In this issue, let us share with you our personal experience in buying our first home in Singapore, and all the research and considerations, decisions that went along with it.

I remember the exhilarating feeling of buying our first home. It is one of the biggest, if not the biggest purchase of your life! There’s a lot that goes into buying a home – from choosing the right type of home, picking a good location, to financing it and choosing the right home loan. In this issue, I’ll share our personal experience of buying our first home, along with the things I learned along the way, hoping to help you with yours!

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This article is part of our Home Buying Guides series. Click here to read more Buying Guides.

The Complete Guide to Buying your First Home in Singapore

Contents – click to jump

Questions to ask yourselves before purchasing a home
What types of housing are there?
Which to choose? Built-to-Order (BTO), Resale or Executive Condominium (EC)?
The Pros & Cons between BTO, Resale & EC
5 Factors to consider when buying your home

Questions to ask yourselves before purchasing a home

First up, before deciding to buy your first home, there are some questions we had to ask ourselves, and we encourage you to do the same before diving into it! These questions are not meant to deter or discourage you from home-finding, but they will allow you to better prepare yourself for the purchase. On these questions, more information will be shared below.

Are you ready to own a house? Have a chat with your partner to see if you are committed to each other to take the step.
How much do you need to own a house? It is important to determine what is the house value you can afford.
Is it the right time to buy a house? This refers to the property market and how it values the house. If you are going for a BTO, this may not apply as much as compared to the resale/private market.
What is your main purpose in buying the house? For homestay or investment? This question will determine the type of flat you choose, as well as size, location and the amenities around it.

What types of housing are there?

BTO flats. These are public housing flats by HDB. They are the lowest priced housing you can get in Singapore. HDB launches about every quarter here. An application costs $10 and you can only apply for 1 estate per round.
Balance of Sale flats. These are also BTO flats, but they are leftover from the past sale launches. You will ballot for a group and it you get it, depending on your queue number you will be able to pick from the remaining flats.
Resale flats are flats in the open market. You are buying directly from the flat owner.
Executive Condominiums (ECs) are comparable to private condominiums in terms of design and facilities. They are designed, built and managed by private developers. The land is sold to these private developers at a subsidised rate, hence the prices of these ECs are cheaper as compared to private housing.
DBSS flats (design, build and sell scheme) by HDB features properties that are designed and built by private developers too. They do not come with extensive facilities unlike an EC, but the exteriors and interiors are an upgrade from the regular BTO. Past DBSS flats have been reported to have high resale values.
Private housing – this refers to condominiums and landed properties. Very high prices, so it’s usually not for a first home unless you can well afford it.

Click here for all sales launches on HDB.

Which to choose? Built-to-Order (BTO), Resale or Executive Condominium (EC)?

Most of our friends found it unbelievable that Matt and I applied for 8 rounds of BTO but was not able to get a ballot successfully. I eventually turned to other options and bought an EC in 2016. Since we wanted to have a place of our own after we got married, waiting around to see if we got a BTO bid (and later if we do, another 4-5 more years) was not an option.

I did a lot of research between EC vs Resale. I ended up concluding that EC was a better option for us, based on certain factors like appreciation, renovation cost, and lifestyle choices. One of the biggest factors that led us to getting an EC was that we found one EC located next to upcoming train station (Canberra MRT), which is very rare to find. It meant that it would not be that inaccessible, even without a car. ECs tend to be built in non-mature estates and further away from the MRT (most a 15 – 20 minute walk).

Comparing the 3 options – BTO, Resale or EC

	BTO (brand new HDB flats)	Resale (older HDB flats)	Executive Condominium
Average 3-room price in non-mature to mature estates	$160 – $380k	$350 – $450k Click here for resale flat prices	$750 – $950k
Income ceiling (average gross monthly household income)	$12,000 $18,000 if applying with extended or multi-generation family	None	$14,000
Grants available (depends on your household income)	Additional CPF Housing Grant of up to $40k Special CPF Housing Grant of up to $40k Click here	Enhanced CPF Grant of up to $50k Additional CPF Housing Grant of up to $40k Proximity grant of up to $20k Click here	Family grant of up to $30k Click here
Downpayment	Application – $10 Option fee – $1,000 – $2,000 (can use CPF if using HDB loan) Down payment – 10% of purchase price if using HDB loan (can be paid CPF/cash). If bank loan, 20% of purchase price, 5-10% to be paid in cash/CPF Stamp duty and legal fees Click here	Deposit to seller up to $5,000 (option fee and deposit) Initial payment – 10% of purchase price for HDB loan (CPF/cashier’s order) and 25% for bank loan (can be paid in CPF/cash) Cash payment for balance purchase price (if resale value is higher than market value) *Please note that CPF cannot be used if remaining lease of flat is less than 30 years	Option fee – 5% of purchase price in cash Balance downpayment (if you can take a bank loan that covers 80% of property price, the balance is 15% of purchase price) Stamp duty and legal fees – 1% – 3% Click here
Loan Eligibility	HDB or Bank Loan	HDB or Bank Loan	Bank Loan only
Minimum Occupation Period	5 years Can only sell to locals (at least 1 Singaporean citizen listed or 2 Singaporean PR) Buyers cannot own another HDB or private property, whether locally or overseas. They must dispose of it before or within 6 months of resale purchase.	5 years if you use CPF housing grant If you did not use the grant, MOP is 1 room flat – no MOP 2-room flat or bigger – 5 years MOP Click here	5 years to sell or rent to Singaporean/PR 10 years to fully privatize – sell to anyone (even foreigners)
Rental yields	~ 7%	~ 5% Click here	~ 3 – 4%
Appreciation	200% over a decade *200% is taking flats in non-mature estates like Punggol/Sengkang bought 10 years ago and comparing it with current prices.	Lowest resale profit	Highest and quickest appreciation An estimated 25% over 3 years

