Question 1: What three factors should you consider when buying a flat?
Type of flat
For most first-time buyers, a Build-To-Order (BTO) flat is the go-to option. And it’s no wonder — they’re brand new and heavily subsidised. On the other hand, the waiting time for a BTO flat is usually at least three to four years. If you are not in a hurry and happy to wait a few years, it may be worthwhile to consider a BTO flat!
Another type of HDB flat to consider is a resale flat. It usually takes only about 8 weeks from HDB’s acceptance of the resale application to completion, when you can collect the keys and move in, or begin renovation works. If you’re less inclined to wait, this could be your ideal option.
Size of flat
When choosing your flat, size matters!
If you’re a couple without children, a single, or have a small family, you may want to consider a smaller flat. Not only can you save on your home purchase, you can save in other areas such as renovation costs as well.
If you are planning to have a large family, naturally you would want more space for your family. This, of course, means that you’ll have to fork out a little more.
Location of flat
Each HDB sales launch offers BTO flats in specific locations, which means that the flats offered may not be in your choice location.
If you have a specific location for your future home in mind, you can purchase a resale flat from any area in Singapore. This means you can choose to live in locations that are near your parent’s home, your workplace or specific amenities that you want. If you have children, you might want a location that allows the kids to commute easily to school.
While prioritising your family’s needs, it’s important to buy a flat that is within your means, as flat prices tend to be higher if you choose resale flats in mature estates.
Question 2: How will you finance your future flat?
Before deciding on a flat that would suit both your budget and family's needs, learn how to finance it! Here’s a quick snapshot of the types of housing loans and CPF Housing Grants available for the purchase of HDB flats.
Types of loans
There are two main housing loan options — housing loans from HDB and financial institutions. There are different considerations for each option.
If you are financing your flat purchase with a HDB housing loan, the downpayment is 10% of the purchase price, and can be fully paid with your CPF savings. You can use HDB's
Sales Financial Plan or
Resale Financial Plan to estimate your HDB loan amount and monthly repayments.
Opting for a housing loan from a financial institution instead? You would have to pay a downpayment of 20% of the purchase price when you sign the Agreement for Lease for your flat. 5% is payable in cash, while the remaining 15% is payable in cash or CPF savings. As financial institutions can grant a maximum loan quantum of up to 75% of the purchase price, you will have to pay the balance 5% of the purchase price using cash or CPF savings when you collect the keys to your flat. Financial institutions also have different housing loan packages with varying interest rates and terms and conditions.
For the monthly housing loan instalments, you can choose to pay with cash or CPF savings, or even a combination of both. Try the
CPF Housing Usage Calculator to estimate how much CPF savings you can use for your property.
If you are taking a housing loan from HDB, keep in mind that you can choose to set aside up to $20,000 in your Ordinary Account (OA) instead of wiping it out to pay for your home. The savings that you set aside in your OA will grow with attractive interest rates of up to 3.5% p.a.*,
which you can use to pay for your home loan in times of need or save for higher payouts in retirement.
CPF housing grants
When you purchase an HDB flat, you can also benefit from various CPF housing grants.
There are three main housing grants available to first-timer flat buyers:
- The Enhanced CPF Housing Grant (up to $80,000), which applies to both BTO and resale flats
- The Family Grant (up to $50,000) for buying of a resale flat
- The Proximity Grant (up to $30,000) if you are buying a resale flat to live with or near your parents.
Get clued in on the various CPF housing grants for families
If you’re a single buyer, check out
this guide to learn more about purchasing a HDB flat, and the CPF housing grants you can tap on!
Now that you’ve asked yourself these two questions, you should be better equipped with the tools you need to plan your housing budget, and be on your way to owning that dream home!
*Includes extra interest. Members who are below 55 years old are paid an extra interest of 1% per annum on the first $60,000 of their combined balances. Members who are 55 years old and above are paid an extra interest of 2% per annum on the first $30,000 and 1% per annum on the next $30,000 of their combined balances. Terms and conditions apply.
Information updated as at 13/11/2020