Life in Singapore can feel like a constant balancing act – juggling career ambitions, wedding preparations, and the dream of owning your first home. If you’re in the midst of this whirlwind, it’s natural to feel overwhelmed. Add the financial planning for a new HDB flat to the mix, and it might feel like there’s too much on your plate.
If you’re new to exploring housing options, don’t worry! Whether you’re considering a Build-to-Order (BTO) flat or diving into the resale market, this guide is here to break down the essentials of HDB downpayments, helping you plan your finances without unnecessary stress.
The basics of downpayments
Simply put, a downpayment is an upfront cost you need to secure your flat. This cost varies depending on whether you’re applying for a BTO or buying a resale flat. Factors like your financing option – whether it’s an HDB loan or a bank loan – also impact how much you’ll need.
Let’s explore the details of BTO and resale flat downpayments so you can make an informed decision.
1. HDB BTO downpayments
A BTO flat is a popular option among young couples planning their future together. These flats are typically more affordable than resale options, and as long as you’re willing to wait a few years for your flat to be built, they’re a great starting point for first-time homeowners.
Here’s a breakdown of the typical downpayment required for an HDB BTO flat:
- Using an HDB loan: If you qualify for an HDB loan, you’ll need to pay a 20% downpayment of the flat’s purchase price. This can be paid using your CPF Ordinary Account (OA) savings, cash, or a combination of both.
- Using a bank loan: If you’re opting for a bank loan instead, the downpayment increases to 25% to 45%. For the former, at least 5% is required in cash and the remaining 20% from CPF savings or cash, and for the latter, at least 10% is required in cash and the remaining 35% from CPF savings or cash.
For example, if your BTO flat costs $400,000:
- With an HDB loan, your downpayment will be $40,000.
- With a bank loan, you’ll need $100,000, with at least $20,000 in cash.
2. Resale flat downpayments
Resale flats are a great choice if you’re looking for a ready-to-move-in option or prefer a specific location. However, these flats often come with a higher price tag, which means a higher downpayment.
Here’s what you’ll need for a resale flat:
– Using an HDB loan: The downpayment is also 10% of the purchase price, similar to a BTO flat, and can be covered by your CPF OA savings, cash, or both.
– Using a bank loan: The downpayment requirements vary based on the Loan-to-Value (LTV) ratio:
- LTV up to 75%: You’ll need a downpayment of 25% of the purchase price, with at least 5% paid in cash and the remaining 20% covered by your CPF Ordinary Account (OA) savings or a combination of CPF and cash.
- LTV up to 55%: In this scenario, the downpayment increases to 45% of the purchase price, requiring at least 10% in cash, with the remaining 35% payable using your cash, CPF OA savings, or a combination of both.
Let’s say the resale flat you’re eyeing costs $600,000:
- With an HDB loan, your downpayment will be $60,000.
- With a bank loan, you’ll need $150,000, with at least $30,000 in cash for an LTV up to 75%. For an LTV up to 55%, you’ll need $$270,000, with at least $60,000 in cash.
Other costs to consider
Aside from the downpayment, there are other costs to prepare for when buying a flat:
1. Stamp duty: This is a tax payable based on the purchase price or market value of the flat, whichever is higher.
2. Legal fees: Whether you’re using an HDB or bank loan, legal fees apply.
3. Option fee: For resale flats, you’ll need to pay an option fee to secure the flat.
Key differences: BTO vs resale
| Feature | BTO Flat | Resale Flat |
| Wait Time | 3 to 5 years | Immediate |
| Price | Lower, subsidised | Higher, market rate |
| Location Choices | Limited | Wide range of options |
| Downpayment | Lower | Higher |
When deciding between a BTO or resale flat, consider your timeline, budget, and priorities. If affordability and subsidies matter most, a BTO flat may be ideal. If convenience and specific locations are your top concerns, a resale flat could be worth the extra cost.
Planning your finances
It’s crucial to have a clear financial plan before committing to a flat purchase. Calculate your budget, including monthly instalments, and set aside an emergency fund for unexpected expenses. Remember, the amount of HDB loan you can get also depends on your financial situation and loan eligibility.
If you’re still unsure, take advantage of CPF calculators and housing tools to better understand the numbers involved. This way, you can confidently plan for your HDB BTO or resale flat downpayment and how much to pay upfront.
But despite careful planning, unexpected expenses can crop up, especially when juggling wedding costs, daily living, and flat payments. That’s where instant cash loans can offer a short-term solution. While they shouldn’t replace proper financial planning, these loans can help manage temporary cash flow challenges without derailing your homeownership journey.
Conclusion
Deciding between a BTO and a resale flat requires careful thought, financial preparation, and an understanding of your priorities. While BTO flats offer affordability and subsidies, resale flats provide immediate availability and more location options.
If managing upfront costs feels overwhelming, Orange Credit can help. We are a licensed moneylender in Singapore, offering business loans, personal loans, and more. Click “Apply with Myinfo” to get your loan quote for free and take the next step towards your dream home!