*For grants: please note that the grants provided are credited directly to your CPF Ordinary Account – you do not get it as cash. You can only use the grant to offset your HDB flat’s initial purchase or to reduce the loan amount. You cannot use it to pay your monthly installments or reduce your minimum cash down payment (for bank home loan).

The Pros & Cons of each

	Pros	Cons
BTO	Initial prices are the lowest Interior of house is brand new 99-year lease	Average waiting period of 3-5 years unless you opt for Balance of Sale Flats Average cost of renovation for 3 room is $40k Much smaller than resale flats Price is non-negotiable
Resale	Flexibility to choose your location and be near to parents (many resale flats in mature estates) Proximity grants are still applicable No wait time, can move in immediately after purchase Older flats tend to be more spacious (you can buy maisonettes)	Variable cost on renovating (If the flat is in good condition, you may have lower cost. But if you want to demolish the entire flat and build from scratch, it would be more expensive due to hacking) Limited lease period left, which gives a limited appreciation potential (limited life) – lowest resale profit out of the 3 options. This is very dependent on the property market on time of purchase and sale.
EC	Highest appreciation Privatization after 10 years Exteriors and interiors are designed by a private developer Furnished with cupboards, air conditioning, kitchen – no need for extensive renovation Facilities and lifestyle are that of private condos	Most expensive with may fees (legal and stamp duty fees) High down payment and not able to take HDB loan Usually in non-mature estates and further away from MRT stations Monthly maintenance fee ($300 – $400 for a 3-bedroom)

What’s the conclusion? Which house should I get?

It will ultimately depend on:

Your primary purpose of buying the house – Are you buying it for your long-term stay or for investment purposes? ECs have the highest appreciation, and the resale value of ECs do come pretty close to private property after privatization. If you can afford that, it is a good opportunity, as you are essentially getting a private property at a subsidized rate.
Your budget and cashflow – Do not buy what you can’t afford. The thing about ECs is that you are required to put up a heavy downpayment upfront (5% cash, and 15% downpayment), which might leave you cash-strapped. BTO is the most economical option, especially for young couples who are just starting out. Many couples buy a BTO first, and later on, choose to upgrade to an EC when they can afford it.
Your timeline, needs, and preferences – If you are in a rush to own your own place and cannot wait for the BTO/EC to be built, resale is a viable option. If you are particular about which district to live in or prefer to stay close to your parents, resale flats are a good option for you as there is more flexibility in determining the location. If you also prefer having a bigger space, older resale flats tend to be bigger than new flats as well.
There are other factors to consider as well, I will go through them in greater detail below.

5 Factors to consider when buying your home

a) Timeline

What is your timeline for getting a house?

Ideally, couples want to have a new place to move in after getting married. If the timeline does not accommodate waiting 3-5 years for your BTO to be built (excluding application and balloting), BTO might not be a viable option. Look at when the estimated TOP date of the property is. Do consider your renovation timeline as well (see below).

There are priority schemes available. If you are married, or with a child, you have a higher probability of getting a ballot. Many couples choose to stay with their in-laws before their home is ready. If it is not convenient to stay at your parents’ house, there is a Parenthood Provisional Housing Scheme (PPHS) that allows you to rent a flat while waiting for the completion of your flat.

For ECs, you do not have to ballot, so it may be quicker to get your unit if the estate is midway to completion. That being said, the further along the estate is in development, there might be more upfront payment involved, as developers collect payments based on building stages.

How long does it take to renovate your home?

