A guide to owning your HDB flat: What first-time homeowners should know

By Felicia Tan / EdgeProp Singapore | March 31, 2020 11:00 AM SGT
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There are several milestones in life. In Singapore, your very first milestone is to graduate from a good school, with a degree or diploma to show for it. If you’re a Singaporean son, you should have completed your two-year National Service before going to university. Then, you embark on a relationship, get engaged, get married, and buy a home.
Most of the time, unless you have plenty of funds to spare, the last three milestones may not take the above order. That is, you would have applied for a Build-To-Order (or BTO) flat with your significant other, propose, and then get married.
If you haven’t found The One, and have reached 35 years of age, you would also be eligible to apply for a BTO flat through the Housing & Development Board (or HDB).
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Buying a home for the first time is an exciting process, and a huge step into adulthood. Beyond having your own space, having a new home also comes with plenty of responsibilities.
Here’s what you need to look out for.
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Eligibility for BTO flats

To buy a BTO flat, you need to be applying for one under one of the following categories:
  • with your fiancé or fiancée (You will need to present your Marriage Certificate within three months of collecting your keys. Applicants between 18 and 21 years old will need written parental consent; applicants below 18 years will require a Special Marriage Licence.);
  • with your immediate family members; or
  • as an orphan, if both your parents are unfortunately deceased. If you are under 35 years old, you may not apply under this scheme, if you have a sibling below the age of 35 who has already applied under this scheme.
At least one of the applicants must be a Singaporean citizen, and you need to be applying with at least one other citizen or permanent resident (or PR) as part of your family nucleus.
Alternatively, you can purchase a BTO flat when you’re 35 years old. Even then, you are eligible to purchase only a two-room flat in a non-mature estate. You may also apply for a flat with your friends (up to three others) who are Singapore citizens, single, and aged 35 years old and above.
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As of Sept 11, 2019, the monthly household income ceiling for BTO flats has been raised from $12,000 to $14,000. For three-room flats, the income ceiling is capped at either $7,000 or $14,000, depending on the project. The income ceiling for four-room flats and above, is capped at $14,000, or $21,000 for multi-generational flats (for married couples, their parents, and their siblings).
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Eligibility for resale flats

To buy a resale flat, the criteria are similar to applying for a BTO flat, except you are not limited to flats available in non-mature estates. You are also allowed to purchase flats in any size you prefer. The criteria for applicants applying for resale flats differ slightly too. Here, at least one of the applicants must be a Singaporean citizen; or two applicants listed need to be Singapore PRs.
Singles above 35 years old looking for resale flats may look at flats with two rooms or more, and in mature or non-mature estates.
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If you are married to a non-citizen, he or she needs to hold a valid Visit Pass or Work Pass, and you will be eligible for the Singles Grant, or Enhanced CPF Housing Grant (Singles) under the Non-Citizen Spouse Scheme (NCS).

Housing grants

There are several housing grants first-time applicants can apply for. If you and your spouse are both applying for a flat for the first time, you may be eligible for:
  • Enhanced CPF Housing Grant of up to $80,000 for applicants with a maximum monthly income of $9,000;
  • Proximity Housing Grant of up to $30,000, for applicants who are buying a resale flat that is within 4km of their parents’ or child’s residence;
  • Family Grant of up to $50,000, with a maximum monthly income of $14,000.
If you are applying for a flat for the first time with your spouse, who has applied for a flat before, you may be eligible for the following:
  • Half-Housing Grant, which gives you $25,000 for a two- to four-room flat, and $20,000 for a five-room flat, and above. The amount is half of what you would have received for the Family Grant, if you were both first-time applicants.
In addition, the applicant and occupiers of the flat must not:
  • Own any property locally or overseas, nor have sold any property within the last 30 months of application;
  • Own private property from the date of application till you have fulfilled your Minimum Occupancy Period (or MOP); or
  • Be purchasing a resale flat under the Selective En bloc Redevelopment Scheme (or SERS).
For singles, you are eligible for an Enhanced CPF Housing Grant ranging from $2,500 to $40,000. Singles buying two- to five-room resale flats may receive up to $80,000 in grants, including the Enhanced CPF Housing Grant, the Singles Grant of up to $25,000 (with a maximum monthly income of $7,000), and Proximity Housing Grant of up to $15,000.
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HDB loan vs bank loan

