Buying your first home is a rite of passage every young person longs to achieve. It is one of the biggest financial decisions to make, and in Singapore, it can also be an extremely complicated procedure, especially if you have decided to buy a Build-to-Order (BTO) flat.
Luckily, the Additional CPF Housing Grant and the Special CPF Housing Grant provide up to S$80,000 in financial aid for first-time buyers, which makes at least the financial aspect of buying a BTO a little easier. HDB has a comprehensive guide where you can find out all the details about the grants.
Now, let’s take a look at what other steps you need to take to get your dream home.
We’ve broken down the BTO flat-buying process into five steps, which includes all that you need to know.
1. Check if you’re eligible
If you’re applying with a partner, at least one of you must be a Singapore citizen.
You can also apply if you’re a citizen over the age of 35, but you’ll only be eligible for two-room flexi flats in non-mature estates. The next eligibility hurdle is income. There are several income tiers depending on the flat’s size and location, and you should check the specific income ceiling of the flat you’re interested in.
2. Let the balloting begin
HDB announces its upcoming sales every quarter, and the easiest way to stay updated is to check their website regularly, or sign up for email or SMS alerts. When you see a development you like, you must submit your application during the one-week application period and pay a S$10 admin fee. This is the trickiest part of all – since the number of people applying is usually much higher than the number of flats available, it really depends on your luck. Some people get it on their first try, while others have to ballot for years. The results are released in approximately six weeks.
3. Secure a loan of your preference
After you’ve balloted, the next step is to make sure you can pay for a flat. Even with the CPF grants mentioned above, you will likely still require a loan to pay for your flat. You will need a loan document before you can sign the lease, and you have two options for this – an HDB loan or a regular bank loan. Upon approval, they will both present you with a document that declares how much they are willing to lend to you.
The letter from the bank is called an approval in principle (AIP) and HDB’s equivalent is the loan eligibility letter (HLE). Do note that a HLE is valid for six months, and an AIP’s validity typically ranges from two weeks to one month, depending on the bank you engage (some banks provide longer validity periods, like Citi Bank, which offers two months’ validity). The loan amount you receive will depend on your total debt servicing ratio (TDSR), which allows only a certain percentage of an individual’s monthly income to be used towards loan repayments.
4. Pay the option fee
If you’ve been assigned a flat, congratulations! Within 1-2 weeks of the results being released, HDB will invite you to an appointment where you can choose your desired unit number. The date of your appointment depends on the balloted queue position, as the invitation to choose your unit number is called in sequence. You can check its availability before attending the appointment. Depending on the size of the flat you’ve selected, you will need to pay an option fee of S$2,000 (4-5 room flat), S$1,000 (three-room flat), or S$500 (two-room flat).
5. Sign the lease agreement
A few months after paying the option fee, you will be invited to sign the lease agreement. This is when you have to shell out your down payment, so be sure to get your finances in order. You also have to provide a long list of documents to complete the process. When everything is done, HDB will let you know the expected completion date of your flat, and you’ll be invited to collect your keys in about 2.5-5 years’ time.
Even though this sounds like a lot of effort, it all pays off in the end when you finally receive the keys to your brand new home. So if you’re eligible, you should definitely consider making your first home a BTO flat.