What You Need to Know Before Buying your First Property in Singapore
Buying your first home is a huge step to take for most Singaporeans. It will be the property you live in for the rest of your lives and should meet all your needs as a growing family.
But before committing to such a heavy investment, you will need to know these things:
Your finances will determine everything
The first thing you need to know before buying a house is your own finances. Don’t overcommit when buying your first home. Check your finances, then start looking at properties that fall within your affordability range. There is no point looking beyond your means, then falling in love with an expensive home that you won’t be able to afford. Be realistic and set your sights within those homes that you can afford.
While checking your finances, you can also check your eligibility. If you’re earning above the income ceiling to buy an HDB (Housing Development Board) flat, then you will have to look into buying a private property, like a condominium.
If you need help with that, Central Provident Fund (CPF) has a useful Our First Home calculator on its website that you can utilize. Don’t forget to factor in your budget for renovations, buying furniture, the agent’s fee of 1% and also monthly utilities.
Your wishlist will serve as an important guideline
Creating a wishlist of criteria that your first home should have is a good guideline for you to find that dream home. It is a useful reference point for you to see your needs now and in the future. If you’re buying your first home with your partner, then make sure he or she includes their criteria in your wishlist before both of you embark on house-hunting. Of course, this should serve as a guideline for non-negotiable elements and some that can be compromised.
If location is a non-negotiable element, then you’ll save a lot of time looking outside your desired neighbourhood. Check out websites and apps like PropertyGuru or 99.co to get a better idea of what you want or need.
Determine your loan: Bank or HDB
Once you’re serious about buying a place, the next step is securing a loan. If you are buying an HDB flat, you can either apply for an HDB concessionary loan or a bank home loan. The interest rate for HDB loans is at a stable 2.6 percent, while bank loans have interest rates that vary. But it isn’t just the interest rates you should look at. HDB charges a late payment interest at 7.5 percent per annum, while banks charge 24 percent. This is an important factor to consider especially in emergency cases.
Another thing to consider is that for HDB loans, down payment can be made with CPF funds with a loan ceiling of 90%, but bank loans require at least 5 percent cash upfront with an 80% loan ceiling. However, do note that HDB loans are restricted to couples who are earning $12,000 and under.
Check for grants
First-time homebuyers can apply for the additional housing grant or special housing grant to offset the cost of purchase. There are a number of grants available by HDB in Singapore, so be sure to see which ones you qualify for from the HDB website.
With all that in mind, you’re ready to start looking for your first home!