Buying a house to become a homeowner is an aspiration for many young Singaporeans. Some apply for a Build-To-Order (BTO) flat with their partner, while others patiently wait until they turn 35 to buy a BTO or resale HDB flat. Those with greater financial means may purchase private property.
However, the path to homeownership can be challenging, given the various real estate industry jargon and the tedious home-buying process. To make your journey easier, we’ve sought advice from three homeowners on their first home purchase. From explaining mortgage eligibility criteria to designing your interior space, we’ll provide you with the most comprehensive guide.
※ The views and opinions expressed in this article are those of the interviewees. We have only edited them for brevity and clarity, without any other modifications.
Table of Contents
Summary: Tips for Buying a Home in Singapore
| Compare different types of home loans | Banks usually offer lower interest rates than HDB loans, but HDB loans provide a larger loan amount in comparison |
| Calculate the down payment | Save for the down payment in advance to take out a smaller loan |
| Consider renting | Renting can be another option for you and your partner |
| Consider buying a resale HDB flat | If you’ve failed to secure a BTO after multiple attempts or simply want more freedom in planning your future |
| Set expectations when buying a home | Create a list of ‘wants’ and ‘needs’ for a more targeted search |
| Seek help from a real estate agent | Not mandatory, but suitable for those who are short on time |
| Note the impact of the house’s orientation on lighting | Pay attention to which direction the house faces, as it affects the amount of light it receives |
| Renovate your home | Design the space according to your needs and renovate based on your budget |
Getting Your Finances in Order Is the First Step to Buying a Home
For many Singaporeans, their first home is typically an HDB flat—specifically a Build-To-Order (BTO) flat. But for those with higher incomes, they might consider buying an Executive Condominium (EC) or even a private condominium.
Regardless of the type of property you choose, it’s essential to budget for your new home. This means you need to consider what type of loan to take to purchase the property. This brings us to our first piece of advice: compare different types of home loans.
1. How to Compare Different Types of Home Loans
The first homeowner we interviewed is 29-year-old Jasmine Tan. She and her then-fiancé (now husband) bought a 5-room HDB flat in Punggol through the Sale of Balance Flats (SBF) exercise. Jasmine and her husband didn’t have much time to save up for their house. They were successful in their ballot in mid-June 2018, selected their flat in October 2018, and then got their keys in June 2019.
“Because things happened so quickly, we didn’t do much planning, so we opted for an HDB loan, which was not only the most straightforward option but also offered us a larger loan amount (at the time she bought her home, the maximum loan amount or Loan-to-Value (LTV) limit was 90% of the property price; now, the maximum LTV for an HDB loan is 80% of the property price).”
Jasmine said, “We briefly estimated whether we could get a bank loan because it would be cheaper, but at that time, we couldn’t afford the 25% down payment. The HDB loan interest rate is 2.6%, whereas banks were offering loans with interest rates below 2% at the time.”
Lesson learned: It’s necessary for home buyers to understand the available home loan options and how much money is needed for the down payment for each type.
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It’s okay if you can’t get a bank loan at first. When you’ve paid off some of your debt and/or have a better earning capacity, you can choose to refinance your home loan.
For guidance on refinancing (or anything related to home loans), please contact our loan experts. They will not only guide you through the entire process but also help you secure the best mortgage rates.
2. Estimate the Down Payment and What You Can Afford
Jasmine added, “In hindsight, I think my advice to others would be to plan ahead and start saving for the down payment early. That way, you can get a smaller loan at a lower interest rate.”
Lesson learned: Start planning a few years in advance so you have time to save money! This will allow you to get a better bank loan and a smaller loan (and incur less interest). A win-win!
Don’t wait until the last minute to start! The first thing you should do before buying a home is to calculate your finances.
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Your First Home: Buying (or Renting) a Resale HDB Flat
3. When You Should Choose to Rent
Our next interviewee is 27-year-old Jane Sia. She and her partner bought a 5-room BTO flat in Tampines and are currently waiting for its construction to be completed.
“After I paid the down payment for the HDB flat, the regular financial commitment became real. Now, whenever I make a major life decision, like what job offer to accept, it stays in the back of my mind and influences my choices.”
Jane advises, “If you really want to live with your partner but are still unsure about your future life path, you might want to consider a more flexible housing option, such as renting a place in Singapore.”
Lesson learned: A mortgage is generally a long-term debt that can take decades to repay (unless you have a lot of zeros in your bank account, in which case, never mind what I said). If you anticipate significant changes in your life or financial situation but want to move to a new place with your significant other, renting might be a better housing arrangement.
From a cost perspective alone, buying a home may be more economical. However, we know that life can’t just be measured in money. For those who want to experience the ups and downs of living together with a partner, renting can be a good compromise.
4. Consider a Resale HDB Flat
At the end of our conversation, Jane left us with another little piece of advice.
“I know friends who applied for popular projects like the Bidadari BTO flats but failed time and time again. They are either unwilling to stay in a non-mature estate (newly built HDB areas) or hope to sell their BTO flat for a profit in the future.
From them, I learned that if you fail to get a popular BTO project three times in a row, it might be time to reassess your priorities or explore the resale market.
