You will be able to list the professional fees you pay and the insurance cover you need at completion.
Completion is when the professionals and the paperwork come in. You need a lawyer and usually two kinds of compulsory insurance, and you should get every fee in writing before you sign anything that commits you to it.
Farah and Hakim were buying a home together. A week before completion, Farah's list of things to pay besides the flat itself ran to eleven lines. She had expected the lawyer. The fire insurance policy the bank insisted on was news to her, and so was a second insurance form from CPF Board. She still couldn't decide about a mortgage insurance plan an agent had pitched at the viewing. Bills around completion come from several places: the law firm, the bank, HDB, CPF Board and any insurer you deal with.
Conveyancing is the legal work of moving ownership into your name and, where there is a loan, registering the bank's or HDB's mortgage over the home. A lawyer does it.
Which lawyer you use depends on the property and the loan. If you buy an HDB resale flat with an HDB loan or no loan, you can generally use either HDB's own conveyancing service or a private law firm. If you buy an HDB resale flat with a bank loan, you usually need a private law firm. Every private property buyer uses a private law firm. Banks often have a panel of law firms they work with. The law firm handles the stamp duty, the CPF applications, the loan documents and the completion itself.
Legal fees vary with the property, the loan and the firm, so ask for a written quote that lists the legal fee and every disbursement. Disbursements are third-party costs the law firm pays on your behalf, such as search fees and registration fees. Farah and Hakim asked two firms from their bank's panel for quotes and took the one whose quote listed every item. It came to about S$3,000 with disbursements. CPF can usually pay legal fees for the purchase.
If the bank offers a legal fee subsidy, check whether a clawback comes with it. Lesson 5.3, "Lock-ins, clawbacks and the real cost of a package", covers the clawbacks that can come attached to a legal fee subsidy.
Two kinds of cover are usually compulsory, and which ones apply to you depends on how you buy.
The first is fire insurance, which protects the building structure against fire damage. HDB requires borrowers with an HDB loan to take HDB's own fire insurance for the flat. A bank makes fire insurance a condition of its loan, and the bank's offer letter states what the policy must cover and whether you can choose your own insurer. Fire insurance covers the structure only, so it does not pay for your renovation or belongings. If you want those covered, you need separate home contents insurance, and whether to buy it is your choice.
The second is the Home Protection Scheme (HPS), mortgage-reducing insurance run by CPF Board. If you use CPF to pay the monthly instalments on an HDB flat, you generally have to be covered by HPS, whether the loan comes from HDB or a bank. If an insured owner dies or becomes permanently incapacitated, HPS pays off the remaining loan for that owner's share, up to the scheme's limits. HPS premiums can be paid from CPF. To check whether HPS applies to you, and how cover is shared between owners, use the CPF Board website.
Both applied to Farah and Hakim. They needed fire insurance because of the bank loan, and HPS because they planned to pay S$1,500 a month of the instalment from CPF.
Banks and agents often suggest mortgage-reducing term insurance, a life policy whose cover falls in line with the loan balance. You don't need it to get a bank loan. Whether you need it at all depends on whether your existing life cover already protects your family from the loan, and HPS may already cover part of that risk.
Don't decide on this at a viewing, which is where Farah was pitched hers. Work out the sum first, then buy afterwards if you need it at all. The course Insurance Decoded teaches how to choose life cover. Its lesson 2.2, "Subtract what already covers you: DPS, HPS, group plans and savings", shows how to count HPS in your existing cover, and lesson 2.3, "Set the term from your youngest dependant and your loan", covers sizing life cover to a loan.
A typical completion list includes:
the legal fee and disbursements a valuation fee HDB or registration fees fire insurance the first HPS premium stamp duty, if not yet paid for a bank loan, any fee a subsidy did not cover
Some of these costs can be paid from CPF and some must be paid in cash, and they don't all fall due on the same day. Your lawyer should give you a completion statement, a document showing each amount due, its payment source and when it is due. Read it line by line before the appointment. For each line, note the amount, whether it comes from CPF or cash, and the due date. Ask the lawyer about anything you don't recognise.
Get every fee in writing before you sign anything that commits you to it. That includes the lawyer's quote, the bank's list of fees and insurance conditions, HDB's fees and any insurer's quote. You can compare a written fee, question it and check it against your budget, while a fee mentioned only in passing tends to turn into a surprise later.
Farah wrote a source beside each of her eleven lines, and the list became the fees section of their purchase timeline. Your list goes into your purchase timeline the same way, with a source beside each fee and policy.
In the activity below, list every fee and policy you would need at completion, and who quoted or set each one.
List every fee and insurance policy you would need at completion, and who quoted or set each one.
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