What Are the Hidden Costs in Buying Property?
What Are the Hidden Costs in Buying Property?
Blog Article
Buying a property is a major financial decision. While most buyers prepare for the obvious expenses like the down payment and home loan, many overlook the hidden costs that can catch them off guard. These hidden costs can add thousands to your budget, so it's important to know what you're really getting into.
Let’s break down the common hidden costs you should be aware of when buying a property.
1. Buyer’s Stamp Duty (BSD)
In many countries, especially in Singapore, Buyer’s Stamp Duty (BSD) is one of the biggest hidden costs. This tax is payable on the property’s purchase price or market value — whichever is higher.
Example for Singapore:
1% on first $180,000
2% on next $180,000
3% on next $640,000
4%-6% on any amount above that
If you’re buying a property worth $1.5 million, your BSD alone can be tens of thousands of dollars.
2. Additional Buyer’s Stamp Duty (ABSD)
If you’re buying a second property, a property as a foreigner, or as a copyright, you may have to pay ABSD. This varies depending on your residency status and number of properties owned.
It’s easy to overlook ABSD, especially if you’re eyeing property for investment purposes. This cost can dramatically change your affordability range.
3. Legal Fees
Every property purchase must go through legal conveyancing. This is handled by a lawyer or law firm, and legal fees can cost anywhere from $2,000 to $4,000 or more, depending on complexity and whether it's a new launch or resale.
Pro tip: Some developers may subsidize legal fees for new launches, so ask before engaging a lawyer.
4. Valuation Fees
Before granting a loan, banks often require a property valuation. This is done by a professional appraiser and can cost between $300 and $500. It’s not typically covered in your home loan, so be prepared to pay this separately.
5. Home Loan Processing Fees
When applying for a mortgage, banks may charge a loan processing or administrative fee, which usually ranges from $200 to $500.
While this amount may seem small compared to the overall cost, it adds to your upfront expenditure.
6. Mortgage Insurance
Some lenders require you to take up mortgage insurance. This protects the lender (and your family) in the event of death or permanent disability.
Examples in Singapore include:
Home Protection Scheme (HPS) for HDB flats
Mortgage Reducing Term Assurance (MRTA) for private properties
Cost varies based on age, loan amount, and tenure — it’s best to get a quote early.
7. Fire Insurance
Banks typically make fire insurance mandatory when approving a loan. This is different from home content insurance and usually only covers the building’s structure.
Though it’s relatively affordable (starting from $100 per year), it’s still a hidden cost many overlook.
8. Renovation and Furnishing
If you're buying a resale flat or even a new BTO/HDB, be prepared for renovation costs, which can range from $20,000 to $100,000, depending on your preferences.
Don’t forget to include:
Furniture and appliances
Lighting and fans
Curtains or blinds
Kitchen equipment
These expenses add up quickly and can impact your cash flow significantly.
9. Maintenance Fees
For condominiums or private apartments, you’ll be liable to pay monthly maintenance fees. These cover upkeep of shared facilities like swimming pools, gyms, and security.
Fees can range from $200 to $500 or more per month, depending on the development and unit size.
10. Property Tax
Once you own the property, property tax becomes a recurring cost. The amount depends on whether it’s owner-occupied or rented out, and is calculated based on the Annual Value (AV) of your property.
In Singapore, for example, non-owner-occupied residential properties attract a progressive tax rate, potentially higher for luxury units.
11. Agent Commission (for resale buyers)
If you're buying a resale unit and engaged an agent, you might need to pay commission, usually about 1% of the purchase price.
Note: This fee is negotiable and sometimes waived if the seller’s agent co-brokes the deal.
12. Moving Costs
Once the property is ready, you’ll need to hire movers, which can cost from $500 to $2,000 depending on how much stuff you have and the distance.
Don’t forget to budget for:
Utility setup charges
Internet and cable installations
Cleaning services
13. Interior Design and Home Styling
If you're planning to create your dream home with a unique interior, hiring an interior designer or home stylist can add significantly to your costs.
Design packages often start from $10,000 and go upwards based on complexity and customization.
14. Early Repayment or Lock-in Penalties
If you decide to sell your property early or refinance your loan, be aware of potential lock-in period penalties.
Banks may charge you:
A percentage (e.g. 1.5%) of the outstanding loan
Admin fees for early termination
Always check the fine print in your loan contract.
Final Thoughts
Buying a property is more than just paying the sticker price. All these hidden costs can add up to 5%–10% of the property price — sometimes more.
To avoid surprises:
Get a breakdown of all costs from your agent or lawyer.
Compare home loan packages with hidden charges in mind.
Build a buffer into your savings (ideally 10%-15% more than expected costs).
Being financially prepared not only gives you peace of mind but ensures a smoother transition into your new home.
Important Links
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