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Ki Residences is developed by Link: Hoi Hup Realty and Sunway Group. The two developers have been doing partnership projects for 11 years in Singapore and is well known in the market. Their track records include Ki Residences Singapore, Royal Square At Novena, Sophia Hills, Arc At Tampines and many more.

Do you know the positives to buying a property Off the plan? Off the plan properties are marketed heavily to Singaporean expats and interstate buyers. The main reason why many expats will purchase Off the plan is that it takes most of the stress from finding a property back in Singapore to invest in. Because the apartment is new there is not any must physically inspect the web page and usually the place is a good location close to any or all amenities.

What is ‘off the Plan’? Off the plan is when a builder/developer is constructing a set of units/apartments and will look to pre-sell some or each of the apartments before construction has even began. This kind of purchase is call purchasing off plan as the buyer is basing the decision to purchase based on the plans and drawings.

The typical transaction is a deposit of 5-10% will likely be paid during signing the contract. Hardly any other payments are required whatsoever until construction is done upon which the balance of the funds have to complete the acquisition. The amount of time from signing in the contract to completion can be any length of time really but generally no longer than two years. Other features of purchasing Off the plan include:

1) Leaseback: Some developers will offer a rental guarantee for a couple of years post completion to provide the customer with comfort around prices,

2) In a rising property market it is really not uncommon for the value of the apartment to boost causing an outstanding return on investment. In the event the deposit the buyer put down was 10% and also the apartment increased by 10% within the 2 year construction period – the purchaser has seen a 100% return on their own money because there are no other costs involved like interest payments etc inside the 2 year construction phase. It is not uncommon for any buyer to on-sell the apartment prior to completion turning a fast profit,

3) Taxation benefits who go with purchasing a new property. They are some good benefits and in a rising market purchasing Off the plan can be well worth the cost.

What are the negatives to purchasing Ki Residences Floor Plan Singapore Off the plan? The primary risk in purchasing Off the plan is obtaining finance with this purchase. No lender will issue an unconditional finance approval for an indefinite period of time. Yes, some lenders will approve finance for Off the plan purchases but they will always be susceptible to final valuation and verification in the applicants financial circumstances.

The maximum time frame a lender will hold open finance approval is six months. Which means that it is far from possible to arrange finance prior to signing an agreement with an Off the plan purchase just like any approval might have long expired when settlement is due. The danger here is that the bank may decline the finance when settlement arrives for one of the following reasons:

1) Valuations have fallen and so the property will be worth less than the first purchase price,

2) Credit policy has evolved leading to the property or purchaser will no longer meeting bank lending criteria,

3) Interest rates or even the Singaporean dollar has risen resulting in the borrower no more having the capacity to pay the repayments.

The inability to finance the balance of the purchase price on settlement can resulted in borrower forfeiting their deposit AND potentially being sued for damages in case the developer sell the house cheaper than the agreed purchase price.

Examples of the above risks materialising in 2010 during the GFC: Through the global economic crisis banks around Australia tightened their credit lending policy. There have been many examples where applicants had purchased Off the plan with settlement imminent but no lender prepared to finance the balance in the purchase price. Here are two examples:

1) Singaporean citizen residing in Indonesia purchased an Off the plan Ki Residences Sunset Way in 2008. Completion was due in September 2009. The apartment was actually a studio apartment with an internal space of 30sqm. Lending policy in 2008 before the GFC permitted lending on this type of unit to 80% LVR so just a 20% deposit plus costs was required. However, after the GFC the banks begun to tighten up their lending policy on these small units with lots of lenders refusing to lend in any way while some wanted a 50% deposit. This purchaser was without enough savings to pay a 50% deposit so needed to forfeit his deposit.

2) Foreign citizen located in Australia had invest in a property in Redcliffe Off the plan during 2009. Settlement due April 2011. Purchase price was $408,000. Bank conducted a valuation and also the valuation started in at $355,000, some $53,000 beneath the purchase price. Lender would only lend 80% from the valuation being 80% of $355,000 requiring the purchaser to put in a bigger deposit than he had otherwise budgeted for.

Do I Need To buy an Off the Plan Property? The writer recommends that Singaporean citizens living overseas considering purchasing an Off the plan apartment should only achieve this if they are in a strong financial position. Ideally lisldj could have a minimum of a 20% deposit plus costs. Before agreeing to purchase an Off the plan unit you ought to talk to a specialised mortgage broker to ensure that they currently meet home loan lending policy and really should also consult their solicitor/conveyancer before fully committing.

Off the plan purchasers can be great investments with a lot of many investors doing very well from the buying of these properties. You will find however downsides and risks to buying Off the plan which have to be considered before committing to the investment.

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