
Buying Your Second Residential Property: What Are Your Costs, Implications and How Much CPF Can You Use
Many Singaporeans dream of owning a second property, collecting rental and subsequently selling off the investment unit for a good capital appreciation and sitting on a tidy profit.
In this article, we explore a range of considerations that you may consider before taking the plunge. These include:
Your Eligibility
If you own a HDB flat or Executive Condominium (EC):
You cannot buy another property within 5 years due to the Minimum Occupation Period (MOP). After the MOP, you will be subject to TDSR (Total Debt Servicing Ratio) on the next property.
If you own a Private Property:
You are not eligible to buy a HDB or EC until after you have disposed of your current property. If you want to buy subsidised HDB/EC, you will have to wait 30 months.
Downpayment For Multiple Loans
One of the most important factors is the cash required upfront. If you have an existing loan and require a second loan, this is the amount you need:
- 1st property: 5% cash
- 2nd property: 25% cash
The percentage is based on the purchase price, or valuation of the property, whichever is lower.
If you have cleared your first housing loan in full, only the 5% applies.
Loan to Value (LTV) Ratio
Your loan to value (LTV) is the housing loan quantum a bank is willing to loan you based on the valuation of your property.
For your 1st property, the LTV is:
- up to age 65: 75% LTV < 30 years tenure
- up to age 75: 55% LTV >30 years tenure
For your 2nd property, the LTV for a bank loan is:
- up to age 65: 45% LTV < 30 years tenure
- up to age 75: 25% LTV >30 years tenure
For other permutations or 3rd property, consult our Property Science consultants.
You can also read more about LTV here.
Taxes – Buyer's Stamp Duties and Property Tax
This consists of the Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD) and property taxes.
Buyer’s Stamp Duty
Buyer’s Stamp Duty is applicable to ALL property purchases, whether residential or industrial. A simple way to calculate the applicable Buyer’s Stamp Duty:
- Properties above $360,000 but below $1,000,000: 3% – $5400
- Properties above $1,000,000: 4% – $15400
Additional Buyer’s Stamp Duty
The Additional Buyer’s Stamp Duty applies to purchasers of second properties. Singapore citizens will have to pay 12%, permanent Residents pay 15% and foreigners pay 20%.
To understand more about Buyer’s Stamp Duties, read this article.
Property Taxes
The progressive property tax rate is applicable to all properties. You may only have one owner-occupier tax rate so your second property will be subject to a higher rate of 10% whether rented or left vacant. This rate is based on the Annual Value of your property, which is based on its estimated rental. For a detailed explanation, read our article on property taxes and how it affects you.
Total Debt Servicing Ratio (TDSR)
The Total Debt Servicing Ratio (TDSR) is the sum of your total liabilities divided by your gross monthly income.
The TDSR limits the home loan quantum by ensuring your monthly repayments for all your debts – existing mortgage, credit cards, car loans, personal loans, and so on – do not exceed 60 per cent of your monthly income.
If your family’s combined income is $10,000 a month, the TDSR is $6,000. If your total loan liabilities are $4,000, this means your maximum monthly loan repayment is $2,000 ($6,000 – $4,000).
The loan tenure is calculated using the income-weighted age of all borrowers.
If you are unsure about your TDSR calculation, contact your mortgage specialist or speak to Property Science consultants now.
More information on TDSR can also be found HERE.
Using Your CPF Funds
Your Central Provident Fund (CPF) can be used to finance your second property under the Multiple Property Rule. If you have used your CPF for an existing property, you would need to set aside the Basic Retirement Sum (BRS) before you can use the excess savings in your Ordinary Account (OA) for subsequent properties. For 2020, the sum is $90,500. This figure increases every year. To get more information about the BRS, click HERE.
Your Basic Retirement Sum includes amounts in your Ordinary Account, Special Account, investments, and Retirement Account (for over 55 years of age).
Rental Yields
As the second property will be your investment vehicle, knowing the rental yields will help you to make informed choices to maximize your investment. Some condos are more popular than others and command a better yield. Engage an experienced agent or do your own research. These condos tend to be near the MRT and are mixed developments.
You can check past transactions of units in your development or compare it with similar units in your precinct to decide how much your rental rate will be. If you are buying a new project, do factor in more time of vacancy due to defects checking lag time, renovation and competition from other owners renting out their units.
As a side note, do check out the maintenance fee as well. This will eat into your overall profit.
Interest Rates
Interest rates are never fixed. 2020/21 is predicted to be a year of low interest rates. You may wish to check with your banker what the best packages are once your lock-in period has expired to save on paying interest.
Many buyers are also under the perception that if the interest rates double, their installment will double as well. This is untrue as interest only makes up a smaller portion of your monthly mortgage repayment.
However, when calculating your affordability, always have some leeway for higher interest rates. To consult our Property Science consultants about your financial standing, click HERE.
Market Cycle
When you go into the property market plays an important part in whether your investment will make sense or not.
Many factors, including government policies and masterplan, population growth, taxation and the global economy status will affect your investment. Besides location and timing, entry price is a major factor that will either make or break your investment.
If you are considering these issues and wish to discuss with an experienced agent, click HERE.
Lastly, buying a second property requires more careful thought as the purchase will have less leverage and you have to fork out substantially more upfront cash.
Failure to keep up with the installments may lead to you losing both properties.
We urge you to go through your financial plan with a trusted real estate consultant in order to make sure your new acquisition enhances and progresses your portfolio.

We’re here to help you on your real estate journey.
Contact us using the form on this page and our Consultant will be in touch with you very soon.
Or contact us by phone/email.
Call: (+65) 8363 2331 / 8778 8778
WhatsApp: Glynis Tan / Benjamin Yeo
Email: findout@property-science.com