10 Things you Should Consider before buying a HDB Flat in Singapore

Buying your first HDB flat is a major milestone for many Singaporeans. It’s an exciting step towards independence and settling down, but also a huge financial commitment that will impact your future. From figuring out the tricky HDB eligibility criteria, deciding between BTO or resale, to budgeting for unexpected costs – there’s a lot to wrap your head around! Don’t worry, we got you covered. We will be laying out the key things you need to consider before taking the plunge into homeownership with an HDB flat. With the right information and some prudent financial planning, you can make sure your first HDB purchase is the perfect fit for your needs and budget. So brew yourself a kopi, sit back, and let us walk you through the ins and outs of getting that coveted HDB keys!

HDB Eligibility

Meet the eligibility criteria set by HDB for buying a flat. You must be a Singapore citizen or permanent resident aged 21 and above. Form a family nucleus, which can be your spouse, parents, siblings, or children. Income ceilings apply based on flat type – for example, the 2023 monthly limit is $14,000 for a 4-room or smaller flat. Check the latest income limits in the HDB official norms.

Resale Eligibility

For HDB Resale Flats, first-timer applicants don’t need to fulfill the Minimum Occupation Period (MOP). But if you’ve taken an HDB subsidy before, you need to have stayed in your previous flat for at least 5 years before selling. This MOP rule prevents quick property flipping. Some exceptions can be considered case-by-case. 

Housing Grants

Several housing grants are available to help buyers, especially low- and middle-income families, reduce upfront costs. The CPF Housing Grant provides up to $50,000 for earning ≤ $9,000/month. Extra grants apply based on income, flat type, location, citizenship status, and other criteria – For more information you can check eligibility on the HDB official website in CPF housing grant section.

HDB Loan or Bank Loan?

You can finance your flat purchase using a loan from HDB or a bank. HDB offers a concessionary loan interest rate of 2.6% fixed for up to 25 years, and a HDB housing loan from 1.1%. Banks like DBS, OCBC, and UOB also offer home loans with interest rates from 1.5% and flexible tenure options. Compare interest rates, fees, loan amount, and repayment flexibility to decide what works for you.

HDB Market Conditions

Closely monitor recent HDB resale transactions to gauge current market conditions and price trends, especially in estates you’re considering. Browsing property portals helps you get a feel of current listings and price levels. Subscribe for email alerts so you can jump on good deals matching your preferences when they hit the market. Tracking historical price data also helps you set a realistic budget.

BTO or Resale?

New BTO flats are cheaper than resale flats, but come with a long waiting time of 3-5 years. Resale flats let you move in faster, offer location flexibility and no CPF usage, but cost more upfront. Consider your budget, urgency to get a flat, location preferences, and willingness to spend more for a fully renovated unit when deciding between BTO and resale.

Location and Amenities

Look at proximity to MRT stations, markets, schools, childcare centres, parks, and other amenities. Check what facilities like supermarkets, coffee shops, clinics, and community centres are available nearby. Read online reviews and visit the estate to assess liveliness, safety, parking availability, and future development plans. Consider amenities you’ll need over the next 5-10 years as your family grows.

Budget Constraints

When budgeting, factor in stamp duties, conveyancing and valuation fees, renovation costs, furniture, appliances, utility deposits and more – not just the flat price. Be conservative in your estimates for additional expenses, as new homeowners often underestimate post-purchase costs. Having a financial buffer is prudent to cover unexpected costs and temporary cash flow issues.

Renovation Loans

You can take an HDB Renovation Loan of up to $30,000 to cover your renovation and furniture costs. Banks also offer renovation loans – DBS provides up to $30,000 at interest rates from 4.88%. Only renovate based on needs, not for lavish upgrades that may not increase your flat’s value. Keep an eye on your loan eligibility when budgeting reno costs.

House Lease

HDB flats come with 99-year leases. Older ones will have a shorter remaining lease, which impacts flat depreciation over time. Check the lease to estimate potential value loss. Flats with under 60 years lease may get limited bank loan tenures. Buy a flat with longer lease remaining if you want more options for financing, reselling, or subletting.

Considering these factors will help you make an informed home purchase decision that meets your budget and needs. Do thorough research and financial planning, as a home is a huge long-term investment.

Disclaimer: The content is intended for general informational purposes only. Doorvisual Pte Ltd does not guarantee the accuracy or suitability of the information provided, and we do not make any warranties, express or implied, regarding its fitness or applicability. While we strive for accuracy, reliability, and completeness at the time of writing, this information should not be solely relied upon for financial, investment, real estate, or legal decisions. It is advisable to seek guidance from a qualified professional who can consider your specific circumstances. We hold no responsibility for decisions made based on this information.