Master Property Investing: 7 Essential Terms Every Investor Must Know – Money News

Why Singaporeans Love Property (and How to Make Them Yours)

From indulging in hawker delights to lining up for MRT tickets, Singaporeans share a handful of common passions. The crown jewel among them? The obsession with owning property. Everyone’s dream: a cozy nest for themselves or a savvy investment that keeps on giving.

Yet, having a dream isn’t the same as turning that dream into a reality. Most folks don’t have the tools and savvy to become a savvy property investor.

Step Up Your Game: Master the Essential Terminology

Want to be ready for the property market? Start by familiarising yourself with these seven must-know terms that every investor should grasp.

• Local vs. Foreign Buyer – Know the rules that protect your territory.
• Cash Flow – Because money in and out of your investment matters.
• ROI (Return on Investment) – Quickly gauge how giggle-worthy your profit is.
• PSU (Public Sector Undertaking) – The big government players in property.
• Vacancy Rate – A simple barometer of how much your place sits idle.
• Lenders & Interest Rates – Don’t get buried in low interest “deals” that turn wicked.
• Smart Home Features – Make your property the next-level chosen by tech-savvy buyers.

7 key terminologies to know if you want to elevate your property investing game

1. Mortgage Servicing Ratio

What the BS Is About the Mortgage Servicing Ratio

Ever wonder why your landlord’s mortgage seemed to hover around 30 % of your income? That’s the Mortgage Servicing Ratio (MSR) doing its thing. In plain English, MSR is the slice of your paycheck you’re allowed to chew on when paying off a home loan.

Quick Buzz‑Bits

• Cap it in the bag: MSR tops out at 30 %.
• Who’s in the game? It matters for borrowers with HDB flats or executive condominiums (ECs).
• Why it matters: That 30 % ceiling dictates the biggest loan you can bite into.

The Numbers Behind the Curtain

Let’s break down the math (yes, it’s not as scary as it looks). Roll the dice with this formula:

MSR = (Monthly repayment instalments for all property loans ÷ Gross monthly Income) × 100%

And remember: MSR ≤ 30 %. So, if your total monthly mortgage bite goes beyond that, you’re not getting the loan you fancy.

What If You’re Feeling Stuck?

Got a 30 % cap hanging over your head? You’ve got two options:

1. Trim your borrowing: Define a realistic loan amount that doesn’t push you beyond that slice.
2. Boost your income: A higher gross can shift that percentage down, freeing up more room for a larger loan.

Bottom Line

MSR is the financial “Do‑Not‑Cross” line for mortgage repayment. Keep it in check, stay within the 30 % band, and you’ll keep your loan playbook happy and your wallet breathe easy.

2. Total Debt Servicing Ratio

What’s the Deal with Home‑Loan Caps?

Got a house? Almost. Whatever property you’re eyeing—whether it’s an HDB apartment, an Executive Condominium, or a snazzy private build—there’s a rule in place that keeps your monthly debt from going off the rails. It’s called the Total Debt‑Servicing Ratio (TDSR).

Key Take‑aways of TDSR

• Cap. Your total debt repayments can’t eat up more than 60 % of your monthly income.
• All‑inclusive. Every loan—mortgages, car loans, student debt, even those pesky credit‑card balances—counts toward that 60 %.

In other words, imagine your net monthly earnings are a jar. Every sort of debt is a scoop inside. Once you’ve packed that 60 % of the jar, you’re done. Anything above that and the banks will basically say, “Sorry, we’re only lending up to the 60 % line.”

How to Play It Right (No TDSR‑Silencing Tricks)

• Put the house first. Make your mortgage the top priority in your repayment schedule.
• Keep other debts tidy. Avoid stacking up on credit‑card or car loans before you’ve locked in that home loan.
• Future plans come later. Once the mortgage is solid, you can think about that shiny new car, or that fancy gadget. Just remember it will push you toward the TDSR limit.

Bottom Line

There’s no way to dodge TDSR— it’s a built‑in safety net that keeps borrowing in check. The trick is to treat it as a budgeting rule: keep that 60 % line in view, prioritise your home loan, and you’ll ride the wave without getting tossed into the debt surf.

3. Buyer Stamp Duty

Buyer Stamp Duty (BSD) – The Tax That’s Always on the House Buying Table

When you snag a property, there’s one more thing you have to drop money on: Buyer Stamp Duty (BSD). Think of it as the tax whisperer that follows you from the very first stamp to the final title transfer.

What BSD Actually Is

• Where it comes from: It’s paid to IRAS (the tax authority) and treats your property purchase as a form of property tax.
• Who it touches: Whether you’re buying a cozy condo or a big commercial warehouse, BSD is on the menu for both.
• How it’s calculated: The price used is either the purchase price or the market price—whichever is higher.