If there are no delays, renovation on average takes about 8 – 12 weeks for BTO, and 12- 14 weeks for resale flats.

If your renovation takes place during a peak period like year-end, there is a high chance it will take longer. IDs and contractors are closed during festive periods like CNY or Hari Raya. Even if they do work through the holidays, they will be stretched thin, so be prepared to add 2 to 3 weeks to your timeline.

The extent and complexity of renovation also matter. The more work you want to be done, the longer it will take. Do also account for a buffer for unforeseen circumstances, defects, or any changes you may want. Though understandable that you are excited to move into your new place, do avoid having unrealistic expectations as well. Rushing IDs and contractors below their required timeframe may backfire as well, as it may affect their quality of work.

b) Location

Though Singapore is a small city, traveling will still take time. Think about which district or estate (mature, or non-mature) you prefer to be in, taking your workplace location and parents’ home into consideration. Do a quick search on Google maps to see how long it takes for you to travel to and fro, and if there is a convenient route.

Some couples like to stay near their parents. It makes it easier to visit them and if you have kids in the future, it is easier to get help. Budget 2018 has also enhanced the proximity grant and you can get up to $30k (previously it was $20k) if you are within 4 km from your parents’ home (previously 2km). You can use this tool to check the distance.

c) Budget & Loan

To finance the flat, consider the budget that you have. Also, get an estimate on the mortgage loan that you are eligible for.

Do also consider the cost of renovation, furniture, and appliances as well.

For a 4-room HDB BTO, renovation cost averages around $50,000 – $60,000.

The actual cost will vary depending on your cost of materials. You can reduce the cost of renovation if you opt to go with the HDB’s flooring, doors, and toilets, though most couples prefer to do their own as they are aesthetically not as nice.

Depending on what you want to replace, renovating a resale flat can cost more if you want to start on a blank canvas as hacking will need to be done. However, if you can stick with what’s provided in the resale flat and just do touch ups, it will be cheaper than renovating an entire BTO.

ECs come equipped with flooring, kitchen, toilets and built-in wardrobes. The cost of renovation will be lower than BTOs. We met with several IDs for our EC reno and found their quotes to be on average $20,000.

For furniture and appliances, the average cost is about $20,000 – $30,000. Actual cost will depend on the brands you choose. Stay tuned to our upcoming Renovation Guide for a full breakdown.

What can you afford?

Use CPF Affordability Calculator to find out. All you need to do is input details such as your income, CPF funds, monthly debt obligations and it will show you an amount that you can afford. Dollars and Sense also show you the salary you need to earn to afford the different types of homes in Singapore. Click here to read.

What loan are you eligible for?

Are you looking at an HDB or bank loan?

For ECs, only bank loans are applicable for your purchase. For bank loan, shortlist the best mortgage loans and find out what loan amount you are eligible for (max is 80% of purchase price). The loan amount that you are eligible for is usually pegged to your income and assets as well as current financial commitments such as vehicle loan, credit cards, which add to your Total Debt Servicing Ratio (TSDR).

HDB concessionary loans are a provision for Singaporeans. Current interest rate is 2.6% and you can loan up to 90% of purchase price. Find out what is the maximum loan you can get from HDB here. Use HDB sales financial plan tool to find estimated figures for your loan amount, monthly instalment and payments required. Use this for resale purchase.

HDB vs bank loan – Which is better?

Here is a table summarising the differences.

	HDB Loan	Bank Loan
Property	HDB properties only, not for ECs	Any kind
Interest Rate	Currently 2.6% (0.1% above CPF Ordinary Account Interest Rate)	Currently 1.3% – 2.4$ (Depends on bank, benchmark, and fluctuating interest rates)
Downpayment	CPF/Cash	At least 5% in cash (the rest can use CPF OA Savings)
Maximum Loan	New flats: 90% of the purchase price Resale flats: 90% of resale price or market valuation (which is lower)	80% of the purchase price
Late Payment Penalty	Currently 7.5% per annum	Depends on the individual bank. Usually less lenient than HDB
Eligibility	At least 1 buyer must be a Singaporean citizen Have not taken 2 or more HDB housing loans previously Ave Gross monthly income <$12,000 Must not own or have owned private property in past 30 months before the date of HDB loan application	Good credit score
Refinancing	Can refinance your HDB loan into a bank loan, but not the other way around	You are stuck with a bank loan (cannot refinance to HDB loan). You can only reprice with the same bank or refinance with another bank (usually every 3 years).
Early payments	You can choose to end your loan term anytime you wish	Prepayment penalties of usually ~1.5%
Late payments	More lenient on deferred payments and lesser clauses than bank loans	Quick to foreclose to minimise losses
Pros	Relatively fixed (at 2.5% for past 16 years), though if CPA OA interest rate goes up, it can technically go up. You can pay your down payment fully using CPF, which gives you more cash flow Straightforward, convenient and you do not have to worry in the future Legal fees are lower for HDB loans	You can take advantage of low interest rates. Bank loans have been about 1.8% on average since about 2008. Future fluctuations can be negated with refinancing (but note that banks do not refinance loans below 100k)
Cons	Currently higher than bank rates	Uncertainty and the possibility of fluctuations in bank loans – do note that historical data shows bank rates over 3 – 4%. Requires a higher down payment. The initial down payment is 25% and 5% is in cash. You can only loan up to 80% of purchase value Quite complicated and you will have to do a lot of research in comparing loans. You can find mortgage companies/tools to make this process slightly easier More troublesome – you will also need to reprice or refinance every 3 years to enjoy lowest market rates

