First-time home buyers in Singapore: 5 Key Tips | DBS Singapore

First-time home buyers in Singapore: 5 Key Tips | DBS Singapore

Buying your first home is a milestone of adulthood in Singapore. It means (finally) moving out from your parents home, and into a place you can call your own. But how do you go about doing this? Weve summarised the key criteria and answers for you, whether youre looking at a BTO, resale flat, or private property.

1. Understand what youre eligible to buy

Properties in Singapore fall into one of these 3 types:

  • Public housing: HDB flats
  • Hybrid of public-private housing: Executive condominiums (ECs)
  • Private property: private condominiums, apartments, landed housing

Your eligibility depends on a few things, including your age and whether youre purchasing the flat with someone else.

  • At least 21 years old, if youre purchasing the HDB flat with your:
    • Spouse and/or children
    • Parents and siblings
    • Children under your legal custody (if youre widowed or divorced)
    • At least 21 years old, if youre purchasing with your family members, are widowed, or orphaned
    • At least 35 years old, if youre single (unmarried) or divorced (no kids)
    • At least 21 years old
    • At least 21 years old
    • At least 21 years old

    2. Plan your budget wisely by working out the math

    A house is a huge financial commitment. There is the downpayment, and 360 monthly repayments if you get a 30-year loan like most other Singaporeans do. Heres how to figure out how much you can afford comfortably

    The math of working out your budget

    One quick way is to get an estimate of the loan that HDB or the banks will grant to you. This amount is based on yours (and your spouses) savings, current income, and age.

    The best time to get this estimate is before your search begins. It helps you filter for the properties that you can afford, which saves you from spending unnecessary time searching among properties that are beyond your budget.

    Then, get in-principle approval (IPA), which is a guarantee that the lender will lend you S$X amount when you need it.

    Armed with these, you can browse the catalogue of HDB and private properties, confident that you can pay for what you choose.

    Tip: If you can raise sufficient cash, consider using that instead of your CPF, as your CPF monies earn higher interest rates of 2.5% each year.

    Government subsidies and grants

    If youre interested in a HDB property, there are government subsidies and grants that can make a property more affordable. There are schemes for:

    Or you might be most interested in the investment potential of a private property. If so, be prepared to have a bigger budget because they are more expensive due to:

    • Couples,
    • Singles, and
    • If you stay within 4km of your parents or in-laws place.

    Or you might be most interested in the investment potential of a private property. If so, be prepared to have a bigger budget because they are more expensive due to:

    • No 5-year minimum occupancy period (MOP)
    • No resale levy
    • No ethnic quota
    • Presence of facilities such as swimming pool, gym, BBQ pits in the condominiums
    • Can be sold to non-Singaporeans/PRs better marketability

    Did you know? The MyHome planning tool allows you to assess your property budget and affordability, and potential changes to your monthly cashflow.

    You can work out your property budget in different ways:

    • Property Price in mind for your future home
    • Monthly Instalment you are prepared to pay
    • Down payment amount you have set aside for your property
    • Maximum loan amount based on your income and financial commitments

    3. Consider your priorities before deciding where should your first home be

    Location is the biggest factor in choosing a house. These are some considerations thatll help you pinpoint the areas that youd be happy to call home.

    Distance from your workplace: Choose somewhere that isnt too far youre your workplace. Singapore is a small city, but the commute between Ang Mo Kio and Changi Business Park can still take up to 2 hours. And adding just 20 minutes to your daily commute feels as bad as if youd received a 19% pay cut 1 .

    Distance from the MRT station: Buying a house near an MRT station saves time, but properties within walking distance cost more. Also note that a house along the East-West line is typically more expensive than along the North-South line (e.g. Tiong Bahru vs Ang Mo Kio), because of its proximity to the CBD.

    Distance from your parents: Staying within 4km of your parents qualifies you for the Proximity Housing Grant (PHG). But chances are, our parents stay in mature estates where new BTOs and resale flats could be pricier.

    Heres how some first-time homeowners have gotten the most out of the accessibility vs affordability trade-off:

    1. Buy smaller units, and then upgrade as their family expands
    2. Purchase properties in non-mature estates. Based on the May 2019 BTO sales launch, you would have paid at least S$387,000 for a 3-room BTO in a mature estate, and S$165,000-S$192,000 for one in a non-mature estate.

    Did you know? Property Marketplace allows you to browse resale properties:

    • By price range
    • In specific neighbourhoods
    • Near specific MRTs
    • Near specific schools
    • That have a desired number of bedrooms
    • Spacious enough for you

    4. Watch out for the hidden costs

    One thing that often slips buyers minds is the whole range of fees and charges that apply. If youre getting a BTO or flat directly from HDB, watch out for these:

    • Property valuation reports,
    • Buyer stamp duty fees,
    • Property taxes,
    • Home or fire insurance fees.

    And if youre thinking about resale flats, add these to your list of costs:

    • Property agent commissions,
    • Fee to process the option to purchase (OTP)
    • Higher renovation costs.

    5. HDB loans arent always cheaper

    Its a common misconception that HDB loans are always cheaper. HDB pegs their interest rates at 0.1% above the CPF interest rate, which means paying 2.6% p.a. of interest each year.

    If you come across a bank loan with a lower interest rate, the difference in interest rates could save you thousands. (When doing your research, dont forget to check for current promos too!)

    But interest rates arent the only thing. Heres what else you should look out for when comparing the loan packages:

    • Differences in fees
    • Charges for early repayment
    • Interest rate type (Fixed rate or floating rate)
    • Loan tenure
    • Extras such as free legal and valuation subsidies, and in-built home loan insurance

    Have more questions about bank loans for HDB flats? Get them answered here.

    Start Planning Now

    Check out DBS MyHome to work out the sums and find a home that meets your budget and preferences. The best part it cuts out the guesswork.

    Alternatively, prepare yourself with an In-Principle Approval (IPA), so you have certainty on how much you could borrow for your home, allowing you to know your budget accurately.

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