BSD Rate Breakdown (Scales with Your House Price)

Wanna See BSD in Action?

Suppose you buy a home for $400,000. Here’s how that tax splits:

Can You Dodge BSD?

Short answer: No. BSD is a non‑negotiable fee for every property buyer. It’s the reality of owning property—like a silent contract that says, “pay up or we’ll call the tax office.”

Quick Takeaways

• BSD is a mandatory payment, whether you’re buying a private home or a commercial space.
• The rates climb with the price, and you’ll pay the highest rate that applies to the portions of the property value.
• Plan your budget accordingly; that extra tax can noticeably shift your total cost.

So, the next time you’re dreaming of a new place, remember BSD is the tax that will pop up at the checkout. It’s not optional—just another part of the property‑shopping experience. Chat with your agent, double‑check those numbers, and you’ll have your BSD accounted for before you move in. Cheers to your new home, BSD included!

4. Additional Buyer Stamp Duty

Cracking the ABSD Code: A Friendly Guide for Your Singapore Home Hunt

Buying a property in Singapore might feel like a high‑stakes game of Monopoly, and one of the biggest twists is the Additional Buyer Stamp Duty (ABSD). Fortunately, this extra tax can be avoided if you’re clever about your buying profile. Below is a quick, chuckle‑worthy rundown of who pays ABSD and how you can dodge it.

Who Gets the Extra Duty?

The ABSD is like a toll that kicks in depending on your status and how many houses you own:

• Singapore Citizens (SC) – Only after buying two or more homes.
• Permanent Residents (SPR) – From the very first home onward.
• Foreigners – From the first property they purchase.
• Entities (companies, developers, etc.) – From the first home as well.

ABSD Rates Over the Years

ABSD rates have fluctuated with each policy tweak. Below is a snapshot (in a friendly bullet format) of what you’d face depending on your buyer type and the period you’re in:

• Singapore Citizens:
  • First home: Not applicable
  • Second home: 7% (2013‑2018) → 12% (2018‑2021) → 17% (2021‑present)
  • Third+ home: 3% (2011‑2013) → 10% (2013‑2018) → 15% (2018‑2021) → 25% (2021‑present)
• Permanent Residents:
  • First home: 5% (since 2013)
  • Second home: 10% (2013‑2018) → 15% (2018‑2021) → 25% (2021‑present)
  • Third+ home: 10% (2013‑2018) → 15% (2018‑2021) → 30% (2021‑present)
• Foreigners: Flat 10% (2011‑2013), 15% (2013‑2018), 20% (2018‑2021), 30% (2021‑present)
• Entities:
  • Standard: 10% (2011‑2013), 15% (2013‑2018), 25% (2018‑2021), 35% (2021‑present)
  • Housing developers: +5% non‑remittable (both 2018‑2021 & 2021‑present)

Can You Actually Skip the ABSD?

Yes it’s possible, but it’s not as simple as slapping on a “Free” sticker. The trick hinges on your buyer profile. If you’re currently a PR or foreigner and you want to dodge ABSD, you can do the following:

• Get de‑coupled— meaning you and your partner each own a different property individually.
• Transformer into Singapore Citizens (SC) – consider ways to establish citizenship or at least spend long enough (e.g., 7 years residency) to qualify the first home as a “first‑time” SC purchase.
• Make sure both partners have sufficient income so each can secure a separate mortgage. (No magic here—the banks still crunch numbers.)

Why De‑coupling Works

The logic is simple: an SC buying a first residential property does not pay ABSD. If you split the ownership, each of you can claim that the property you own is your first one, shaving off the extra duty.

Final Word – Stay Smart, Stay Light

ABSD is a tax you just have to plan for. It’s not a permanent dam, just a height that changes each year. With a bit of savvy, a dash of patience, and perhaps a heartfelt “citizenship” marathon, you can enjoy your new home with fewer stingy deductions. Happy house hunting!

5. Seller Stamp Duty

Why This 9‑Month Tax is Called the Seller Stamp Duty (SSD)

Picture this: you buy a house, and the next day you’re already thinking about selling it for a quick profit. Governments, in their infinite wisdom, invented something called Seller Stamp Duty (SSD) to slow this “flipping” frenzy. Think of SSD as a polite but firm reminder that if you sell within three years of purchase, you might owe a chunk of your gains to the state.

Quick Snapshot of SSD Rules

• Unlike the Buyers Surcharge (BSD) or Additional BSD (ABSD), SSD is paid by the seller.
• It only applies to residential properties or residential lands bought after 20 February 2010.
• The longer you keep the property, the lighter the tax—because patience pays off.

