Option to Purchase (OTP) Guide \u2014 Singapore
The OTP is the single most important document in a property transaction. It locks in your right to buy \u2014 and puts real money on the line. Here's everything you need to know.
Answer: An OTP gives the buyer the exclusive right to purchase a property within a fixed period. For private property, the buyer pays a 1% option fee upfront and has 14 days to exercise by paying the 4% exercise fee (5% total deposit). For HDB resale, the option fee is $1\u2013$1,000 with a 21-day exercise window. If you don't exercise, you forfeit the option fee. The seller is bound and cannot sell to anyone else during the exercise period.
OTP: HDB Resale vs Private vs New Launch
| Detail | HDB Resale | Private Resale | New Launch |
|---|---|---|---|
| Option fee | $1\u2013$1,000 | 1% of price | $5,000\u2013$10,000 |
| Exercise period | 21 calendar days | 14 days | 21 days (3 weeks) |
| Exercise fee | None (separate) | 4% of price | 4\u20134.5% of price |
| Total deposit on exercise | $1\u2013$1,000 | 5% of price | 5% of price |
| OTP format | HDB Resale Portal (online) | Lawyer-prepared document | Developer's S&P agreement |
| Forfeit if not exercised | $1\u2013$1,000 | 1% of price | $5,000\u2013$10,000 |
| Stamp duty deadline | 14 days from exercise | 14 days from exercise | 14 days from exercise |
Private Property OTP \u2014 Step by Step
Step 1: Negotiate and agree on price
You and the seller agree on the purchase price, usually through agents. Make sure you've done your homework \u2014 recent transacted prices, bank valuation, loan In-Principle Approval (IPA).
Step 2: Pay option fee (1%) and receive OTP
You pay 1% of the purchase price to the seller. The seller's lawyer prepares and issues the OTP document. This is a cheque to the seller, not the agent. Your 14-day clock starts from the date of the OTP.
Step 3: 14-day decision period
You have 14 days to decide. During this period: confirm your loan, arrange financing, do a final property inspection, check for defects, and prepare your stamp duty funds. The seller cannot sell to anyone else during this window.
Step 4: Exercise the OTP (or let it lapse)
To exercise, sign the acceptance copy of the OTP and pay the 4% exercise fee to the seller's lawyer. Total deposit is now 5%. If you don't exercise within 14 days, the OTP expires and you lose the 1% option fee.
Step 5: Pay stamp duty (within 14 days of exercise)
BSD (and ABSD if applicable) must be paid within 14 days of exercising the OTP. Your lawyer typically handles the IRAS submission. Late payment incurs penalties.
Step 6: Completion (8\u201312 weeks)
Completion typically happens 8\u201312 weeks after exercise. The remaining down payment (15% for 75% LTV) and the bank loan disbursement are settled. Keys are handed over.
What You Pay at Each Stage (Private Property)
| Price | Option Fee (1%) | Exercise Fee (4%) | Total Deposit (5%) | BSD |
|---|---|---|---|---|
| $1,000,000 | $10,000 | $40,000 | $50,000 | $24,600 |
| $1,500,000 | $15,000 | $60,000 | $75,000 | $44,600 |
| $2,000,000 | $20,000 | $80,000 | $100,000 | $64,600 |
| $3,000,000 | $30,000 | $120,000 | $150,000 | $109,600 |
BSD calculated using current progressive rates (1\u20136%). ABSD not included \u2014 add 20% for SC second property, 30% for SC third, 5% for PR first, etc.
HDB Resale OTP \u2014 How It's Different
HDB resale OTPs are handled through the HDB Resale Portal (online via Singpass). The process is more structured:
- Option fee: $1\u2013$1,000, negotiated between buyer and seller
- Exercise period: Fixed at 21 calendar days \u2014 no extensions
- No separate exercise fee: Unlike private property, there's no 4% exercise fee for HDB. The deposit structure is different
- HDB eligibility check: Before exercising, buyers must submit a resale application on the HDB portal to confirm eligibility (income ceiling, ethnic quota, citizenship)
- Completion: 8\u201312 weeks after HDB approves the resale application
The biggest risk on HDB is lower: your maximum option fee forfeit is just $1,000, vs $10,000\u2013$30,000 for private property.
