Honing In On Home Ownership

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Millennials are now in the stage of their lives where they are buying homes and having families. Here are a few factors to take note of.

By Rhonda Wong

“Check the property size and layout. It should be optimum for you and your partner for the next five years. If you have children, or are living with parents, you should aim for a home where everyone can live comfortably.”

As a millennial, buying a house for the first time can be intimidating. Inevitably, this is one of the biggest decisions in life, and it comes at a hefty price tag, especially finding the perfect home that meets your demands and criteria. Adding to that, property prices in Singapore are one of the most expensive in the world. Mistakes can be costly.

With millennials being a DIY generation that appreciates fast and effortless smart technology experiences, the good news is that, there are websites and mobile applications widely available for completing house hunting tasks quickly and efficiently. Here are a couple of factors you may want to take note of.

1.  If you are eligible for an HDB, consider getting a mortgage loan from either HDB or banks. The main difference is the loan quantum.

HDB can grant up to 90% loan, with minimum 10% downpayment from either CPF or cash. If you are taking a bank loan, the maximum is 75% bank loan, with the first 5% downpayment in cash, followed by the next 20% in either CPF, or cash.

At first glance, many would think that a higher loan quantum from HDB is a better choice. In actual fact, a higher loan amount simply means that one would have to pay more interest in the long run.  

Besides, the interest rate for HDB loan is currently at 2.6%, which is much higher than a bank loan hovering around 1.65% to 1.98%. Hence, it may make sense to take a bank loan at a lower interest rate, if one has the resources for the downpayment.

An HDB loan also has several restrictions that might be worth taking note. At least one buyer must be a Singapore citizen. There are also additional household income ceilings to be factored in. That said, both HDB and bank loans have the same approving guidelines.

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2.  If you are considering private housing, you cannot apply for an HDB loan.

The bank’s financing structure for private housing is the same at maximum 75% loan, with first 5% cash downpayment and next 20% in cash or CPF. Essentially, the bank will assess your loan eligibility based on age, income, current liabilities and past credit history. It is recommended to apply for an In-Principle Approval to determine your loan eligibility prior to making a property purchase.

Furthermore, you can only borrow up to 80% of the purchase price for private housing. The minimum cash downpayment starts from 5%, and goes up to 25% based on factors like your CPF balance and Debt Servicing Ratio.

3.  If you rent or sell private housing within four years of purchase, you have to pay stamp duty to the seller.

Within the first year, the stamp duty can be as high as 16%. Between the third and fourth year, it is 4%.

Most importantly, consider whether the neighbourhood suits your lifestyle.

Focus on things that can’t change, such as location and proximity to schools, over things that can be changed, like the appearance of the flat which can be renovated. If you go to town often, you might not want to stay in an area where commuting can be difficult.

Check the property size and layout.

It should be optimum for you and your partner for the next five years. If you have children, or are living with parents, you should aim for a home where everyone can live comfortably. Keep in mind when a HDB flat is said to have three rooms, it usually means two bedrooms and a living room.

Apart from looking at size, location and type of property, you need to figure out the finances of buying a home.

The primary thing to look at is your own resources. Spend some quality time on laying out a financial plan, and the entire process of buying a home can be smoother. Consider Ohmyhome’s Affordability Calculator, which helps you find out whether you can afford the property with your current CPF amount, salary, and potential loan amount.

Mortgage advisors are also available to compare the best packages across all banks, so you can find the right one. Note that there are additional costs in buying an apartment, including renovation, legal conveyancing, stamp duties and agent fees. You can engage a fixed rate agent from Ohmyhome to take care of these calculations for you at a fraction of the usual rates. Keep these in mind and you will be all set to find your dream home. Happy house hunting!


Rhonda Wong is the Co-Founder and Chief Executive Officer of Ohmyhome, a new-age DIY platform which seeks to revolutionize the real estate sector. It connects buyers and sellers directly at no cost. Simple, fast and free, Ohmyhome aims to be an integrated platform for all housing needs, providing fuss-free solutions every step of the way.

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