What is an Option to Purchase (OTP)?

An Option to Purchase (OTP) is a legal agreement between a property seller and a buyer. The buyer pays an option fee (typically 1% of the purchase price for private properties) to the seller, who then grants the buyer the exclusive right to purchase the property at an agreed price within a specified period (usually 14 days, known as the option period).

Do I need a lawyer to buy private property in Singapore?

Yes, it is mandatory to engage a lawyer (conveyancing lawyer) to handle the legal aspects of a private property transaction in Singapore. They will conduct due diligence, prepare legal documents, handle the transfer of funds, and ensure the property title is properly transferred to you.

What are the typical upfront costs when buying private property?

Upfront costs include the downpayment (cash and/or CPF), Buyer's Stamp Duty (BSD), Additional Buyer's Stamp Duty (ABSD if applicable), legal fees, valuation fees, and potentially an option fee. Our Full Property Buying Calculator can help you estimate these.

Step-by-Step Guide to Buying Private Property in Singapore

Financial Planning & Affordability Assessment

Before you even start browsing property listings, the most crucial step is to understand your financial capacity.

Assess Your Savings: Determine how much cash and CPF Ordinary Account (OA) savings you have available for the downpayment, stamp duties, legal fees, and other upfront costs.
Check Your Loan Eligibility: Understand the Loan-to-Value (LTV) limits and Total Debt Servicing Ratio (TDSR). Use our Affordability Calculator to get an estimate of the property price you can realistically afford and the potential loan amount.
Budget for Ongoing Costs: Beyond the mortgage, factor in property tax, maintenance fees (especially for condos), home insurance, and potential renovation costs.

Obtain an In-Principle Approval (IPA) for Your Home Loan

An In-Principle Approval (IPA) or Approval-in-Principle (AIP) from a bank is a preliminary indication of how much they are willing to lend you. It's not a formal loan offer but gives you confidence when making an offer on a property.

Approach several banks to compare their loan packages or engage a reputable mortgage broker. Our Mortgage Loans Guide can help you understand different loan types.
Provide necessary documents (income proof, credit history, etc.).
An IPA is typically valid for 30 days.

Property Search & Viewings

With your budget and IPA in hand, you can start your property search.

Define your requirements: location, property type (condo, landed), size, amenities, lease tenure (freehold vs. leasehold).
Utilize online property portals, engage a property agent (buyer's agent), or look for new launch projects.
Attend viewings and thoroughly inspect properties. Consider factors like unit condition, facing, noise levels, and surrounding environment.

Make an Offer & Secure the Option to Purchase (OTP)

Once you've found a suitable property:

Negotiate the purchase price with the seller or their agent.
Upon agreement, the seller will grant you an Option to Purchase (OTP).
You will need to pay an **Option Fee** to the seller, typically 1% of the agreed purchase price. This fee reserves the property for you for a specified period (usually 14 days, known as the Option Period). During this time, the seller cannot offer the property to anyone else.

Appoint a Lawyer & Exercise the Option

During the Option Period:

Appoint a Conveyancing Lawyer: Engage a lawyer to handle the legal paperwork for the property transaction. They will conduct due diligence (legal checks on the property).
Secure Formal Loan Offer: If taking a bank loan, submit your OTP to your chosen bank to get a formal Letter of Offer (LO) for your mortgage.
Exercise the Option: If you decide to proceed, you must exercise the OTP within the Option Period by signing it and paying the **Option Exercise Fee** (typically 4% of the purchase price for private properties, paid to your lawyer's conveyancing account or directly to the seller as per OTP terms). This, combined with the Option Fee, usually forms the initial 5% cash component of your downpayment.

Once the Option is exercised, it becomes a legally binding Sale and Purchase Agreement (S&PA).

Pay Stamp Duties

After exercising the Option (or signing the S&PA), you are required to pay stamp duties to IRAS:

Buyer's Stamp Duty (BSD): Payable on all property purchases.
Additional Buyer's Stamp Duty (ABSD): Payable if you are a foreigner, or a Singapore Citizen/PR purchasing your second or subsequent residential property.

Stamp duties are typically payable within 14 days of exercising the OTP. Your lawyer will assist with this. Use our Stamp Duty Calculator for an estimate, or refer to our BSD & ABSD Guide for details.

Completion of Sale & Key Collection

The completion date is usually 8 to 12 weeks after exercising the Option, as stated in the OTP/S&PA.

Pay Balance Downpayment: You'll need to pay the remaining portion of your downpayment (cash and/or CPF).
Loan Disbursement: Your bank will disburse the loan amount to your lawyer, who will then pay the seller.
Legal Completion: Your lawyer will complete the legal transfer of property ownership.
Key Collection: Once the sale is completed, you will receive the keys to your new property!

Post-Completion Matters

Arrange for utilities (electricity, water, gas).
Plan for renovations, if any.
Update your address with relevant authorities.
Start servicing your monthly mortgage payments.

Important Note:

This guide provides a general overview of the private property buying process in Singapore. Timelines and specific procedures can vary. It is crucial to engage qualified professionals (property agent, lawyer, mortgage banker/broker) to guide you through your specific transaction.

Use our Full Property Buying Calculator to get a comprehensive estimate of all associated costs.