It’s a defining moment when you move out of your parents’ house. You’ve finally reached a stage in life where you’re ready to have your own place to call home. The freedom of being able to do what you want whenever you want to – like hosting friends for impromptu dinner parties, having all of the space to yourself and adopting a clothing optional policy – is thrilling.
As exhilarating as it is, however, buying your first house can be a daunting task. It will, after all, be one of your biggest purchases to date. It’s important to make informed decisions.
There will undoubtedly be stress, but we’ll try to lessen this for you. Knowing your options is powerful, so read on to find out what these are and the factors to consider.
For the overwhelming majority of young Singaporeans, one of the most sensible options is to purchase a flat built by the Housing Development Board (HDB), as you’re eligible for exclusive access and heavy subsidies. Here’s what you need to know if you’re thinking of going this route.
New or resale?
For HDB flats, you can either buy a brand-new (built-to-order), or second-hand (more commonly known as ‘resale’) unit. There are several differences between the two, such as:
New flats are sold at a subsidised price, which means they’re more affordable and also a lucrative investment opportunity. Resale flats, on the other hand, are always sold at a higher price as they aren’t subsidised.
Newly built flats are mostly located in non-mature estates such as Yishun, Woodlands and Punggol, as the prime locations have already been developed. If you dread long commutes, want to live near the CBD or are fussy about your neighbourhood, then a resale flat may be better for you.
3. Mode of purchase
Each Singaporean is only eligible to buy a new flat twice. Interested buyers must apply directly to HDB for a unit and can make use of priority schemes to improve their chances of securing a unit. In contrast, resale flats can be purchased from the open market at any time.
4. Renovation costs
New flats will likely cost you less in renovations as you’re receiving an empty, unfurnished unit. A resale flat, however, comes with all the design features implemented by the previous owner, and will cost you more simply to remove and refurbish.
5. Minimum Occupation Period (MOP)
If you’re thinking of earning extra income from subletting your flat, remember that for most new and resale flats, you would have to live in it for a minimum of five years before doing so. However, do note that there are certain exceptions to this rule. The MOP is calculated based on the date that you become the authorised owner of the flat.
6. Wait time for flat to be ready
Typically, young couples would have to wait for about three to four years before they can move into their BTO flats in non-mature estates, though there are plans to cut this waiting time to 2.5 years soon. For resale flats, the waiting time is much shorter, and it would take about 3 months between purchasing your flat and receiving your keys to it.
Verdict: All factors considered, resale flats present more flexibility and convenience as compared to BTO flats. However, for young couples who are not in a rush to move into their new place, it will be wise to try for BTO flats first as the priority schemes could present significant savings.
What kind of flat can you purchase?
The next step is to consider which type of HDB flat is right for you.
First, take HDB’s Eligibility Check to determine which eligibility scheme(s) you qualify for when applying for a HDB flat. The check will take into account critical qualifying factors such as your income and age. You’ll have to meet specific requirements for each of the following options.
Buying a new or resale flat
The following types of flats can either be purchased as a brand-new built-to-order (BTO) flat, or from the open market as a resale flat.
1. 2-room Flexi Flat
Ideal for singles as well as couples comprising one partner who is neither a citizen nor Permanent Resident, the 2-room Flexi Flat is a good option for first-time buyers on a low budget. The flats come in either 36 or 45 square metres and have a 99-year lease for first-time buyers.
2. 3-room, 4-room and 5-room flats
If you’re thinking of starting a family, these flats offer more options to suit your budget and space requirements. You can view an interactive digital show flat of the 3-room, 4-room and 5-room flats, which are sized at approximately 60 to 65 square metres, 90 square metres, and 110 square metres respectively.
3. 3Gen Flat
For those looking to live with your family, 3Gen Flats are ideal. With a size of approximately 115 square metres, these flats come with four bedrooms, two of which include an en-suite bathroom.
4. Executive Condominium (EC)
If you’re a high-income earner, the EC is a great option as they have premium design features and facilities comparable to private condominiums. EC buyers are also allowed to have a higher income ceiling of SGD 14,000 for an average gross monthly household income, while HDB buyers’ average monthly income should not exceed SGD 6,000.
ECs are built and sold directly by private developers, but you can still enjoy the privileges and priority of purchasing as a first-time HDB applicant. They also come with a 99-year lease.
Buying a resale-only flat
1. Design, Build, and Sell Scheme (DBSS)
DBSS flats are a class between regular HDB flats and ECs. They require the buyer to meet similar eligibility conditions as those of a new HDB flat but, like ECs, the buyer is allowed to meet a higher income ceiling – an average gross monthly household income of SGD 12,000 – and can purchase the flat directly from the developer.
However, unlike ECs, DBSS flats don’t have security fencing or facilities like swimming pools. This option is ideal for second-time owners as they aren’t required to pay a resale levy, as they would have to do with a purchase of other types of HDB flats.
2. Executive Flats
If spaciousness is a priority, consider getting an Executive Flat. This comprises of the Executive Apartment (EA), Executive Maisonette (EM) and Housing and Urban Development Company (HUDC) Flats.
At a size of 140-150 square metres, most of these units are bigger than the range of newer HDB flats – even the 5-room flats. Moreover, EM flats are two storeys high, allowing you plenty of space to redesign the layout of your home to your heart’s desire.
However, these units don’t come cheap. Only about 65,000 executive flats remain in the market today, and they are in high demand.
Financing your dream home
Now that you’ve narrowed down the search and possibly found your forever home, how will you pay for it?
If you’re not eligible for a housing loan, you can also get a bank loan. DBS Home Loans provides attractive loan options at a fixed interest rate which is guaranteed to be lower than HDB’s concessionary rate, so you can enjoy savings as well as peace of mind that your loan won’t become more expensive over time. Furthermore, DBS also allows you to pre-pay your loan at no additional cost.
But first things first, refer to the following checklists to see if you’re all set:
Resale flat checklist: https://www.dbs.com.sg/personal/landing/loans/homeloans/pdf/resale-flat.pdf
There are dozens of details to take into account, which can understandably be anxiety inducing. More importantly, however, buying a home is also supposed to be an exciting stage in your life, so don’t forget to enjoy it!