Your search results

Mortgage Interest : The True Cost of Buying and Owning Properties in Singapore

Posted by Jayson Ang on March 16, 2023

| All

| 0

TLDR

When considering buying a property in Singapore, it’s crucial to understand the true costs and risks involved. High monthly repayments can be challenging, especially with fluctuating interest rates. Buyers should assess their holding power and not overextend themselves financially. Strategic decisions like selling, downgrading, or gear refinancing can help manage repayments effectively. It’s essential to weigh the potential capital gains and losses against interest rates before making a property investment in Singapore.

Are you thinking of buying a property in Singapore? Whether you are already a homeowner or just starting to explore the market, it is important to understand the true cost of owning a property, especially with prices reaching all-time highs.

In this article, I will share one of my client’s experience of owning a condominium worth $2 million, with a 75% loan at a floating rate. After four years, the property has appreciated to $2.48 million, but the interest rate has increased from 1% to 3.55%, making the monthly repayment of $6,700 with $4,000 going into interest servicing.

If you are feeling the pain of owning a property due to high monthly repayments, it may be time to consider your options. I advised my client to either sell and downgrade to a lower-priced property, cashing out the difference of $400,000 to $500,000 to use as a buffer for monthly repayments, or do a gear refinance to retain the property while cashing out a certain amount of money. By doing either, my client would be able to realize the profit he made, nearly 100% on his capital of $500,000, after taking into account the down payment.

I emphasise the importance of understanding the risks and rewards of buying a property in Singapore, particularly in terms of interest rates and potential capital gain and loss. Most home buyers in Singapore take up mortgage loans, with many going for the full 75% loan in a low-interest environment. While this is a good strategy to ride the wave up, it also means that buyers are highly leveraged, with a 25% down payment. If the property price goes up by 25%, they will gain 100% return on capital. However, if the property price goes down by 25%, they will lose their entire capital if they sell.

I will advise buyers to consider their holding power and not to overstretch themselves when committing to buying a property. Monthly mortgage repayments include the principal and interest, with interest being an expenditure. In a high-interest environment, someone who borrows 75% to buy a house will have to pay 3.75% of the property price in the first year in the form of interest, translating to roughly $75,000 for a $2 million property or around $6,000 a month in just interest payments alone.

In summary, while buying a property in Singapore can be a good investment, it is crucial to understand the risks and rewards, particularly in terms of interest rates and potential capital gain and loss.

Be mindful of your holding power, and don’t overstretch yourself when committing to a property. Consider your options if you are feeling the pain of high monthly repayments, such as selling and downgrading or doing a gear refinance.

With the right strategy, you can realize the profit you make and enjoy the rewards of owning a property in Singapore.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

Mandarin Top 5

Top 5 Hawker Centres in Singapore for Local Food

Jayson Ang – February 24, 2024 –

Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...

All Blog Posts Opinion

Singapore Property Bubble Ahead? My Friends Share My Market Predictions

Jayson Ang – March 12, 2023 –

TLDR The author delves into various opinions on the Singapore property market for the year 2023. Experts have differing views...

All Buying Tips

Multiple Property Ownership in Singapore: A Different Landscape in 2025

Jayson Ang – July 22, 2025 –

TLDR Owning multiple properties in Singapore in 2025 is tougher due to higher Additional Buyer’s Stamp Duty (ABSD), stricter Loan-to-Value...

All Buying Tips Opinion

The Sneaky Role of Property Appraisals in Shaping Singapore’s Home Prices

Jayson Ang – January 20, 2024 –

TLDR When it comes to the real estate market in Singapore, understanding property valuations and the impact on mortgage loans...

All Buying Tips

ANALYSIS: Unveiling the HDB Towns with the Steepest and Lowest Price Surges!

Jayson Ang – August 17, 2024 –

TLDR The real estate market for HDB flats in Singapore has witnessed significant growth, with prices reaching new highs. The...

All Buying Tips

A Guide to Purchasing a New Launch Condo in Singapore in 2023

Jayson Ang – October 26, 2023 –

TLDR When buying a new launch condo in Singapore, start by planning your finances to determine loan and property limits....

Mandarin Top 5

Top 5 : Dangerous Ideas Singapore Property Investors Have

Jayson Ang – March 5, 2025 –

Singapore's property market has long been considered a safe and lucrative investment option for both local and foreign investors. The...

All Blog Posts Buying Tips

4 Simple Strategies to Help Future Homeowners Save Money

Jayson Ang – July 15, 2023 –

TLDR When it comes to being a new homeowner, it's essential to prioritize regular maintenance to avoid costly repairs down...

All Buying Tips Opinion Selling Tips

$1.5 Million HDB Flats: Their Locations and Reasons Behind Being Singapore’s Priciest Public Housing

Jayson Ang – December 2, 2025 –

TLDR Singapore’s HDB resale market has entered a new phase, with at least 13 flats sold for $1.5 million or...

All Blog Posts Buying Tips

Learn How To Negotiate For The Best Price When Purchasing a Resale HDB Flat

Jayson Ang – February 17, 2023 –

Navigating the complexities of purchasing a resale HDB flat requires honing negotiation skills and market awareness. Understanding property valuations, seller...

Buying Tips Mandarin Top 5

5 Reasons Why You Should Consider Investing In Singapore Real Estate

Jayson Ang – August 1, 2023 –

TLDR Investing in Singapore real estate offers attractive tax incentives, low cost of living, high rental yields, market reliability, diversification...

All Buying Tips

Single, Over 35, and Searching for a Home? Here’s Your Guide to Choosing Between an HDB and a Condo!

Jayson Ang – January 21, 2025 –

At the age of 35, a single Singaporean starts a significant year, highlighted by the long-awaited chance to buy their...

Mandarin Top 5

Top 5 Best Urban Hiking Trails in Singapore

Jayson Ang – April 8, 2025 –

Singapore, known as the Garden City, is a bustling metropolis that offers a multitude of parks and nature reserves for...

All Opinion

Budget 2024: What To Expect For The Singapore Residential Market?

Jayson Ang – February 18, 2024 –

TLDR In 2025, owner-occupiers of residential properties can benefit from property tax relief based on the Annual Value Band. Retirees...

Mandarin Top 5

The 5 Secrets To Successful Singapore Property Investing Revealed

Jayson Ang – July 4, 2024 –

The vibrant property market in Singapore has attracted numerous investors and speculators looking to profit from the nation's thriving conditions....

Mandarin Top 5

Discover Singapore: 5 Must-See Attractions for a Culture Lovers’ Paradise

Jayson Ang – June 21, 2025 –

TLDR Singapore stands out as a top destination for culture lovers, offering a rich blend of heritage and modernity through...

All Buying Tips

Sell High Buy High : Will This Still Make You a Profit?

Jayson Ang – December 7, 2022 –

TL;DR Summary: Timing of Property Sale: Selling high and buying high may seem counterintuitive, but understanding market dynamics can...

All Blog Posts Buying Tips

5 Facilities Selling Points Condo Sellers Should Emphasize To Entice Potential Buyers

Jayson Ang – May 23, 2023 –

TLDR When selling a condo, focusing on highlighting key facilities like gyms, swimming pools, family-friendly amenities, community gardens, and clubhouse...