We share seven essential pointers for a smooth buying process of a new Build-To-Order flat.
We share seven essential pointers for a smooth buying process of a new Build-To-Order flat.
While buying a resale flat allows you to acquire a home in your preferred location quicker, it is also more costly than a Build-to-Order (BTO) one.
If you’re a first-time homeowner who can afford to wait for a BTO flat, these highly subsidised, brand-new homes offer the best bang for your buck. Here’s what you need to know about applying for a BTO flat.
1. Check your eligibility
Applicants for BTO flats have to qualify either under the Public Scheme, the Fiance/ Fiancee Scheme or the Orphans Scheme. The Public Scheme requires you to form a family nucleus either with a spouse (and your children, if any); your parents (and siblings, if any); or for divorced or widowed applicants, with children under your legal custody, care, and control. Single Singaporeans can apply for a two-room BTO flat, after they turn 35 years old.
At least one applicant must be a Singapore Citizen, with at least one other Singapore Citizen or Singapore Permanent Resident (PR). First-timer households comprising only one Singapore Citizen and one or more PR family members must pay a $10,000 premium at the point of flat purchase. However, should the spouse get his or her Singapore Citizenship, or when they have a Singapore Citizen child in the future, they can apply for the additional $10,000 Citizen Top-Up Grant.
All applicants must be at least 21 years old and meet the Average Gross Monthly Household income ceiling for the flat you intend to buy. For three-room flats, this ranges from $6,000 to $12,000. For four-room flats or bigger, the income ceiling is raised from $12,000 to $18,000 if buying with extended family members.
2. Work out your budget
Some prefer a smaller flat or one in a non-mature estate where prices are lower. Others decide to maximise their shot at buying a subsidised new flat, by booking a bigger or more expensive home in a popular location and stretching their loan tenure to its limit (25 years for HDB’s concessionary loan; 30 years for private banks). Many assume that their salary will definitely increase over the years and may ambitiously plan for a bigger loan quantum.
Always be more conservative when considering future unearned income; you never know if unforeseeable circumstances – such as illness, retrenchment or even further studies – may affect your ability to finance your loan.
Sit down with your partner and list your combined income, and current and future foreseeable expenses such as student loans, car loans (or public transport costs), insurance premiums, food and other personal expenses. Be realistic in your expectations of maintaining a particular lifestyle. After doing your sums, you’ll have a better idea of which area, or how big a flat, to target.
3. Plan for future logistic needs
Do you need to live near your parents, whether to care for them in their old age or to tap into their babysitting help? What about your kids’ future schools?
One family found themselves in such a fix. Then childless, the couple bought their BTO flat in Jurong West. They decided to enrol their children in their alma mater, a primary school in central Singapore. They relocated a little closer when the eldest child started school, but the younger one still attended a childcare centre near their old home. Over the next few years, the couple spent a fair bit of time and money commuting daily, until both kids were finally in the same school.
4 . Consider different neighbourhoods offered in the BTO launches
HDB announces its BTO launches every February, May, August and November, which are publicised in the local media and on the HDB’s website (www.hdb.gov.sg). This month sees launches in Bukit Batok (1,410 units) and Sengkang (2,440 units) offering two-room flexi, three-room, four-room and five-room flats. To get reminders about the latest launches, subscribe to the HDB eAlert Service on the website. Also check out Sale of Balance Flats (SBF); the most recent runs were in November 2016 and May 2017.
While you should not rush into booking a unit if the locations are not ideal for you, do explore options with an open mind. Singleton Charlene Sim did not even consider Bukit Batok initially, as she preferred a home in central or eastern Singapore. After several rounds of BTO launches, she decided to visit the Bukit Batok site to get a better feel. Pleasantly surprised by the neighbourhood’s proximity to malls in Bukit Batok and Jurong East, she booked a two-room unit at Bukit Batok’s West Edge during the February 2015 BTO launch. Another plus: Its affordability. Her unit is below her budget and only costs $115,000, which she can pay off fully with the funds in her CPF Ordinary Account.
5. Milk your first-timer benefits, priority schemes and grants
Being a first-timer (or a couple comprising a first-time and second-time applicant) allows you to enjoy a larger proportion of flat supply depending on the flat type and its location, and two ballot chances compared to second-timers. If two or more of your applications are unsuccessful for BTO launches in non-mature estates, you’ll get an extra chance per subsequent application. However, if you have previously cancelled a flat application or declined to book a flat twice, you have to wait out a one-year period before applying again.
