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How Much Should You Be Earning to Afford a Condo?

Updated: Oct 14, 2020

The average price of a 2-bedroom condominium in Singapore is close to $1.5 million. However, the region where the condominium is located is a major deciding factor in the price of the unit. Average prices of condos located in Core Central Region (CCR) will be costlier than those located in the Rest of Central Region (CCR), which are costlier than those in Outside Central (OCR). Let us take a look at a few examples:

Before jumping into the purchase of a condominium, there are a few things to consider – loans, downpayment, living expenses, and monthly maintenance fees. We will be looking at a $1.3 million condominium in this scenario.

Loans & Downpayment

Purchasing a condominium does not come with any government loan or subsidies. If you do not have sufficient funds to purchase the condo in one go, the best option would be to take on a bank loan.

Banks can only loan up to 75% of the property price, and the borrower has to meet the Total Debt Servicing Ratio (TDSR) limit of 60%. The remaining 25% of the property price will be the downpayment; minimum of 5% in cash and the remaining (20% or lesser) through CPF.

Property price: $1.3 million

Downpayment (cash, 5%): $65,000

Downpayment (CPF, 20%): $260,000

Bank loan (75%): $975,000

Monthly loan repayment: $3,653 (assuming an interest rate of 2.1%)

Living Expenses & Monthly Maintenance Fees

The breakdown of living expenses is as follows:

Food and entertainment: $1,000

Transport: $200

Parents’ allowance: $500

Insurance: $500

Others (Netflix subscriptions, mobile bills, utilities, etc.): $100

Total: $2,300

In general, maintenance fees range from a few hundreds to a thousand. We will use $300 in this scenario.

Monthly maintenance fees: $300

Monthly living expenses: $2,300

Total Amount Needed Per Month Monthly living expenses + monthly maintenance fees + bank loan repayment = $2,300 + $300 + $3,653 = $6,253 (take home salary).

After factoring in CPF amount, you should be earning $8,316.25 for a $1.3 million condominium. This does not include the downpayment which you need to pay upfront. In addition, this amount is assuming that:

  • You have no debts

  • You qualify for the 75% Loan-to-Value loan limit

  • You have a good credit score and the bank will approve your loan

  • Interest rate for bank loan is 2.1%

  • You are a first-time property buyer (will not need to pay Additional Buyer Stamp Duty (ABSD) of 12%)

Contact Mortgage Consultancy now to get the smartest financial bank loan advice specifically for your home. We are able to provide more than 100 loan packages from 16 banks for you to compare and choose from! Feel free to contact us at +65 8556 5271 so that we will be able to help you make an informed decision, suited to your needs.

*Above figures are for illustration and does not constitute to any form of advice. Please consult Mortgage Consultancy Team if you need further clarifications.

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