Use the HDB loan calculator to compute your estimated monthly instalment for your repayment period.

If you made up your mind to settle for a bank loan, after which you will need to decide between a fixed or floating interest rate package.

Fixed rate packages will have the same interest rate maintained during the lock-in period (ranges from 1 to 5 years), after which the interest rate will convert to a floating one.
For floating rate packages, the rate will change from time to time. Bank loan rates are influenced by the Singapore Interbank Offered Rate (SIBOR) or Swap Offer Rate (SOR), or a bank’s Internal Board Rate (IBR), of which Fixed Deposit Home Loan Rates (FHR) are also a part.

So, what’s the conclusion? Which loan should I get?

If you are more risk averse and prefer to not have to worry about future fluctuations, opt for the HDB loan. Also if there is a chance you can pay off the loan early, you might want to opt for a HDB loan. If you are cash strapped, even though the HDB loan interest rate is higher now, it is less taxing on your cash flow.

Bank loans are more complicated than HDB loan for sure, but the reason to choose it would be to take advantage of the lower interest rates. Banks also do offer attractive teaser rates for the first few years to entice potential customers. If you understand the housing market well, or if you do not mind spending the time to research to find the best home loan, and later on reprice or refinance, a bank loan right now could ultimately be cheaper.

d) Nearby amenities & upcoming developments

Nearby Amenities

When choosing your estate, be sure to research on the nearby amenities around it. Where is the nearest train or bus station? Is there a mall, supermarket or clinic nearby? If you are planning to have kids in the near future, what about schools and childcare nearby? Depending on your lifestyle, consider facilities such as parks, community centres, libraries or sports hubs nearby.

Upcoming Developments

After choosing your estate, find out what are the upcoming developments around your estate from the Urban Redevelopment Authority (URA) website. The benefit of living in Singapore is that URA publishes their near to longer term plans and you will be able to identify which are the future growth areas, like what Sengkang and Punggol experience in the last decade.

Sharing our experience that even though the Canberra EC (Woodlands) we bought was further, we bought it as it would be situated next to an upcoming Canberra MRT. It is difficult to find ECs located next to MRT stations. A new mall, Canberra Plaza will also be right next to the property. The North area is also targeted to become a transport hub (with the upcoming Thomson-East Coast Line), a new expressway (NSE) that provides a direct city connection. Recreation wise, a sports hub is upcoming, along with cycling tracks are in the plans. These upcoming developments may help to increase the resale value of the property in future.

e) Lifestyle needs

If you plan to stay in your house for long-term, on top of the nearby amenities, you have to recee the estate’s nearby surroundings and see if you like the area and neighborhood.

The size of your unit may also matter. Your home will have to accommodate your future plans as well. If you plan to have several kids, you may need a bigger space or more rooms. Resale flats are usually much bigger, and you can opt to buy older estates like mansionettes.

Consider your lifestyle needs. The benefit of ECs is that they come equipped with many facilities like gym, swimming pool but it comes at a much higher cost and monthly maintenance fees. If your BTO or resale is close to a community centre or SAFRA club, that might be an alternative.

When buying a resale, do consider these additional factors such as

The state and condition of the property
Remaining lease period – at the tail end of a lease you can expect a sharp drop in the property value

All in all, you have to first decide on what is the purpose of you buying a home. You may have to trade off some factors to benefit from others.. For example, if you want to live in a mature estate as compared to non-mature, you will have to fork out more money or the same unit size, or reduce your unit size. If you prioritize an EC for investment, you may not be closely situated to the MRT. That being said, the property market in Singapore has a lot of opportunities, so spend the time to do your research and do not rush into a purchase. I would also suggest linking up with a recommended property agent who has the expertise and experience to guide you.

I hope our home buying guide has helped you. Our team specialises in writing long-form articles to ensure that every step is covered. If there is more we can add, please feel free to drop us a message and let us know!

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