By : Benjamin Chew
05 December 2017
“Many have said that an HDB flat purchase is probably one of the biggest investments most Singaporeans would make in their lives. We totally agree!”
Li Jun and her husband, James, are newlyweds who had collected the keys to their home earlier this year. Drawing from their experience, they give some useful tips for first-timer home buyers.
• Be clear about your needs
We wanted to buy a new Build-to-Order (BTO) flat, and knowing that we would need to wait a couple of years for it to be ready, we started 2 to 3 years earlier.
Another key consideration is to live near our parents. It would be more convenient to visit them and vice versa. Both our parents live in mature estates. We decided to buy a flat in a non-mature estate that is closer to our parents’ homes. The prices would be more within our budget. As newly-weds, we did not want to be saddled with a big loan.
• Get the right information and advice
We looked up the HDB InfoWEB and found the information we needed. We also talked to family members and friends who are existing home owners for additional advice.
We found that doing research and speaking to people who have been through the process very helpful. Especially, when it came to the planning of finances as buying a flat is a long term financial commitment.
• Plan finances prudently
Lots of homework was done when it came to planning our finances for the flat. We found the step-by-step guide on financial planning on the HDB InfoWEB very useful.
Prudency is always our primary consideration as we want to service the housing loan comfortably and have sufficient money for other items, such as holidays. Therefore, we set a housing budget that enables us to service the monthly instalment solely by CPF.
• Determine loan amount
We also applied for the HLE letter to find out the loan quantum that we were eligible for. We had a good gauge of our budget based on our CPF savings, and factoring in other fees such as the down payment, stamp duty, and legal fees.
We decided to take up an HDB loan which offers a stable interest rate, and the option to make early repayment without penalty. This means that we are able to make partial redemption of the outstanding housing loan flexibly, and clear the housing loan as soon as possible without having to pay more interest.