New vs. old flats: What can you afford?

BTO v Resale 02

Housing affordability is a big deal in Singapore, and if you are looking to buy an HDB flat, you may be wondering if you should get a resale or BTO flat. While there are a number of differences between the two, the first question to ask yourself is which type you can afford.

 by Cheryl Marie Tay

The context of cost

According to HDB’s website, the price of a four-room Build-to-Order (BTO) HDB flat in a mature town such as Bedok starts from $408,000 before grants, while the price of a four-room resale flat in the same estate starts from $600,000.

Assuming you are house-hunting for a BTO flat in Bedok with your spouse-to-be and

  • you are both Singaporean
  • your combined household income does not exceed the HDB’s income ceiling of $12,000 for a four-room BTO flat, and
  • this is your first or second HDB flat

You are eligible for the Special CPF Housing Grant (SHG) of up to $20,000, depending on your household income. You can also buy a BTO flat under the Fiancé / Fiancée Scheme for new flats.

On the other hand, if you are in the market for a resale HDB flat, note that there is no income ceiling for the purchase of such a flat. There is, however, an income ceiling for CPF Housing Grants and HDB housing loans.

For instance, if you are both first-time applicants and your combined monthly household income does not exceed $12,000, you can receive a Family Grant of $30,000. However, if one of you had previously received a housing subsidy, you are eligible for the Half-Housing Grant, whose amount is half the Family Grant you would qualify for if both of you were first-timer applicants.

There are also non-financial rules and regulations regarding the purchase of a resale flat, which are all stated on the HDB website.

Additional costs

Aside from the aforementioned costs and grants, other costs to consider when you are trying to ascertain whether you should buy a BTO or resale flat include renovation and interior design costs.

Such costs are typically more applicable when it comes to resale flats, as potential buyers quite often want to replace the old fittings, flooring, and furnishing, as well as give such flats fresh coats of paint to brighten up their living spaces.

But while you probably don’t need to renovate a BTO flat, you might find that the interior doesn’t suit your personal tastes. As such, you might consider engaging an interior designer or design firm to help make your ideal home aesthetic a reality. Do also note that new BTO flats do not come with furniture, so that would have to factor into your budget.

Other differences

Resale flats, apart from being older than BTO flats, also tend to be more spacious. At the same time, they are usually located in mature estates, such as Bedok, Tampines, Marine Parade, Bishan and Jurong East. This means resale flats are more likely to be located within walking distance of — or a short bus ride from — amenities like bus stops, MRT stations, schools, eateries, shops, markets, supermarkets and even suburban malls.

While BTO flats in non-mature estates, such as Sengkang and Punggol, are also located close to schools, malls and public transport, the same amenities in mature estates tend to be more numerous and well established.

Another main difference between BTO and resale flats is the waiting time to move in. If you successfully apply for a BTO flat and are allotted one, you have to wait around two to four years for the flat to be built before you can move in. While waiting, you might have to live with your parents or in-laws, meaning a lack of privacy for you and your spouse. Alternatively, you could rent a place while waiting, though that would of course add to your expenditure.

With a resale flat, you can move in as soon as you have completed your purchase and are handed the keys; the waiting time depends on how quickly the process goes, but it is usually around three months. Furthermore, buying a BTO flat means you won’t get to see the actual product until it has been completed, while you can view a resale flat before you decide whether or not to buy it.

Still, it is important to note that renovation is normally not necessary for a BTO flat, while a resale flat may be in need of some work in order to be as good as new. This will add to the waiting time before you can move into your resale flat, and will also incur additional costs.

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