A First-Timer’s Guide To Buying HDB

Buying an HDB flat is a long-term financial commitment that requires careful planning and consideration. You need to ask yourself several questions before embarking on this journey.

In this article, we’ll share answers from HDB itself to some of the most commonly asked questions about buying an HDB flat to help you make informed decisions.

How much money do you need to have before buying an HDB flat?

The cost of an HDB flat can vary widely depending on several factors, such as its location, size, and age. Thus, there is no model answer to this question.

To determine your housing budget, start by working out how much you can comfortably set aside each month for your home loan repayments. You can use the financial calculator on the HDB flat portal to work out the budget for your flat.

Have your HDB Loan Eligibility (HLE) Letter on hand but if the letter is not yet available, you can retrieve your details via Singpass or input information based on the drop down options.

Remember that buying a flat is a long-term financial commitment, so plan your financials carefully.

How do HDB housing grants work?

CPF housing grants make your housing purchase more affordable. If you’re a first-timer couple buying a BTO flat, you can receive up to $80,000. If you are buying a resale flat, you could receive up to $160,000.

These grants are dispersed to your CPF account for you to use towards your flat purchase. When you sell your flat, all the CPF monies you use, including the CPF housing grants, will be returned to your CPF account with accrued interest. You can then use your CPF savings for your next home purchase or retirement.

How much housing loan can you get, and what factors determine it?

Several factors determine how much housing loan you can get, such as your age, financial standing, employment status, monthly income, financial commitments, and past repayment records.

You can use the budget calculator on the HDB flat portal to estimate your housing loan amount. However, these figures are just estimates, so you should check with the loan provider before committing to a flat.

Consider using the sliders of the budget calculator to adjust the loan amount and payment period to find the ideal amount that you’re comfortable with paying each month. You’ll be able to see how much you can save on interest payments, if you take up a smaller loan or repay in a shorter amount of time.

Most BTO buyers use less than a quarter of their monthly income on their mortgage installments.

HDB

Should you pay for your flat using cash or CPF savings?

When deciding between cash or CPF savings for the various payments for your flat, such as the down payment and mortgage loan, you should consider your own financial situation and goals.

For example, if you have more immediate needs requiring cash, you can consider using more of your CPF savings to pay for the flat.

But if you have enough cash on hand to finance your flat, you might want to preserve your CPF savings. That way, you can take advantage of the CPF interest rates to build your retirement fund.

Is it cheaper for tertiary students to apply for BTO flats?

The answer is no. However, BTO flats are already heavily subsidised, and first-time buyers can even enjoy CPF housing grants of up to $80,000 for BTO flats.

It can feel overwhelming to buy your first HDB flat. To make the planning process easier, you can use various tools and resources on the HDB website, such as the HDB budget calculator and payment plan calculator.

Buying an HDB flat requires careful planning and consideration. By asking yourself these questions and seeking out the necessary information, you can make informed decisions that will help you achieve your housing goals. Happy house hunting!

For more information visit www.hdb.gov.sg

This article was written based on HDB’s sharing on its YouTube channel: 5 Questions with HDB: A Guide to Financing your Flat

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