As you should know, buying a house isn’t cheap. Even if you can afford to pay cash upfront – which means you won’t have to pay extra money in interest fees – and if you are left with a sum that won’t last you for six months without a job, it may be wiser to take up a mortgage.
When you’re applying for a flat, you are given two options to finance your home: taking a loan from the HDB, or from a bank.
For HDB loans, you will need to have been employed for at least three to six months, and have a valid SingPass. Bank loans, in comparison, have no such restrictions.
The interest rates from the HDB are at 2.6%. If you’re looking at bank loans, banks’ interest rates are pegged to the Singapore Interbank Offered Rate (or SIBOR), which is hovering around slightly below 2% now (as of March 2020). SIBOR is used as a daily benchmark rate that banks use when lending money to other banks.
That said, with HDB loans, there is no minimum loan amount, and you can choose to pay a downpayment of 10% with cash or CPF. With banks, you will need to fork out 5% in cash, and another 20% in cash or with your CPF. Late payment penalties are also generally harsher for banks.
Worried you don’t have enough for your downpayment? First-time applicants under the age of 30 may consider the Staggered Downpayment Scheme that lets you split your downpayment, and payment upon key collection in half.

Other monetary considerations

You may have done your sums on how much your new home will set you back by. But have you considered these additional costs?
- Renovations If you did not opt for HDB’s Optional Component Scheme for your BTO, you will need to factor in works such as flooring, carpentry such as kitchen cabinets, as well as sanitary fittings such as a shower set and wash basin. Your bathroom will already come with an existing toilet bowl.
- Furniture & other essentials Even if you don’t mind living in a minimalist-style living room with only throw cushions, or straight-back chairs that are meant for the dining table, you will still need a bed (plus a mattress, bedsheets, and pillows) to sleep in.
Other essentials include a wardrobe or clothes rack, toilet paper (don’t laugh – it is the one thing you will need on a daily basis), cleaning supplies (a broom, detergent, and toilet scrubber), and kitchen-must haves (such as mugs, bowls, and a pot or two).
- Monthly utilities You’re looking at bills for water, gas, and electricity (especially if you intend to switch on the air-conditioner every night).
- Conservancy fees These are essentially maintenance fees that go to the upkeep of the estate. Fees range from $20 to over $100 a month, depending on the type of flat you live in.
- Property tax You will be taxed within one year of taking over ownership of your flat. Your property tax is calculated using the Annual Value of your flat multiplied by the tax rates proposed by IRAS.
- Buyer’s stamp duty All property buyers will have to pay Buyer’s Stamp Duty (or BSD), whether it is your first home or not. The only difference lies in the rates. The more affordable your property, the less you have to pay.
- Home insurance payments Home insurance is optional. Like a medical insurance policy, a home insurance policy covers you for unforeseen incidents, such as burglary or fire.
- Carpark fees If you own a car, season parking charges are $80 per month for open-air (or surface) car parks, and $110 per month for sheltered car parks. Should you own more than one car, you should expect to fork out $90 and $120 per month respectively for your second, and subsequent lots.
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Photo: Albert Chua / EdgeProp Singapore

Finally, questions to ask yourself before applying for a flat:

1. Am I ready to purchase a flat, and do I really need one now?
2. Am I eligible to take on any loans for my flat? Click here to see if you are able to afford the home you’re interested in.
3. Which works better? HDB home loans, or bank loans? (See above)
4. How do I calculate my Total Debt Servicing Ratio?
5. Can I afford to pay the monthly home loans?
6. Do I have enough to afford the downpayment?
7. Can I afford additional costs such as renovations, furniture, and monthly utility bills?
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