Buying a house is a big commitment.
It doesn’t matter if you are:
- Doing it purely for investment — in that case, you should read our Ultimate Guide to Property Investment in Singapore; or
- Buying your first BTO to settle down.
There’s a lot to consider before you take the plunge, be it finances, what type of property you want to buy, renovation, whether you plan to sell the property later, and so on.
When I put in my bid for my BTO, I didn’t have much planned. I only knew three things: 1) I really, really wanted to stay in a particular area, 2) I was quite sure that I would marry the person that I was putting in the bid with, and 3) It only cost $10 to put in a bid… and besides, would we even be so lucky on our first try?
Okay, I exaggerate, but I think it would have been a much better experience if I had been able to set aside more for my renovation, properly decide if I had wanted a bank loan or HDB loan, put more thought into buying for investment, explore the possibility of buying a private property and so on. And guess what, I didn’t even tell my parents that I had balloted for a house!
So that you don’t rush headlong into things, risk making an uninformed decision, or even worse, face external pressures dictating what you should do with your life and money at this stage;
here are some tips to help my fellow millennial women buy their first property.
Get your finances in order
To start you off, why not check out our Affordability Calculator? It helps you calculate how much mortgage you can actually afford, that’s within your current earning capabilities.
Here is a rough breakdown of how much you should expect to pay every month:
- 3-room HDB flat (about $300k) — roughly $1,500/month
- 5-room HDB flat (about $560k) — roughly $2,800/month
- Executive Condominium (about $1 million) — roughly $4,000/month
- Condominium/RCR (about $1.6 million) — roughly $6,000/month
- Good Class Bungalow (about $25 million) — roughly $45,000/month
Of course, divide the cost by 2 if you’ll be buying the property with someone. Do note that you’ll also need to pay the downpayment upfront. This can range from 10%, right up to 25% of the total property price — typically you will need to pay in a mixture of cold, hard cash and CPF funds. Additional costs include legal fees, stamp duty, agent fees and so on.
Check your CPF account
If you’re planning to use CPF for your downpayment and monthly mortgage instalments, do log in to your CPF account to check how healthy it is.
Chances are, if you’ve been working for 5-10 years and have a stable income, your CPF savings should be sufficient to cover your downpayment and a monthly mortgage of an HDB flat. You might even have extra funds that’ll help you reduce the monthly payments even further.
I pumped ALL of my available CPF Savings in my Ordinary Account into my HDB flat, and my monthly CPF contributions more than cover the mortgage. This meant I had zero cash outlay, which in hindsight, I should have thought twice about.
Please don’t be like me and read this article before you do anything: 4 Reasons You Should Not Use Your CPF To Pay For Your House
Instead, I should have opted for a bank loan instead, and use as much cash as possible to pay for my flat. This would leave me with more savings for my retirement; so I could enjoy my heard-earned CPF savings once I choose to retire.
Know what type of property you’re eligible to buy
Unfortunately, you need to fulfil certain criteria before you can buy property in Singapore.
For starters, if you want to buy an HDB flat, you need to be either a Singapore Citizen or a Permanent Resident. Singles can only buy an HDB property (resale/BTO) if they are 35 and older; if the single person is widowed or orphaned, they can buy the HDB property if they are 21 years old and above. If you don’t fulfil these conditions but still want to buy an HDB flat, you’ll need to either 1) be married, 2) be planning to marry, 3) be part of a nuclear family. You’ll still need to be 21 years old and above.
Those who want to buy private property don’t face as many restrictions, but they’ll still need to be at least 21 years of age — when you are legally an adult in Singapore.
How are your finances and what is your potential earning power in the future? As mentioned above, always spend within your means. Not many of us can afford a GCB in this lifetime, but many of us should be able to buy an HDB flat in our 20s/30s!
Know the purpose of your property purchase
Are you buying a home or investment? If you’re buying a home, are you buying it as a single or with your partner? Are you planning to stay single, get married and/or have children? Do you plan to sell the property after the MOP or rent it out?
No pressure, it’s just important to have an idea of what your future might look like. Different goals require different property purchasing decisions.
For example, I bought a flat in a neighbourhood close to my mum’s place, where I knew I’d want to live for a long time. We don’t intend to have kids, so we bought ourselves a small home.
Similarly, some of my friends bought homes in areas that will see property prices appreciating with the increase of amenities. They plan to sell the flat after the MOP, either as an investment or towards buying a private property.
We must also consider factors affecting your decision depending on your lifestyle, commute, family life, and social life. You might want to live somewhere close to a park, nearby a community centre, closer to the main road or with good parking; perhaps you want to be in a lively area with nightlife, or an area a bit more recluse in a quiet neighbourhood.
It’s good to know how much price ranges within each area in Singapore, and how much they can increase depending on development plans for the region. This applies regardless of whether your property is being purchased to be sold later or lived in right now.
Some useful links:
Know the order: Go private after public
Many of us hope to own more than one property, and sometimes we jump right into buying a condominium just because we can afford it.
Just know the order — you can buy a private property if you have an HDB flat, but you cannot buy public housing once you already own private property. You’ll need to sell your private property first.
So if you want to own an HDB flat eventually, do take note of this.
Keep your credit rating in tip-top shape
Pay your credit card bills on time, manage your finances well, don’t default on a loan, etc. If you maintain a good credit rating, it’ll be easier for your loan to be approved when you want to purchase your property. You might also be able to get a larger loan.
Reach out to the Credit Bureau of Singapore to get a copy of your credit report (admin fee of ~$6).
Know your jargon
It pays to know acronyms and jargon before you make your first property purchase. Some key terms include TDSR — or Total Debt Servicing Ratio. Even though a good agent or HDB officer will definitely help you through the process, knowing your stuff will put you in good stead.
Staying on top of property reports and global events will keep you in the know. It is important that you understand property terms, it’ll prevent you encountering agents who tend to assume that women are clueless or easy to deceive.
Ask all the questions you might have, clarify anything that seems vague or potentially misleading, and view the property as many times as you need. After all, we don’t know what we don’t know — so make sure we know as much as we can!
Start researching for your investment now
Start off by immersing yourself in property news, take note of new launches, last transacted prices, infrastructure developments and so on, even if you don’t plan on purchasing said property for a few years to come. As mentioned above, knowledge truly is power.
You can also check out our questions on investing in Singapore, with answers and advice from the helpful PropertyGuru community. We also have a wealth of knowledge available — there’s a Property Resources page and we also produce detailed and insightful reports such as the Singapore Property Market Outlook 2020.
There’s no time like the present to kick start your property buying journey!
Stay confident, know what you want & stand firm!
Finally, you need to stick to your guns. You go, girl! You’ve already done all the necessary calculations and research.
If there’s anything that makes you uneasy about a deal, or any feature in the showflat that turns you off — don’t settle. Don’t feel like you’re an inconvenience either just because you need time to make a decision or are afraid of taking up other people’s time. No more of this!
Buying property is not like nipping to the store and casually grabbing a jar of peanut butter; as a big-ticket item, your involvement in the decision process is crucial.