While resale flats are older and more expensive, they offer more freedom. You can plan your future life according to your schedule, not the BTO construction timeline,” Jane concluded.
27-year-old Sheryl Low can relate. After trying nine times to get a BTO flat without success, she and her fiancé bought a 4-room resale flat in Bendemeer.
Lesson learned: It’s good to know what you want, but if you find it too difficult to find or secure your ideal home, it might be time to broaden your options.
BTO flats are the first choice for many young couples, which makes the competition for them fierce. If you fail to secure a unit, consider a resale HDB flat or condominium.
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Choosing Your Home: What to Look Out For
5. Set Expectations When Buying a Home
Sheryl’s other piece of advice is to list your priorities when choosing your future home.
“When buying a house, create two lists of requirements: ‘must-haves’ and ‘nice-to-haves’. For my fiancé and me, our ‘must-haves’ were:
- Just a short walk from an MRT station
- No west-facing sun
- Several different eateries around
- At least on the fifth floor or higher
- An unobstructed view (we value our privacy)
Our ‘nice-to-haves’ were: a supermarket nearby, a high floor, and good ventilation. Your ‘must-haves’ should be realistic because unless you have a high budget, you can’t have the best of both worlds.” With this method, she found her dream home in just two months!
Lesson learned: Create a list of ‘wants’ versus ‘needs’ for a more targeted search. Without a list you can constantly refer to, your search for your ‘dream home’ will be very inefficient.
6. Hire a Real Estate Agent
Sheryl also shared her thoughts on hiring a real estate agent. “I didn’t look for a real estate agent myself, but it’s not a bad idea if neither of you has the time or if you’re unfamiliar with the whole home-buying process. A real estate agent will help you schedule viewings and keep an eye on deals you might miss.”
“If you’re arranging viewings yourself, consider scheduling multiple viewings in the same location (within a 20-minute walk). That way, you can easily walk from one house to the next.”
Lesson learned: Hiring a real estate agent is not mandatory, but for busy people, it might be a better choice.
Although Sheryl successfully completed her home-buying journey without hiring a real estate agent, not everyone can do the same. Buying a home involves a lot of tedious procedures, and if you’re not familiar with them, the process can be challenging.
Therefore, if you don’t have the patience to handle the details, you can leave this work to the professionals. You might even gain a new friend in the process.
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7. Details Shouldn’t Be Overlooked (e.g., the house’s orientation)
The last person we interviewed was 27-year-old Susan Sim. She and her then-fiancé (now husband) bought a 4-room BTO flat in Tampines North and have lived there for over a year.
When she bought the house, she chose a north-facing unit. However, after living there for a while, she realized this idea wasn’t as perfect as she had imagined.
She explained, “The orientation of your house is very important. We wanted to avoid the evening sun, so we chose windows that face north. But this meant our whole house was very dark. Our backyard gets almost no sunlight. Even during the day, we often have to turn on the lights. If we had the chance to choose again, we would have picked an east-facing house with better lighting.”
Lesson learned: Details make all the difference! If lighting is important to you, you may need to pay more attention to the orientation of your home, as it affects the brightness and temperature of your residence.
Susan intended to avoid the annoying evening sun, which can heat up a house quickly, but she didn’t realize it would affect the natural light in her home. While most people might consider lighting and ventilation as secondary factors, we believe that light and wind will become increasingly important in the current climate.
Designing and Renovating Your Home
8. Renovating Your Home
Susan and her husband chose to do the renovations themselves to save some money. Only the electrical wiring, plumbing, and tiling were left to the professionals.
They ordered, assembled, and installed the furniture, called family over to help with the painting, and designed the house according to their needs. For example, they don’t watch TV, so they bought a large dining table so they could entertain more family and friends.
Susan warned us, “If you have the Optional Component Scheme (OCS), consider carefully whether you will use and keep each element. For example, if you plan to tear down a wall, don’t choose the flooring option. If you want to redesign the bathroom, don’t tick the box for sanitary fittings. We opted out of many things, but in the end, we still had to tear them down.”
Lesson learned: Design the space according to your needs and renovate based on your budget.
One of the main ‘selling points‘ of the OCS is that you can use your CPF to pay for it as part of your BTO flat’s price. This could mean spending less cash on renovations. However, as Soh Vil has shared, it pays to consider carefully before opting in. The last thing you want is to spend more money on removing these structures!
“One of the main ‘selling points’ of the Optional Component Scheme (OCS) is that you can use your CPF to pay for it as part of your BTO flat’s price. This might mean spending less cash on renovations. However, as Susan has shared, it is extremely wise and necessary to consider it over and over again before opting in. You don’t want to spend extra money to remove the components you paid for!”
Your First Home-Buying Journey in Singapore
Before embarking on your home-buying journey, it’s best to ask around and do plenty of research. But remember, everyone has different needs and preferences; everyone’s situation is unique. Ultimately, you should make the choice that is most comfortable for both of you.
To all who are about to embark on their first home-buying journey, we hope this article has been helpful. If you need help with calculating your finances or are unsure whether to choose an HDB loan or a bank loan, feel free to seek help from our friendly mortgage experts. We wish you a smooth home-buying journey!
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