This is part 2 of our 6 part guide to buying a HDB BTO flat. Part 1 covers the Things You Need to Know Before Applying. You can find it here.
Now that you have a better understanding of BTO Eligibility, Housing Types, Priority Schemes and how to pick your location, we will move on to how to pay for the whole thing. You’ll be glad to know that you won’t have to pay for everything up front, and there’s a way to ‘haggle’ with HDB like how you bargain for something on Carousell.
We will be giving you a breakdown on BTO pricing and teaching you some pro tips on how to save money on your BTO with information about grants, loans and finding the ideal housing loan for your needs.
- BTO Prices 2019
- BTO Grants 2019
- Making BTO Down Payments
- Housing Loans: HDB Loan vs Bank Loan
BTO Prices 2019
We all know that housing in Singapore is expensive, but how much does a HDB BTO actually cost?
Above is an example of the cost of a typical 4-room flat and how it can be financed, through grants and housing loans. This is a good ballpark figure of how much the average BTO will cost, but your mileage will vary. Although you can finance the majority of the monthly installment with your CPF OA account, it is not advisable to do so. Currently, the CPF OA interest rate is at an almost guaranteed 3.5% per annum, making this a pretty good investment as not many saving accounts or investment avenues can match the interest rate and low risk.
Latest BTO Sales Launch Prices
For reference, this are the latest BTO November 2018 Sales Launch prices. This is a good indication of how much you can expect to pay and the price differential between non mature and mature town BTOs. The difference can go up to $100,000!
BTO vs Resale Price
To put this price into context, we will compare BTO flats and resale flats. As seen on the graph above, BTO flats can be about 100k cheaper than resale flats, which explains why it is very popular amongst Singaporeans. Luckily, if you are a first-time homeowner couple, your chances of getting an affordable BTO flat is higher mainly due to the priority scheme and the grants HDB offers.
BTO Admin Fees
When buying a flat, keep an open mind as there are most costs than just the flat itself. Take note on these other costs and factor these into your calculations. Some of the cost varies depending on the housing type.
2-room – $500
3-room – $1000
4-5room – $2000
Stamp Duty (Based on selling price)
First 180k – 1%
Next 180k – 2%
Next 640k – 3%
Remaining – 4%
You can use this handy calculator provided by IRAS here.
If not using or using HDB Loan – 10% of selling price (payable by CPF)
If using Bank Loan – 20% of selling price (5-10% to be paid in cash depending on loan ceiling)
Click here to view the a detailed cost breakdown.
Note: If you are interested in Executive Condominiums, you’ll have to contact the private developer yourself for any sales inquiry regarding its market price etc.
BTO Grant Information
There are CPF Housing Grants for each type of housing (HDBs and ECs), with each type of housing having its own eligibility conditions and considerations such as your household incomes. We have picked out the key information for you to get an idea on what types of grants you may be entitled to.
To view the detailed info from HDB’s website, click here.
Note: As the HDB Housing Loans requires a minimum employment period of 1 year. For young couples who don’t qualify, you can choose to defer their income assessment nearer to the key collection date. Find out more about the Deferred Income Assessment here.
BTO Down Payments
Another thing to look out for are the BTO Down Payment Schemes, these schemes are put in place to help young families or elderly with their cash flow management. The pricing of down payment is dependent on whether you have taken housing loans; they can range from 10% – 20% of the purchase price. Currently, there are only two schemes and each scheme has its own eligible buyers. Down Payments are an important consideration when purchasing a flat because it determines how much cash at hand you’ll need or left with after paying it, and these will affect your future plannings such as renovations and furniture.
Now, the final portion of financing your house usually lies with a Housing Loan from either HDB or Banks, you can’t choose both. Let’s discuss more the two types of loan.
For young couples, who are mostly first-timers getting their BTO flat, will have no problem getting a loan from HDB, do take note that you’d need to apply for a HDB Loan Eligibility (HLE) Letter before committing to the loan. Refer here for the documents needed to submit for the HLE letter!
Alternatively, if you not eligible or you’d prefer a Bank Loan, you can apply through any of the banks that are regulated by the Monetary Authority of Singapore (MAS). But what are the differences between those two? Which is better for your family?
Note: To find out if you’re eligible for HDB Housing Loan, do the Eligibility Check here.
In our opinion, the HDB loan is generally better. When purchasing a BTO you’ll need 5% to secure the flat followed by another 5% payment when you collect the keys. In comparison Banks require 10% payment followed by another 10% when you collect the keys. Best part about choosing the HDB loan is you can reinvest the 10% down payment that is freed up from taking the HDB loan. You can actually cover the additional interest rate from the HDB loan. This is especially good for people who want to sell their BTO flat in ten years.
In addition, go for the HDB loan with the longest repayment period – this allows one to have more cash on hand to invest and puts you in a better position even if you’re unsure if you want to sell the flat in 10 years. You can always negotiate for a shorter loan term in future if you do decide to pay off your HDB loan faster.
Great success! You have taken the next step towards getting your dream home.
New to IUIGA? Check out our extensive range of home essentials with bathroom accessories, home & decor items, bedding and furniture you’ll want to come home to!
Now that you know how the pricing and financing of BTO works, we will cover the application process in Part 3 – Applying for BTO!