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What Singaporeans Should Consider Before Buying An Overseas Property
With the sky-high property prices in land-scarce Singapore, many here have considered the possibility of purchasing an investment property overseas. Buying an overseas property can be an investment, or simply a way of building your retirement nest.
Before you heed your impulses to buy into an overseas property, we at GET.com have come up with some things that you might want to consider first.
What Is Your Main Reason For Acquiring An Overseas Property?
Are you looking to rent it out long term or use it for a vacation rental? Rental yields may not be as high as those in Singapore, and you will need to consider that you might need to hire someone to take care of your property.
Be Aware Of The Tax Laws In The Country
Some countries such as Malaysia favours investors and not flippers. This means that developers in Malaysia mostly do not allow investors to sell off their property within the construction period.
Many countries also levy a property gain tax so that will offset against your yield and capital gains.
Obtaining An International Property Loan
Not all banks here offer an international property loan, but some of the ones who offer include UOB, DBS, ANZ and OCBC.
When it comes to financing your overseas property, you should consider what are the credit facilities available to you, as well as their respective payment processes.
Here are some aspects you need to take note of:
1. Loans
- Take note of your loan currency & interest rates.
- Compare loans from both local and overseas banks.
- Note that the total debt servicing ratio applies to overseas property loans as well.
2. Know The Costs Involved
Overseas properties do not necessarily provide better value and returns than local ones even if they are cheaper.
You need to understand all related costs and financing limits involved in buying foreign property so that it doesn't become a financial burden.
There are typically 2 types of costs involved: Transaction costs and Operating costs.
Transaction costs will include legal fees, state consent fees, stamp duties and valuation. Operating costs will be insurance, taxes, mortgage interest and maintenance fees.
3. Documents You Need
In order for the banks to assess your eligibility, you generally need to submit the following documents:
- Copy of NRIC / passport
- Copy of employment pass / work permit (for foreigners)
- Income documents
- Pay slips from the last 6 months
- CPF contribution history of last 12 months
- Reservation form / contract for sale
Take Your Time!
Buying a property overseas can take on substantial risk due to unfamiliarity with the market and foreign laws. In fact, investors take on more risks compared to buying property on home ground.
A property purchase anywhere is a big decision because of the huge costs involved, so you should definitely take your time to research every detail!
This article was originally on the GET.com blog at: What Singaporeans Should Consider Before Buying An Overseas Property.
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