Friday, July 20, 2018


There are many properties for sale in Singapore, such as condominiums in West Coast. However, the price of condominium is expensive and can be unaffordable, especially to young working adults. In addition, buying your first flat can be an intimidating experience. You browse through HDB website but still unsure of the steps. You start reading many articles regarding the guide to getting a HDB or BTO flat. However, you are still unsure of where to begin, after all, this is a big decision that involves a lot of money. This article will guide you through the important things that you need to know before getting an HDB flat or BTO flat and it might help you to reduce the stress on the journey.

• Minimum Occupation Period
First of all, you need to know that when you purchase a new HDB flat, there is a minimum occupation period (MOP) of 5 years to fulfil. In other words, you are required to stay at the HDB flat for at least 5 years. The official 5 years period will only start the day you collect the keys from the HDB office. In addition, you are also prohibited from buying other private properties throughout the 5 years of minimum occupation period, whether it is a local private property or an overseas property. Moreover, you are not allowed to rent out the entire unit. However, renting out individual rooms is possible as long as you are staying in the same unit.That being said, if it takes 3 years for your HDB flat to complete, it would then take 8 years to fulfil your minimum occupation period because the minimum occupation period starts on the day you collect your HDB flat keys. This rule applies to individuals buying a resale flat using a CPF Housing Grant as well. This is an important rule that you should keep in mind when it comes to buying your first HDB flat or planning to buy properties for investment purpose in the future.

• Resale Levy Payable
The next important rule that most first time homebuyers missed out: the resale levy payable. A BTO flat is also considered as a subsidised flat. Therefore, if you were to sell your current HDB flat to purchase another new HDB flat, you will then have to pay a resale levy. The resale levy is depending on the size of the HDB flat. The table below will give you an idea how much your resale levy is if you were to sell your curren HDB flat.

Size of HDB FlatResale Levy
2 rooms$15,000
3 rooms$30,000
4 rooms$40,000
5 rooms$45,000

Therefore, do your planning ahead. Many young couples did not realise there is a resale levy payable when they first purchase their HDB flat, thinking that they could always upgrade their house when needed. 5 years later when they have children at home and are planning to upgrade to a bigger HDB flat, only then they find out that they are required to pay a resale levy if they were to buy a new HDB flat. Hence, do your planning ahead if you want to avoid paying for a resale levy.

• Bank Loan or HDB Loan
It is important to understand the difference between a bank loan and an HDB loan before deciding which loan you want to apply. List down the pros and cons of each loan. Do not forget about the downpayment that you would need to pay as well. The difference between a HDB Loan and bank loan is that HDB Loan is 90% LTV whereas bank loan is only 80% LTV. The HDB Loan also allows you to pay for a lower down payment, however, HDB loan offers less flexibility. As for bank loan, it requires a higher down payment but comes with greater flexibility. Do take caution that the validation for HLE is only 6 months. More information on ways to apply can be found here.

• HDB Grant
There are also HDB Grants available for people buying their first BTO flat. Check for the eligibility before applying for these grant. You can start looking for grant available from Special Housing Grant (SHG) and Additional Housing Grant (AHG). SHG is a housing subsidy that covers both the low and middle income families with grant ranging from $5,000 to $20,000, subject to buyer’s income. As for the AHG, it is a scheme that aims to help Singaporeans with lower income to purchase their first flat with grant ranging from $5,000 to $40,000, subject to buyer’s income as well. To qualify for an AHG grant, your household income should not exceed $5,000 per month, for a period of 12 months before your application for the flat. Do note that the time to wait is approximately 2 months to 3 months between the period of successful ballot and flat choosing. After the long waiting time, you will then be invited by the HDB person in charge to choose your desired flat and make payment for Option to Purchase (OTP).

• Withdrawal
You are one step nearer to getting your first BTO flat. And that means there is no backing out for you. Once you have applied for bank loans and made payment for the downpayment of your BTO, there is no looking back unless you want to risk forfeiting your downpayment or deposit. Make sure you think thoroughly and be 100% sure that you are ready to commit before buying a HDB or BTO flat.

In conclusion, it takes effort to prepare when it comes to getting a HDB or BTO. Be patient and you will be satisfied with the end results of it.

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