How Much Must You Earn to Buy a HDB BTO Flat in Singapore?
Cost is definitely one of an ongoing issues where most Singaporean couples face today when they progress further and take their relationship into the next level where they apply for a house together. Owning a home may sound scary as this is a HUGE responsibility and commitment that both you and your spouse have to come to a decision at some point during the course of your relationship.
If you were to apply a BTO flat with HDB, chances are you would not be able to fork out the whole lump sum at a go. Hence, the government has extend help to aid with the financing of the BTO unit for especially for first timers applying. The cost of a BTO unit can be paid off through a loan taken either from a bank or directly from HDB, cash, CPF, and additional grants from the government.
Leaving aside the eligibility requirements and prerequisites that any couple should abide to in order to be eligible to apply for a BTO with the HDB, here are the income capped that entitles you to apply for the room type that both you and your spouse are looking for.
Minimal upfront payment is required, if you are eligible for most of the housing grants that the government is providing to aid couples financially and the remaining bulk of the amount can then be paid via instalments which can be taken up either with HDB or a bank.
The above income ceiling is taken from the HDB website, where it states that so long your average combined income does not exceed or hits that certain amount, you are eligible to apply for that particular BTO flat type. But if you or your spouse, or both combined were to surpass the amount stated, you will not be eligible to apply for a BTO.
Referring to the Monthly instalment calculator that HDB has provided for the ease of calculating the monthly instalments for couples here are a couple of questions and considerations you should be asking yourself as a couple beforehand.
➜ How much ready cash do i want to want to fork out?
➜ How much loan do i intend to take out with HDB?
➜ Factoring in the interest rate, how long do i intend to clear that loan?
➜ Is my current salary able to finance the monthly instalment? Will it be too tight on us?
The general rule of thumb and for those that does not want to further finance any extra interest rate, their loan should be kept at minimum and cleared ASAP to reduce the chances of incurring further interest rate costs.
DISCLAIMER: Loan amount, years of repayment and interest rate is only used for reference purposes only.
For instance, if you were to take up a loan amount of $350,000 and you wish to fully repay your loan amount with a time frame of 20 years, the interest rate as of 1st October 2018 would be 2.60%, computing the final monthly repayment amount to be $1,872. Hence, this is the amount that both husband and wife must repay on a monthly basis for their housing loan.
Below is a list of expenses that a newly wed couple, supposedly would typically incur and should be factored in as part of their ongoing monthly expenses that comes along with the BTO unit.
- Monthly housing loan – $1,872
- Utility bill (e.g. electricity and water) – $150
- Telecommunications bill (e.g. Mobile and internet) – $150
- Transportation (individually) – $200 – $300 x 2
- Food (individually) – $300 – $500 x 2
- Insurance – $100 – $300 x 2
- Misc (e.g. Medical leave, entertainment, supper, etc) – $200
- Savings – $200 x 2
- Total – $3,972 (Conservative)
- Per person has to fork out $4,072/2 = $1,936
NOTE: Above is purely just an example an in no way should anyone be using it as a gauge or benchmark.
Buying a HDB BTO unit is not that simple as just buying a computer or a TV set, the expenses that comes along with it, long term expenses to be exact has to be accounted for and money to be set aside to pay them at ease, else if you were to shoulder upon a house that is beyond your financial capability, the both of you would only suffer in the end. Do also take note that you have to include renovation costs and big ticket item such as new furnitures.
The long-term expenses that comes along with a HDB flat includes:
- Fire insurance (In case of fire accidents, or if the fire were to spread from neighbouring units
- Utility bills (Internet connection, electricity, gas etc)
- Property tax
- Conservancy fees
- Housing loan instalments
Before CPF deduction, each person has to be earning at least $2,500, which equates to them getting to take home $2,000 to satisfy the above example. Not factoring in if there were to be a personal car or motorbike involved in the family, and supposedly no one were to meet into any accident or mishap where they would be hospitalized, incurring further expenses.
The initial stages of any newly wed couple would pose a challenge for most financially as some would struggle to pay off one time off lump sums with things such as furnitures, renovations, and household items, but after settling down, the monthly expenses should drop and stabilize moving forward.
Hence, there is no specific amount that we would urge you to be earning, however you should take the above into serious considerations while making your decision to when it comes to applying for a new BTO or buying a HDB flat. You should also save aside money to procure furnitures, household accessories, daily essentials for the house, utility bills, internet and phone bills etc. You should aim to earn as much as you can, having your family in mind and even making plans for your children and future generation. Having a home may seem relatively easy and doable for most couples, but maintaining it is another ball game as you are not allowed to sell off your new BTO unit within the first 5 years of obtaining it. Hence, both husband and wife should make certain plans, stick to it, and work towards that goal of achieving the ideal dream home where you can start a family and settle down comfortably. If you have more questions and doubts and need further information, you may reach out to HDB or read up more from their comprehensive website.