What to Do During the Exercise Period
Get your loan confirmed
If you only have an In-Principle Approval (IPA), convert it to a formal Letter of Offer from the bank. Confirm the loan amount, interest rate, and tenure. Don't exercise the OTP without a confirmed loan.
Prepare stamp duty funds
BSD (and ABSD if applicable) is due 14 days after exercise. For a $1,500,000 condo, that's $44,600 in BSD alone. If you're a SC buying a second property, add $300,000 ABSD (20%).
Final inspection
For resale, do a final viewing. Check for defects, water damage, structural issues. Once you exercise, you're committed \u2014 backing out after exercise means potential legal action and forfeiting more than just the option fee.
Engage a conveyancing lawyer
If you haven't already, appoint a lawyer to handle the conveyancing. Legal fees typically run $2,500\u2013$3,500 for a private property purchase.
After You Exercise \u2014 Can You Back Out?
Technically yes, but it's expensive. Once you exercise the OTP, the sale is legally binding. If you back out:
- You forfeit the entire 5% deposit ($50,000 on a $1,000,000 property)
- The seller may sue for damages (e.g., loss of sale, market decline)
- You may still owe stamp duty (IRAS treats the transaction as completed)
Bottom line: don't exercise unless you're sure. The option fee (1%) is your "decision cost" \u2014 once you exercise, you're in.
About to sign or exercise an OTP?
Make sure you know the exact stamp duty and cash you need before committing.
FAQ
What is the option fee and how much is it?
The option fee is the upfront payment to secure your right to buy. For private property, it’s typically 1% of the purchase price (e.g., $15,000 on a $1.5M condo). For HDB resale, it’s negotiable between $1 and $1,000. For new launches, developers usually ask $5,000–$10,000.
What is the exercise period and how long do I have?
The exercise period is the window during which you can commit to the purchase. For private resale property, it’s typically 14 days. For HDB resale, it’s 21 calendar days. For new launch condos, it’s usually 21 days (3 weeks) from receiving the S&P. During this period, the seller cannot sell to anyone else.
What is the 4% exercise fee for private property?
When you decide to exercise the OTP for a private property, you pay an additional 4% of the purchase price. Combined with the 1% option fee, this brings your total deposit to 5%. For example, on a $1.5M condo: $15,000 option fee + $60,000 exercise fee = $75,000 total deposit.
What happens if I don’t exercise the OTP?
The OTP expires and you forfeit the option fee. For private property, that’s 1% of the purchase price gone. For HDB, you lose the negotiated amount ($1–$1,000). You have no further obligation. The seller keeps the option fee and can sell to someone else.
Can the seller back out after granting the OTP?
No. Once the seller grants the OTP and accepts the option fee, they are legally bound for the entire exercise period. If the seller refuses to complete the sale after the buyer exercises, the buyer can sue for breach of contract and specific performance. For private property, the OTP typically provides that the seller must refund 2x the option fee if they back out.
When is stamp duty due after exercising the OTP?
BSD (and ABSD if applicable) must be paid within 14 days of exercising the OTP. Late payment incurs penalties from IRAS. Have your stamp duty funds ready before you exercise — for a $1.5M condo, BSD alone is $44,600, and ABSD can add $300,000 (20% for SC second property).
Related
- What Is an Option to Purchase? \u2014 quick overview
- OTP Exercise Fee \u2014 1% new launch, 5% resale
- Down Payment for First Condo \u2014 25% (5% cash + 20% CPF)
- Stamp Duty Calculator \u2014 know your BSD + ABSD before exercising
- HDB Resale Process Timeline \u2014 full buyer\u2019s journey for HDB
Last updated Feb 2026. OTP process per HDB and general conveyancing practice in Singapore. BSD rates effective 15 Feb 2023. This is informational, not financial or legal advice.