to that instead.

There’s also the Buyers Stamp Duty (BSD) you need to pay.

• Monthly loan repayment

Since you’re upgrading to a condo, an HDB loan isn’t an option for you. Bank loans typically range between 1.2% to 3% p.a. You also have to decide if you want a fixed-rate packaging, a floating rate package, or a combination of both.

Fixed-rate home loans generally give you peace of mind knowing that your monthly repayments for each month stay the same, regardless of market conditions. And this usually lasts for a specific period of time between one to five years.

As for floating rates, you may sometimes get a rate lower than a fixed rate package, though it may also be priced higher, according to the market. They also vary in lock-in period, which means that any repricing and refinancing within this period will subject you to a penalty fee.

If your house costs S$1.2million without any existing mortgage, the highest amount you can loan from the bank is 75% of the price, which comes up to S$900,000. Assuming you take a loan tenure of 30 years at a 1.5% p.a. interest rate, your monthly repayments will amount to about S$2,500, which can be paid in cash or via CPF.

• Maintenance fees

 Most condos have a monthly maintenance fee of about S$250 to S$350 to upkeep the amenities and facilities. The fee varies based on the share value of your unit, which means that the bigger the floor area of your property, the higher the maintenance costs you have to pay. 

If you’re gunning for a luxury condo, do note that the maintenance fees can come up to S$800 and even over $1,000 dollars, so make sure you factor in these monthly recurring costs within your budget. 

• Property taxes

The amount of property taxes you have to pay depends on the Annual Value (AV) of your condo, which is the estimated gross annual rental value of the property. Simply multiply the AV of your property with the Property Tax Rates that apply to you. You can always refer to the Inland Revenue Authority of Singapore (IRAS) site for more details.

You can also check the AV of your property through “View Property Dashboard” on their website.

• Renovations

The renovation fees for each property vary according to the extent of renovation being done. As a general gauge, the renovation cost for condos generally ranges from S$40,000 to S$50,000. 

If you’re considering taking up a renovation loan, do note that there is a cap of S$30,000 or six months of your income (whichever is higher). However, interest rates are generally very high, between 3% to 4.2% p.a.

Not enough cash to pay for renovations? Consider a personal loan instead, and compare the competitive interest rates across all loans here.

How much is a new launch condo?

How much is a resale condo?

Core Central Region (CCR)

This area consists of three districts, mainly 9, 10, 11 as well as Downtown Core Planning Area and Sentosa. Because it is considered the heart of Singapore, purchasing a property, let alone a private property, in this area is definitely going to come with a hefty price tag.

The central region is largely known for the CBD district which is home to numerous major commercial buildings in  Singapore's main prime metropolitan area. It also houses Singapore’s famous Orchard shopping belt, which has many high-end restaurants, malls and hotels.

The Rest of Central Region (RCR)

This region is defined as the “non-core central region”, though it still falls within the central region. This region is mid-tier for condos, and prices aren’t that cheap either since it is very near the CBD district. Even HDBs in this region command a much higher asking price.

For homeowners who can’t afford property in the CCR, this is the next alternative. This region has also gained traction among foreigners who value affordability but yet want to live in close proximity to the CBD.

Outside Central Region (OCR)

This region is basically other zones that are not part of RCR and CCR. It comprises 33 areas, which are districts 16-19 and 22-28. Generally, condos in this area should cost the least compared to the other two regions since they are not close to central.

However, though these properties are not centrally located, that does not mean that they are inaccessible. Because of Singapore’s excellent transport system, these places are also highly connected and accessible by MRT and by bus, making it an appealing location for many Singaporeans as well.

The higher-priced regions located in OCR include Changi, Hougang, Serangoon and Ang Mo Kio.

Bottom line

If you had to have one takeaway from this entire article, it would probably be that upgrading to a condo is very expensive. Though we have broken down for you the estimated salary per month needed to afford a resale condo, bear in mind that there are other additional lump sum costs like renovation fees and property taxes that you’ll have to pay.

A large increment or promotion may call for a celebration, and tempt you to upgrade to a condo since you think you can afford it. But it does come with a lot of hidden costs that you may have overlooked. So be sure to consult an agent or financial advisor and plan your finances properly before committing to an upgrade.