13 Terms You Should Know Before Buying Properties

13 Terms you should know Before Buying Properties, Welcome to the exciting world of property purchase, where you could better prepare for your future home through better knowledge and experience.

One of the things that might scare you when you first step into the world of real estate, however, might just be all the complicated lingos that are often thrown around. You might fear that you’ll be cheated because you don’t understand what any of these words mean.

Not to worry – here comes sensei to guide you down the murky path. Class is in session!

1. CSC

Otherwise known as the “Certificate of Statutory Completion”. It’s a certificate to prove that a building has been completed and that all the legal requirements have been met (safety, building design, etc).

It is issued by the Commissioner of Building Control and usually given after the Temporary Occupation Permit (TOP) is issued.

2. Downpayment

The initial payment you must pay when purchasing a house. It’s the remaining portion of money from the amount that your bank is willing to lend you for the purchase.

The downpayment can usually be paid partly in cash and partly using your CPF account.

3. En-bloc

A collective sale where owners of private properties sell to a developer for en bloc redevelopment. There is a need to have at least 80% of the strata title share before the collective sale can proceed.

Developers usually favour this avenue to acquire land when Government Land Sales are limited in supply.

4. Freehold

If a property is a freehold title, or you might see this term – estate in fee simple; it means that anyone who owns it, holds the ownership forever.

5. Leasehold

This type of property, on the other hand, is one where you only own part of the right to occupy the land for a given amount of time (either 99 years or 999 years). And once that lease is up… the land revert to the government. But that’s a topic for another time.

6. LTV

Or Loan to Value. It is the amount of money you borrow for a property’s mortgage (otherwise known as “mortgage quantum”) divided by the total appraised value of the property.

LTV is one of the risk factors that lenders such as your bank assess when deciding whether if you qualify for a mortgage loan.

7. MOP

The Minimum Occupation Period is the length of time a HDB flat buyer has to stay in before you are allowed to sell it (as of this writing, it stands at 5 years).

8. OTP

Option to Purchase is the right, but not the obligation, given by the seller of a property to the purchaser within a specific period of time. As a purchase, you must purchase the property within this period in order for the transaction to be valid.

9. Plot Ratio

Very straightforward – it is the total area on all floors of all buildings on a certain plot divided by the area of the plot. In other words, it tells you the density of property development on that piece of land.

10. $psf

A very common term you will usually find when house-hunting on real estate websites. It means “Per Square Foot”, and it’s a unit of measurement for an area. $/psf is the total price of the property divided by the land area (in square feet).

11. SIBOR

The Singapore Interbank Offered Rate (SIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market).

It is similar to the internationally used LIBOR (London Interbank Offered Rate).

How will this affect you? Well, if banks have to increase the interest rates in the market for other banks, that means they will increase the interest rates for your home loans too. Everyone’s gotta make a living based on how the economy is like, after all.

12. Strata title

A form of ownership that you and a group of people have over apartment blocks or condominiums. Yes, that means the ownership is shared among all of you. It is distinct from the form of ownership a landed property owner will have (over the entire land).

13. TOP

Basically, it’s a permit given by the Commissioner of Building Control that grants permission for owners and tenants to occupy a building only after certain requirements are met.

And that about covers it! More often than not, property advisors like myself will help you through the complicated process of homeownership, but if you are ever feeling anxious over your lack of knowledge over these terms… well, there you go. All prepped and ready to plan on your own.