For many Singaporeans, buying a home is a huge milestone. Some may even joke that it has replaced engagement rings as the new way of proposing. The issue is that for many couples and singles alike, buying a flat is like that birthday surprise your friends planned haphazardly for you and you really only know what’s going to happen as you go along with the process.
This may cause many unforeseen hiccups or bad decisions along the way that could have really been prevented if you knew what to look out for. Regardless of whether you are buying an HDB BTO flat or a resale flat, here are few important things you should be aware of when it comes to planning so that you make the best decision possible:
1. Choosing between a BTO vs resale flat
One of the largest considerations when choosing what type of flat to buy – whether a BTO or resale flat – is how quickly you need to shift into a home. Resale flats allow you to shift in quickly since it has already been built, while BTO flats take about 3-4 years to be ready.
That said, some BTO flats are now being made available faster, with the first batch of 1,000 flats with a shorter waiting period to be launched in 2018 in Sembawang, Sengkang and Yishun. There are also Sales of Balance Flats and Re-offer of Balance Flats available if you need a house more urgently!
It is also recommended that you consider the remaining lease length when buying a resale flat, to find the right lease length to suit their needs.
2. Choosing between a mature vs a non-mature estate
Some people may prefer to live in mature estates because the amenities are already built up, or they want to be closer to their parents who may be living in these estates. Others may prefer to live in non-mature estates as the amenities are newer and have more modern designs.
Regardless of your preference, one tip to take note of is that you can enjoy a much higher chance of success if you apply for BTO flats in non-mature estates, which are generally well-developed today with good amenities and transport networks. In fact, most first-time applicants are able to secure a flat within two tries, and almost certainly in their third attempt. What’s even better is that you can get more grants for these flats! (see next point).
3. Find out the amount of grants you qualify for
For BTO flats
If you are a first-time homebuyer applying for a BTO flat, you can enjoy up to $80,000 in housing grants, comprising the Additional CPF Housing Grant (AHG) and Special CPF Housing Grant (SHG) of up to $40,000 each.
Not sure what AHG or SHG is? Basically, the AHG helps families earning up to $5,000 per month buy their first home, while the SHG helps first-time families earning up to $8,500 purchase a new flat from HDB (up to 4-room) in non-mature estates. Since the SHG only applies only to non-matures estates, you can get much more grants just by choosing to stay in a non-mature estate as compared to a mature estate!
For example, if you and your partner earn a combined monthly income of $4,000 and want to buy a 4-room flat in a non-mature estate, you can qualify for grants of $55,000 ($15,000 AHG and $40,000 SHG).
| Average Monthly Household Income* Over 12 Months | AHG | SHG | Total | ||
| July 2013 to May 2015 Sales Launch | From November 2015 Sales Launch | July 2013 to May 2015 Sales Launch | From November 2015 Sales Launch | ||
| Up to $1,500 | $40,000 | $20,000 | $40,000 | $60,000 | $80,000 |
| $1,501 to 2,000 | $35,000 | $20,000 | $40,000 | $55,000 | $75,000 |
| $2,001 to 2,500 | $30,000 | $20,000 | $40,000 | $50,000 | $70,000 |
| $2,501 to 3,000 | $25,000 | $20,000 | $40,000 | $45,000 | $65,000 |
| $3,001 to 3,500 | $20,000 | $20,000 | $40,000 | $40,000 | $60,000 |
| $3,501 to 4,000 | $15,000 | $20,000 | $40,000 | $35,000 | $55,000 |
| $4,001 to 4,500 | $10,000 | $20,000 | $40,000 | $30,000 | $50,000 |
| $4,501 to 5,000 | $5,000 | $20,000 | $40,000 | $25,000 | $45,000 |
| $5,001 to 5,500 | Nil | $15,000 | $35,000 | $15,000 | $35,000 |
| $5,501 to 6,000 | Nil | $10,000 | $30,000 | $10,000 | $30,000 |
| $6,001 to 6,500 | Nil | $5,000 | $25,000 | $5,000 | $25,000 |
| $6,501 to 7,000 | Nil | Nil | $20,000 | Nil | $20,000 |
| $7,001 to 7,500 | Nil | Nil | $15,000 | Nil | $15,000 |
| $7,501 to 8,000 | Nil | Nil | $10,000 | Nil | $10,000 |
| $8,001 to 8,500 | Nil | Nil | $5,000 | Nil | $5,000 |
*All working persons’ (i.e. applicants and occupiers) income are included.
As your household income is one of the key determining factors of how much you can get in terms of grants, this can impact when you decide to apply for your flat as well. If you are expecting a pay raise in the near future, but are already planning to buy a flat and can afford what you are looking for, it might make sense to apply for it earlier.
That being said, the first consideration should always be whether or not you can afford your home in your current financial state. If applying for a flat early is going to stretch your finances, banking on a pay increment in the future isn’t something that is prudent.
For resale flats
If you are buying a resale flat, there are grants for you as well!
If you are a first-time homebuyer, you can apply for the CPF Housing Grant of up to $50,000 and Additional CPF Housing Grant (AHG) of up to $40,000. Depending on the size of the flat you are buying, you can enjoy $40,000 of CPF Housing Grant for 5-room and larger flats, or $50,000 for 4-room and smaller flats. If you decide to buy a resale flat to live near or together with your parents, or vice-versa, there is an additional Proximity Housing Grant of $20,000 or $30,000, respectively. What this means is that you can receive up to $120,000 in housing grants in total when buying a resale flat.
Tip: Use the online calculators in this webpage to find out how much grants you qualify for and which HDB estates could suit your budget and needs.
4. Financing your home loan
One of the biggest decisions you will need to make when it comes to your home purchase is how you are going to finance your home loan. There are certain distinct differences when it comes to choosing between an HDB loan and a bank loan. Here’s a summary of the most important aspects to take note of:
| HDB Loan | Bank Loan | |
| Loan Amount | Up to 90% of purchase price | Up to 80% of purchase price |
| Downpayment | At least 10% of purchase price | At least 20% of purchase price |
| Cash/CPF savings requirement | All 10% can come from cash and/or CPF savings | At least 5% must be cash, the remaining 15% can be in cash/CPF |
If you are unsure of which one of the two you should choose, check out our simple guide on how to make the best decision.
Other costs to consider
Everyone wants to stay in a beautifully-decorated home. But renovation costs can be hefty. Even for resale flats, unless you are completely satisfied with the existing design and fittings installed by the previous owner, it Is likely that you would have to spend on renovation.
As such, you should bear in mind that the overall cost of your flat should also include a budget for renovation. This would ensure that you don’t overspend, and will help you in finding a home that best suits your budget and needs.
Conclusion
Before overcomplicating things, it’s important to remember that first and foremost, your flat is a home. Making sure that you plan your finances well and assess your needs ahead of time ensures that you are able to make the best decision possible for a place that you will call home.
While there are a few things you can do to optimise your finances (which we will get to in a subsequent article!), you can first start of by heading to www.mnd.gov.sg/yourhousingjourney.
Happy house hunting!