Disclaimer (Block 1): This article is for educational purposes only and is intended to assist CEA-registered property agents in understanding regulatory frameworks. It does not constitute financial, tax, or legal advice. LEVR's calculations are indicative only. Always verify rates and eligibility with your bank, HDB, CPF Board, or a licensed financial advisor before advising clients.
Step 1 — Confirm ABSD Profile and Total Stamp Duty
Before viewing properties, establish the buyer's ABSD status. ABSD is assessed based on how many residential properties the buyer (and any co-purchaser) owns at the time of exercising the OTP — not signing the S&P. Run the calculation:
- SC purchasing 1st residential: 0% ABSD, BSD only
- SC purchasing 2nd residential: 20% ABSD
- SC purchasing 3rd+: 30% ABSD
- SPR purchasing 1st: 5% ABSD
- SPR purchasing 2nd+: 30% ABSD
- Foreigner (any): 60% ABSD
For a buyer purchasing with a spouse who owns a different number of properties, ABSD is computed on the basis of the co-purchaser with the higher count. Never assume the buyer has correctly self-assessed their property count.
Step 2 — Check TDSR and LTV Borrowing Capacity
Private resale purchases typically require bank financing. The Total Debt Servicing Ratio (TDSR) caps all debt obligations (including new mortgage) at 55% of gross monthly income. LTV limits apply based on the number of outstanding property loans:
- No outstanding property loan: LTV 75% (loan tenure ≤30 years, borrower ≤65)
- 1 outstanding property loan: LTV 45%
- 2+ outstanding property loans: LTV 35%
Agents should run an indicative TDSR check using the buyer's income and existing liabilities before identifying target price ranges. Clients who are stretching TDSR should have an In-Principle Approval (IPA) from a bank before signing any OTP.
Step 3 — Conduct Title Search and Encumbrance Check
A title search via the Singapore Land Authority (SLA) reveals the current registered owner, any outstanding mortgages, caveats lodged by third parties, and other encumbrances. The buyer's solicitor should conduct this search before OTP exercise, not after.
Key items to check:
- Registered owner matches the seller (confirm no power-of-attorney complications)
- Existing mortgage — ensure discharge is part of the completion undertaking
- Any caveats from prior buyers (could indicate a failed prior transaction)
- Any restrictive covenants or easements affecting use of the property
- Tenure confirmation (freehold vs leasehold; if leasehold, remaining years)
Step 4 — Check URA Approved Use and Zoning
For non-standard property types (shophouses, mixed-use developments, dual-key units marketed as investment), verify the URA Master Plan zoning and approved use. Residential units in commercial buildings may be subject to different financing terms. Buyers intending to rent out may need to check minimum tenancy period rules (URA 3-month minimum for private residential).
Check the property's gross floor area on the approved plans — strata area stated in marketing materials includes balconies and voids which are not fully usable floor space.
Step 5 — Review Management Corporation (MCST) Status
For strata-titled properties (condominiums, cluster houses), request the MCST financials from the seller or managing agent:
- Outstanding maintenance fees owed by the current owner (become buyer's liability)
- Sinking fund balance — low balance may signal upcoming special levy
- Any pending special levy already approved at AGM
- Pending litigation involving the MCST (structural defects claims, contractor disputes)
- Age of lifts, major M&E systems, and scheduled replacement timelines
Step 6 — Verify CPF Withdrawal Limits
CPF can fund the down payment and monthly instalments for private resale, subject to the Valuation Limit (VL) and Withdrawal Limit (WL). The VL is the lower of the purchase price or the property's market valuation at the time of purchase. CPF usage above 120% of the VL requires the buyer to set aside the Basic Retirement Sum (BRS) in their CPF OA/SA/RA.
The accrued interest at 2.5% per annum on prior CPF withdrawals also accumulates — older buyers who have used significant CPF for prior properties may have limited remaining CPF capacity. Confirm this with CPF Board or a HLE/IPA application before the OTP is signed.
Step 7 — Understand the OTP and Completion Timeline
Private resale OTPs are negotiated between parties (unlike HDB's portal-prescribed format). Standard practice in Singapore:
- Option period: typically 14 days (negotiable)
- Option fee (1%): non-refundable if buyer does not exercise
- Exercise fee (4%): paid on exercise, total deposit becomes 5%
- Completion: typically 10–12 weeks from exercise
- BSD due: within 14 days of exercising S&P
- ABSD due: within 21 days of OTP grant date
Agents should review the OTP terms carefully before the buyer signs: completion date, extension clauses, condition on vacant possession, and any agreed fixtures to be retained (e.g., built-in wardrobes, kitchen appliances). Items agreed verbally but not in the OTP are not enforceable.
Q: Is a valuation required for private resale purchases?
A: There is no mandatory independent valuation for private resale purchases (unlike HDB resale, which requires an OVA from HDB). However, the bank will conduct their own valuation before approving the mortgage. If the bank's valuation comes in below the purchase price, the buyer must fund the shortfall (valuation gap) in cash, as the bank lends only against the lower valuation.
Q: What if the seller has not fully discharged their existing mortgage?
A: In most private resale transactions, the seller's existing mortgage is discharged at completion using the net sale proceeds. The buyer's solicitor obtains an undertaking from the seller's bank to discharge the mortgage upon receipt of the redemption sum. This is standard practice and does not normally delay completion — but the buyer's solicitor should confirm the redemption amount before the completion date.
Q: Can the buyer pull out after exercising the OTP?
A: After exercising the OTP (paying the 4% exercise fee), the buyer has a binding S&P contract. Failure to complete exposes the buyer to forfeiture of the 5% deposit and potential action for specific performance or damages. The buyer cannot simply walk away without financial consequence.
Disclaimer (Block 3): LEVR's calculator outputs are estimates based on inputs provided and current regulatory parameters as known at time of publication. They are not a guarantee of borrowing capacity, stamp duty liability, or CPF eligibility. Regulatory thresholds and rates may change. Always verify with IRAS, your bank, or a licensed financial advisor before making financial decisions.