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 Reasons : Why Do Singaporeans Still Flood The Property Market?

Jayson Ang – November 17, 2024 –

Singapore's property market has been a hot topic of discussion for many years, with its resilience and growth attracting both...

All Buying Tips Opinion

Dual-Key Condo: Analysing The Pros And Cons

Jayson Ang – November 16, 2023 –

TLDR for "Dual-Key Condo: Analysing The Pros And Cons" When considering dual-key condo units, it's important to weigh the advantages...

All Buying Tips Opinion Selling Tips

The Unforeseen Impact on Your Home Loan in Singapore if Your Spouse Passes Away

Jayson Ang – September 25, 2026 –

TLDR The death of a co-borrower in Singapore can trigger complex home loan challenges beyond simply taking over repayments. Banks...

Mandarin Top 5

Top 5 Places to Learn About Singapore’s Diversity

Jayson Ang – August 31, 2024 –

Singapore, a vibrant city-state in Southeast Asia, is well-known for its diverse culture and rich history. A melting pot of...

All Buying Tips

How to Avoid Forfeiting Your Security Deposit: A Guide to Your Rental Property

Jayson Ang – July 30, 2023 –

TLDR When bidding farewell to your rented property, ensure the safe return of your security deposit by: Regular Aircon Servicing:...

All Buying Tips Opinion

Is It Better To Purchase A Larger HDB Or A Smaller Condo For $1 Million In 2025?

Jayson Ang – August 14, 2025 –

TLDR When comparing a large, centrally located resale flat (e.g., 5-room HDB) with a small condo around the $1 million...

All Blog Posts Buying Tips

What is a Tenancy Agreement (TA)

Jayson Ang – July 21, 2023 –

TLDR When it comes to understanding property jargon, it's crucial to familiarize yourself with the specifics of a Tenancy Agreement...

All Opinion

Why Aren’t Spacious, Wallet-Friendly Homes Our Reality Yet?

Jayson Ang – April 17, 2024 –

TLDR The article discusses the current housing market in Singapore, focusing on the challenges faced by individuals like Sherlyn Tan...

Mandarin Top 5

Singapore’s Luxury Real Estate Market: The 5 Most Luxurious Neighborhoods

Jayson Ang – May 14, 2023 –

The 5 most expensive neighborhoods in the city, and are home to some of the most exclusive and opulent properties...

Mandarin Top 5

Top 5 Best Unique Nighttime Experiences in Singapore

Jayson Ang – December 13, 2024 –

Singapore, a vibrant city-state known for its stunning skyline and diverse culture, truly comes alive at night. As the sun...

All Buying Tips Opinion

Should You Pay For A Buyer Agent?

Jayson Ang – August 10, 2025 –

TLDR The idea of making buyers pay their own property agents in Singapore, as suggested by SEAA, makes sense in...

All Buying Tips Opinion

Prioritizing Your Property Search in Singapore: A Practical Framework

Jayson Ang – July 26, 2026 –

TLDR Buying property in Singapore can feel overwhelming, so prioritization matters. Start with price and future downside risk: stay within...

All Buying Tips Opinion Selling Tips

5 Warning Signs of New Launch Condominiums That Certain Property Agents Might Not Disclose to You

Jayson Ang – November 29, 2025 –

TLDR When buying a new launch condo, don’t just rely on show flats or sales pitches—look deeper. Watch out if...

All

Find Your Dream Home: Top 5 Property Investments for Families in Singapore

Jayson Ang – March 22, 2024 –

As one of the most prosperous countries in the world, Singapore is an attractive destination for families looking to invest...

All Opinion Selling Tips

Selling Your Home in Singapore Independently: 7 Key Considerations

Jayson Ang – September 22, 2026 –

TLDR Selling your home in Singapore independently can save on agent commissions but requires significant effort and the right circumstances....

All Buying Tips Opinion

Most Buyers Miss This Condo Checklist Item — Until It’s Too Late

Jayson Ang – April 18, 2026 –

TLDR When buying a condo, many overlook the importance of the Management Corporation Strata Title (MCST) and its finances. Beyond...

Mandarin Top 5

Top 5 : Benefits of Investing in Newer vs. Older Singapore Property Market Condos for International Buyers

Jayson Ang – January 4, 2025 –

Singapore's property market has always been an attractive investment option for international buyers, thanks to its stable economy, strategic location,...