HOUSING MATTERS
Process Of Buying
A Build-To-Order (BTO) Flat
You and your partner are planning to settle down and you both know that you will need to purchase a house in the near future. In Singapore, we are fortunate that we are actually able to buy a house. The ability to use our CPF monies to finance the purchase of a house has definitely been the reason why we are able to afford it.
Moving on, there are 2 common options that majority of you will consider, it is to either buy a Build – to – Order (BTO) or a resale flat. This article discusses the processes of buying a BTO.
Buying a BTO flat requires a few stages and years hence it might be confusing and a totally new experience especially for first-time buyers.
The infographic below will show you the steps in buying a BTO flat. There are 6 steps that you will have to go through. Each one of them will have some waiting period in between them and it differs from one to the other.
Number 1: Eligibility Check
Since a HDB flat is a subsidized housing property, there are rules that you have to abide by prior to being able to purchase it.
First, you should look at your income. There is an income ceiling, which means that you cannot be well off and buy a subsidized property. Refer to the graphic below to see if you are eligible to buy a BTO.
Next, let us refer to this checklist to check the rest of your eligibility.
Number 2: Application submission
There will a period of 1 week for you to submit your application. Do check the HDB website to find out the particular timeframe on when you can send in your application.
Number 3: Balloting
Balloting is to decide the allocation of something to applicants by drawing lots. In other words, it also means to hope and pray that you will get the unit of your dreams.
This process will cost you $10 and the waiting process will be approximately around 1 – 2 months.
Number 4: Book a flat
Congratulations if you have reached this part! This means that you are successful in your balloting. You will then be invited for your first appointment.
For you to book a flat you will have to pay an option fee. The amount of option fee will depend on the type of flat.
- 2-Room Flexi flat: $500
- 3-Room Flat: $1,000
- 4/5-Room & Executive Flat: $2,000
The option fee will be reimbursed if you have enough in your CPFOA in order to pay your downpayment. If not, it will be used to pay off the cash portion of your downpayment.
One more thing, since most of us do not have the money to pay off the property in one lump sum, hence we have to take a loan. Therefore if you are planning to take a HDB loan, you will have to obtain a HDB loan eligibility letter (HLE). If you decide to take a bank loan, you will have to obtain a Letter of Offer from the bank.
Both documents are just a form of guarantee that you are able to pay for the flat and you will need to have them prepared. Therefore it is important for you to get it prior to your first appointment.
Number 5: Sign agreement for lease
Sign agreement of lease also known as the second appointment.
At this stage, you will have to pay your downpayment and a few other fees as well.
Downpayment
The amount that you have to pay on your downpayment depends on the type of loan you are taking. Refer to the graphic below.
Stamp duty
Stamp duty is a form of tax that you have to pay when buying your own property. The fees are calculated as follow:
Conveyancing Fee
This fee that you pay to transfer the ownership of a property from one owner to the other.
Caveat Registration Fee
When you sign the Agreement for Lease, you have to pay the Caveat Registration Fee of $64.45. This is done to protect your interest in the flat.
Example
Assumptions:
The purchase price of flat: $400,000
– Finance using HDB concessionary loan.
Number 6: Key Collection
After the long wait, you will finally be able to step into your new home. There will still be certain fees that you have to pay at this step.
The type of registration fee will depend on whether you finance your flat via HDB loan or Bank loan. Survey fees, on the other hand, will depend on the type of flat you are purchasing.
Registration Fees
Survey Fees
That is the process
The long awaited moment has finally arrived. After settling down, you will start paying for your monthly loan repayment in the second month so better be prepared.
Nevertheless, since it is indeed a new flat, you do have to chip in money for renovation and furniture as well. Will not comment about what kind of renovation you should do or where you should buy your furniture from, but one thing for sure, spend within your means.
This is the beginning of a 25-year commitment hence do plan properly. Buying a property might not be the hardest part but holding onto it might be.
Hope this article was useful. Do share with your family and friends. Till next time.
Disclaimer
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided are true to the best of my knowledge, but there maybe omissions, errors or mistakes.
