Buying a house all by yourself might seem impossible now, but with some planning, you can get there. Here’s what you need to know.

Portrait of Tammy Strobel

Buying a house all by yourself might seem impossible now, but with some planning, you can get there. Here’s what you need to know.

If you didn’t already know, Singaporeans who have never been married before can buy a HDB flat once they turn 35. While you may not be eligible for another decade or so, it’s a good idea to know how much you’ll need to buy a flat so you can start getting your finances in order. 

We talk to Amy Lim, an associate division director at Propnex Realty, to help you figure out what sort of flat you’ll be able to get at 35, and how much you’ll need to put down for it*. 

BTO or Resale? 

There are two main options when it comes to buying a HDB flat: brand new Build-to- Order (BTO) flats or resale flats from the open market. 

If you’re earning $6,000 or less a month, you can apply for either. But if you’re earning more than that, you can only apply for a resale flat. 

If you go for a BTO flat… 

BTO flats have 99-year leases and are generally much cheaper than resale flats. According to Amy, a two-room BTO flat in Punggol goes for about $130,000. Assuming you pay for 20% of it in the beginning (whether using cash or your CPF), and pay the remainder over 20 years, you’ll have to fork out less than $500 a month for your flat (which can be paid with your CPF). 

However, there are a few catches if you take the BTO route. Firstly, they take three to four years to build, so it’ll be a long wait before you can move in. And no, you can’t apply for a BTO before turning 35, so by the time you get yours, you’ll be at least 38. 

Secondly, you can only apply for a two-room BTO flat in non-mature estates like Punggol, Sengkang and Hougang. This is because the bigger BTO flats are reserved for families.  

You can also forget about getting additional income by subletting or renting out your flat. “The government felt that since BTO flats are already subsidised, they shouldn’t be used as a money-churning tool,” explains Amy. 

If you go for a resale flat… 

If you can’t wait to move into your own pad, resale is the way to go. In fact, you can get the keys to your flat in as short as a few months after application. And since there aren’t any size restrictions, you can even get a five- room flat if you can afford it, and sublet the spare rooms immediately for extra income. 

Also, resale flats are usually located in mature estates, so you can get a flat in a town with lots of amenities like Tampines or Toa Payoh if convenience is a priority. 

As for cons: naturally, a resale flat has a shorter lease. If you decide to sell off your flat in the future, you’ll have to bear in mind that the value of your flat will decline as you get closer to the end of your lease. 

Also, expect to shell out a lot more cash—a three- room resale flat in Punggol is about $350,000. And then there’s the generally higher renovation cost, since the older flats probably won’t be in tip-top condition. 

How much cash do you need? 

Unless you decide to pay off the entire cost in cash, you’ll have to choose between getting a HDB loan or a bank loan. 

The biggest difference is the amount you’re allowed to borrow—HDB loans can cover up to 90% of the cost of your flat, while bank loans only 75% (as of July 2018). Also, HDB loans let you pay your down payment fully using your CPF, while for bank loans, you’ll need to pay at least 5% of the total flat value in cash. 

So let’s say you want to get a two-room BTO that costs $130,000. If you take a HDB loan, you might not have to spend a single cent upfront if you have enough CPF savings. If you go for a bank loan, you’ll need to pay at least $6,500 in cash. 

Either way, there’s also miscellaneous administration and legal fees, but they likely won’t exceed $10,000 in total and can for the most part be paid with your CPF. 

If you’ve been consistently employed and frugal with your money, these amounts may not be as intimidating as you thought. Of course, you’ll also need to factor in renovation costs (according to Amy, a safe budget for renovation is $20,000) and furniture purchases, but if you’ve been saving, you may well be able to afford a place to call your own when the time comes. 

*Based on current guidelines. 

Why go for a bank loan?

Bank loan interest rates today are generally lower (about 1.3% to 2%) than HDB loans (about 2.6%), so you stand to save money in the long run. However, while HDB loan interest rates are fixed, bank loan interest rates fluctuate from year to year, and may even be higher than that of HDB loans in the years to come.