Legal contract a seller grants a buyer that locks in the right to buy at a stated price within an option period (usually 14–21 days), in exchange for an option fee.
An Option to Purchase is a legal contract a property seller grants a buyer, giving the buyer the exclusive right to purchase at a stated price within a defined option period — usually 14 to 21 days for private property.
The OTP is the formal starting point of the transaction. Until you exercise it, you're not bound to buy; once exercised, you're committed and must complete.
Option fee: paid by the buyer when the OTP is granted. Typically 1% of purchase price for private property; S$1,000 for HDB.
Exercise fee: paid when you 'exercise' the OTP (commit to buy). Usually 4% of purchase price for private (so cumulative deposit is 5%); S$4,000 for HDB.
If you don't exercise: the option fee is forfeited — non-refundable. The seller can then sell to another buyer.
Apply for housing loan In-Principle Approval (IPA) if you don't have one yet.
Engage a conveyancing lawyer.
Arrange building inspection (especially for older properties).
Confirm CPF usage if applicable.
Review the actual property title and any encumbrances.
Decide before the option period expires.
Stamp duty (BSD + ABSD) is payable within 14 days of OTP exercise.
Completion typically follows 8 – 12 weeks after exercise (private), or once HDB processing is complete (HDB resale).
On completion: balance of purchase price paid, title transferred, keys handed over. Monthly mortgage instalments begin.
If the buyer cannot complete after exercising, they lose the entire 5% deposit and may face further damages.
A legal contract a property seller grants a buyer, giving the buyer the exclusive right to purchase at a stated price within a defined option period (typically 14 – 21 days for private; varies for HDB). The buyer pays an option fee to receive the OTP.
Option fee: paid when the OTP is granted — typically 1% of purchase price for private (S$1,000 for HDB). Exercise fee: paid when you commit to the purchase — typically 4% of price for private (S$4,000 for HDB). Cumulative deposit is 5% of price.
The option fee is forfeited (non-refundable). The seller can then sell to another buyer. If you exercise and fail to complete, you typically lose the entire 5% deposit and may face damages claims.
BSD and ABSD must be paid to IRAS within 14 days of OTP exercise (not signing of the OTP). Late payment triggers penalties — get the stamp-duty cash ready in your account before exercise.