Buying your first BTO

Singapore HDB flat and thunderstorm at night
Lightning strikes near residential area during a heavy stormy night.

Buying a flat is not nearly as daunting as people make it to be but for a first-time buyer it can still feel overwhelming. HDB does a rather good job of preparing the buyer but sometimes, the technical language used on the site can be easily misread.

In the spirit of streamlining things, here are a few things to take note of when you embark on the process toward acquiring your first flat.

Eligibility

Before you apply, you will need to determine your eligibility for buying a flat as well as taking a loan. Check your income (combined or otherwise) and if you meet these requirements, then ensure you have enough money for preliminary deposits.

For example, a $2,000 deposit is required when going for the first appointment after being issued a queue number from the ballot. The amount however, varies according to the size of the unit chosen.

Documents

There are many potential documents to prepare but the three most significant ones are

  • a copy of your identity card(s)/passport
  • a copy of pay slips (six months at least as proof of stable income, including latest)
  • a copy of your CPF (also minimum six months, including latest)

These three documents are the most consistently requested ones. If the buyer is looking to benefit from the Family Grant of Additional CPF Housing Grant, then additional documents such as the parents’ marriage certificates and/or birth certificates will be required. The parents will also need to be present for the first appointment to sign some documents.

If all the documents are in order, you get to choose your flat then sit through a three to six month wait before HDB calls you down to sign the lease. During that time, you will need to secure a loan either from HDB or a bank and have those documents ready for the next appointment.

If you are taking a loan from HDB, then you’ll need to bring along the HDB Loan Eligibility Letter (HLE) as well.

For resale

The procedures for resale are more or less the same. Unlike buying a new flat however, you obviously skip the balloting and selection process. Utilizing an agent to secure you a resale apartment is crucial to ensuring that the paperwork is carried out with minimal fuss.

Ensure you have a credible and knowledgeable agent to assist you as well as sufficient CPF funds and/or cash to make the payments on the appointment date.

One critical thing to consider before committing to signing the Option to Purchase is the leasehold remainder. HDB’s new ruling as of a few years ago states that flats with less than 60 years left on the lease have various stipulations. For flats with less than 30 years left on the lease, no CPF can be used. Flats with less than 60 years but more than 30 can still be paid with CPF but only if the age of the youngest person (in a couple or family nucleus) buying plus the remaining lease of the property adds up to at least 80 years.

Following this, the maximum amount of CPF that can be used is pegged at the percentage of the lower of the purchase price and the value of the property. The final percentage of the CPF amount is then calculated from the remaining lease of the property when the youngest eligible owner using CPF turns 55 divided by the remaining lease at the point of purchase and multiplied by the lower of purchase price / value of the property.

Due to the over complicatedness of this particular stipulation, it is crucial to have an agent with the knowledge to shepherd you through the transaction, should you wish to purchase a flat that has less than 60 years left on the lease.

The ruling is quite obscure but a good agent is expected to know of this and will make the necessary checks to prevent from entering into an OTP signing while blind to this rule.

More info on the CPF stipulations can be found here.

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