SSD Rates According to How Long You Keep It:

How to Dodge the SSD Bullet?

The secret sauce? Just wait—let the clock tick past the three‑year mark. Once you’re over a three‑year holding period, the SSD vanishes into thin air like a bad joke at a family dinner. No extra fees, no extra headaches.

Pro Tip for the Perpetual Flipper:

Try setting a reminder on your phone that says, “Hey, remember to think of the SSD after three years!” It’s the gentle nudge that keeps you from turning your property into a quick‑sell lottery junkie.

Essential Takeaway

• If you flip a property in under three years, expect a 12%–4% tax bite.
• Stretch your hold beyond the three‑year mark, and you win: zero SSD, pure profit.
• In short, patience isn’t just a virtue—it’s your newest financial strategy.

When you’re thinking about real estate, remember: the best transaction isn’t always the fastest one. Sometimes, letting time do its thing is the most cost‑saving move you can make.

6. Rental yield

How to Spot a Stellar Rental Property: Your Quick‑Guide to Rental Yield

Thinking about buying a house to make cash on the side? Before you hand over your hard‑earned cash, you’ll want to know how much this property will actually earn you. That’s where rental yield comes in – it’s like a health check for your investment, telling you whether the property is a money‑making machine or a financial pothole.

What Is Rental Yield?

Rental yield is simply the return you’ll get from renting out a property, expressed as a percentage of the cost of the property (or of your down‑payment, if you’re feeling daring). Think of it as the “yield” of a savings account, but instead of a bank, the account is your rental property.

Quick Formula Cheat Sheet

• Gross Rental Yield: Annual Rent ÷ Market Value – This tells you the raw earning power.
• Net Rental Yield: (Annual Rent – Mortgage – Insurance – Maintenance) ÷ Market Value – The real, take‑home profit you’ll see.
• Down‑Payment Yield (Aggressive Spin): (Net Annual Rent) ÷ Down‑Payment – Useful if you’re focusing on the equity you’re putting in front of the bank.

Why Should You Care About Yield?

Rental yield gives you a snapshot that says “yes, this will pay my mortgage” or “nah, this will barely cover the costs.” Instead of getting lost in how much you’re paying, you get to see how much the money is doing for you.

Consider this: a cozy condo in a bustling square might fetch a high rent, giving it a booming yield, while a sun‑bleached cottage in a sleepy town might look lovely but struggle to keep a tenant—resulting in a shabby net yield that could drain your bank account.

Bottom Line

Build a quick spreadsheet with these formulas, plug in your numbers, and you’ll instantly see if the property is a high‑yield, bang‑for‑your‑buck find or just a costly headache. Remember, higher yield usually equals higher risk, so always balance the return against your risk tolerance and the property’s location, condition, and market trends.

Now you’re armed with the knowledge to make a smarter, happier investment decision. Happy house hunting!

7. Refinancing

Making Big‑Ticket Property Purchases Feel Easy (and Keep Your Wallet Happy)

Buying a house is a monumental step, and paying the full price upfront? That’s a myth. Most folks wind up juggling a monthly mortgage instead of paying a single lump sum. Financing is the secret sauce that lets you get into your dream home without breaking the bank.

What’s Refinancing Usually About?

• Switching Up Your Loan: Once you’ve moved past the lock‑in period (usually two to three years), you can change to a different home‑loan package. It’s called refinancing.
• Interest Rates are Wiggly: They fluctutate daily. By refinancing, you can grab the lower rates whenever they pop up, cutting those nasty interest charges that add up over time.

How to Nail Smart Refinancing

When you’re ready to lower that interest rate, the smart play is to shop around. Think of it like comparing the latest phones: you want the best features at the lowest price. Unfortunately, reaching out to each of the 11 banks in Singapore can feel like an exhausting treasure hunt.

Enter the Mortgage Master—your trusted sidekick that does the legwork for you. With a broker, you get:

• All the latest market offers in one glance.
• A crystal‑clear view of which deals have the lowest rates or the coolest perks.
• The freedom to make the best refinancing choice without the headache of endless call‑outs.

In short, a good broker is like having a seasoned friend who knows every aisle in the financial supermarket. They’ll point out the deals that most people would miss—and keep your home‑ownership journey smooth.

Why This Matters

Refinancing doesn’t just reduce your monthly payments; it’s a way to squeeze out every penny of potential savings. A low interest rate translates to fewer fees, a shorter loan term, and ultimately a less stressful mortgage experience.

So, if you’re planning to buy or already own property, keep an eye on the market, talk to a broker like Mortgage Master, and refinance when the time feels right. Your future self will thank you for making that smart move.

— Originally published by Mortgage Master. All rights reserved.