Whether it is because you don’t want to wait 4-5 years for a BTO or there is no new housing in your desired area, with the introduction of various cooling measures by the Government, both resale prices for HDB and private housing has dipped considerably, making now a good time for couples to purchase resale units as their matrimonial home.
Why budgeting is crucial and the different ways of financing your home
Buying a property is a long-term financial commitment, therefore, this is the most important question you should consider with your partner. Do your calculations carefully and determine a comfortable budget (including renovation costs) that will not put a strain to your finances, bearing in mind your monthly expenses, regular savings and insurances.
Whether it is a HDB or a private condominium, you are encouraged to obtain a HDB Loan Eligibility (HLE) letter (for HDB loan) or an Approval in Principle (AIP) from banks (for bank loan) before you start hunting for your home; unless you have sufficient cash and CPF in your accounts. Either one will give you a clear indication of the amount available to you should you take up the loan, and helps you do your budgeting more efficiently.
Assuming either spouse is a Singaporean, your budget will also help to determine the type of residential property, HDB or private, most suitable for your combined incomes. If both parties are Singapore Permanent Resident (SPR), you will have to wait 3 years from the date of obtaining SPR status before you are eligible to purchase a resale HDB.
If your combined incomes do not exceed S$10,000 and one of you is a Singaporean, both of you are eligible for a HDB Loan should you consider purchasing a resale HDB unit. This will save you the hassle to refinance with the bank every few years, since banks’ interest rates vary according to prevailing market conditions which you don’t really have control over, while the interest rate for HDB loan remains at 2.6% per annum.
Even if you are not eligible for a HDB loan, you can still purchase a HDB resale unit using bank loan. Always study the different housing loan packages offered by various banks before making a decision. Remember to read the terms and conditions carefully, bearing in mind that banks’ interest rates may increase over the years.
Although you are not required by law to engage a real estate agent, it will definitely make things easier for you to seek their professional assistance on all relevant paperwork, especially since this is your first property purchase. Moreover, you can consult them on all the various fees payable (both cash and CPF components), so as to prepare a more accurate and informed estimate of your overall budget.
Are you uncertain over what you can afford? Ease your concerns with our Affordability Calculator.
Need help calculating something else? Check out our page of various mortgage calculators.
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