Apply for priority schemes if everyone listed in your flat application is eligible; you can get priority for up to two schemes. These include the Parenthood Priority Scheme, Multi-Generation Priority Scheme, Married Child Priority Scheme, Third Child Priority Scheme, Tenants’ Priority Scheme and Senior Priority Scheme, which boost your chances in the computer ballot.
Most importantly, grab the grants! If you booked a two-room flexi or bigger flat, your family’s income is $5,000 and below, and both spouses have been employed for 12 months prior to your flat application, you qualify for the Additional CPF Housing Grant. The Special CPF Housing Grant is also available for those who booked a two-room flexi, three-room or four-room flat in a non-mature estate, with a more generous income ceiling of $8,500 per family. Both grants range from $5,000 to $40,000, depending on your household income.
6. Prepare for the booking
Once you’ve decided on a suitable BTO launch, submit your application within the one-week application period, with a fee of $10 via HDB’s website. You can also visit HDB Hub or any of HDB’s branches. It takes about 1½ months (or 2½ months, for SBF launches) after the closing date to notify you if you’ve been successful. Depending on your queue number, you will be invited to select and book your flat within one to two weeks.
On the day of booking, bring your identity cards (or birth certificates, for children, and passports for non-citizens) of everyone listed in the application. If you are buying a flat under the Multi Generation Priority Scheme or Married Child Priority Scheme, you need your birth certificate and your parents’ marriage certificate, too.
For the Parenthood Priority Scheme, a doctor’s certification of pregnancy or your child’s birth certificate is required. Also show your income documents to assess your income ceiling and for the Additional CPF Housing Grant or Special Housing Grant. Prepare to pay an option fee of $500 for a two-room flexi flat, $1,000 for a three-room flat, or $2,000 for a four-room, five-room and Executive flat. This goes towards your down payment, which will be paid during the Signing of Agreement for Lease held within the next four months.
If you’re taking a HDB concessionary loan (with an interest rate currently pegged at 0.1 percent above the CPF Ordinary Account rate), apply for an HDB Loan Eligibility letter online at HDB’s website. Your down payment will be 10 percent of the purchase price, which can be fully paid using your CPF funds and/or cash.
For bank loans, you need a valid Letter of Offer from the bank. Your down payment is at least 20 percent of the purchase price (depending on the loan ceiling), of which 5 percent must be in cash and the rest using CPF funds.
In addition, buyers must pay stamp duty, the conveyancing fee and caveat registration fee, which depends on the price of your flat. Take along your identity cards, the receipt of your booking fee, your bank passbook and a photocopy of the page stating your name and bank account number (so that it’s easier for HDB to reimburse your booking fee directly to your account, if necessary) and latest CPF statements.
Now, all you have to do is wait – usually about three years for a BTO flat. If you’d purchased an SBF flat, this can be as short as three months as you may sign the Agreement for Lease and collect the keys at the same time.
7. Collect your keys and check for defects
During your key collection, you need to pay a survey fee, registration fee and stamp duty on the Deed of Assignment; costs vary depending on your flat type and loan amount. Take along your identity cards, marriage certificate for those buying a flat under the Fiance/ Fiancee Scheme and who applied for the Additional CPF Housing Grant, latest CPF statements and certificate of insurance.
Those taking a HDB loan must buy fire insurance from HDB’s appointed insurer, ETIQA, located at HDB Hub’s Atrium.
If you are using your CPF funds to pay your instalments, you need to apply and pay for the Home Protection Scheme. If you plan to pay your monthly loan instalments partially or fully by cash, you need a completed GIRO form.
Your new HDB flat is covered by a warranty within the one-year Defects Liability Period, from the date you collect your keys. Make sure you report all defects to the Building Service Centre within seven days of receiving your keys, and before you start your own renovation. The warranty will not cover rectification items that surface during or after that.
Give yourself ample time to sort out everything. Tan Yi Leng, who just collected the keys to her new three-room BTO flat, shared that she found over 20 defects, from severe scratches on her doors to a crooked clothes rack and chips on her walls. It took three rounds of rectification before most were done satisfactorily. In contrast, a neighbour, who was in a hurry to get his renovation started, decided to make do with minor rectifications and paid his contractor to do the rest.
DURING YOUR KEY COLLECTION, YOU NEED TO PAY A SURVEY FEE, REGISTRATION FEE AND STAMP DUTY ON THE DEED OF ASSIGNMENT.
