Buying a BTO flat is practically a rite of passage for Singaporeans, a sign that you’re finally ready to start adulting for real.
Here’s a step-by-step guide to buying your very own BTO flat.
1) Check your eligibility
In order to buy a BTO flat, you’ve got to first be eligible.
To buy a BTO flat, you must:
- Be at least one citizen, applying with at least one other citizen or PR as a family nucleus, meaning spouse and kids (if any), parents and siblings (if any), or children under your legal custody (only for widowed/divorced applicants)
- Be applying with your fiancé(e), and be prepared to register your marriage before taking possession of your flat if applying for additional or special CPF housing grants, or within 3 months of taking possession of flat.
- Be a single citizen aged 35 and older (only eligible for 2-room flats in non-mature estates)
- Be a citizen with a non-citizen spouse on a visit pass or work pass (only eligible for 2-room flats in non-mature estates)
- Be a single citizen aged 35 and older applying for a flat with up to 3 single citizen co-applicants (only eligible for 2-room flat in non-mature estates)
In addition, you’ll have to ensure you’re not making too much money to qualify for the flat you’re eyeing. Here are the income ceilings for the various types of flats:
- 2-room flexi flat: $6,000, or $12,000 for short-lease flats (max 45 year lease)
- 3-room flat: in non-mature estates, $6,000 or $12,000 depending on which project you’re balloting for; $12,000 in mature estates. Check the sales launch to know the exact income ceiling.
- 4-room flat or bigger: $12,000, or $18,000 if you’re purchasing the flat as an extended or multi-generation family.
You must also not own any other property, HDB or private, locally or overseas. If you are currently a property owner, you’ll need to dispose of your ownership within 30 months of your application.
2) Ballot for a flat
If you thought striking Toto was hard, try balloting for an HDB flat.
First, you’ll have to check the HDB website regularly for news of upcoming sales launches.
When you see a launch in an area that interests you, pay $10 to ballot for it. How many tries it takes you to get a flat depends on your luck. Some people get it on the first or second try, others have to try 10 times. Expect to wait about one to two months to know if you’ve been successful or not.
The day you receive news that you’ve been allotted a decent queue number, go and buy 4D.
3) Obtain a loan – get your HLE letter or your AIP
Now that you’ve probably got a BTO flat on the horizon, it’s time to look for someone to lend you money to finance it. You need to get all your loan documents in order to sign the lease agreement.
You have a choice between taking out an HDB loan and a bank loan. Don’t just sign up for the first loan that presents itself to you. Compare loans using MoneySmart’s home loan wizard.
For those taking out a bank loan, you’ll want to receive approval in principle (AIP) from them. It’s basically a letter declaring how much the bank will loan you. If you’re taking out an HDB loan, get an HDB Loan Eligibility letter (HLE), which you can apply for here.
4) Select your flat and pay the option fee
Your queue number will determine your priority in choosing a unit. The number of people allotted queue numbers will exceed the number of units, so if your queue number is way out there, chances are you won’t be able to get your hands on a unit and will have to ballot again.
When it comes time to show up at HDB Hub to book your flat, don’t forget to bring along your IC and income documents, as well as your HLE if you are taking a housing loan from the HDB.
Once you’ve selected your unit, start the purchase process by paying an option fee on the spot. This will be $500 for 2-room flexi flats, $1,000 for 3-room flats and $2,000 for 4 room or larger flats.
You will also apply for your CPF housing grants at this point. Make sure you download the application forms for the Additional CPF Housing Grant and Special CPF Housing Grant if you plan to apply for them, and bring them along to your flat booking appointment.
5) Sign the lease agreement and pay the downpayment
You’ll have to sign the lease agreement within four months of booking a flat. Make sure you’ve gotten your loan arrangements in order by that time.
On the day you sign the lease agreement, you’ll have to fork out the downpayment, as well as stamp duties and legal fees.
How much your downpayment is depends on whether you’re taking out an HDB or a bank loan.
HDB loan folks will have to pay 10% of the purchase price using cash and/or CPF.
Those taking out bank loans will have to pay a 20% downpayment, of which at least 5% must be in cash and the rest can be paid using CPF.
Note that those taking bank loans can only use CPF savings within certain limits.
Legal fees and stamp duties
Your legal fees and stamp duty can be paid using a mixture of cash and CPF. The stamp duty rates are as follows:
Staggered Downpayment Scheme
You may also be eligible for the Staggered Downpayment Scheme. As the name implies, this allows you to pay half the downpayment when you sign your lease agreement, and the other half when you sign the Terms of Agreement and collect your keys. Here’s what it looks like if you’re taking a bank loan with a loan ceiling of 80%:
Now, all you can do is wait as construction workers labouring under the hot sun scramble to build your flat. This stage typically takes 2 to 3 years.
6) Collect your keys
At some point, HDB will notify you to say that you can pick up the keys to your unit. Hooray!
This article was first published in Money Smart.