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Asian couple sitting amid packing boxes
Asian couple sitting amid packing boxes

Careful consideration before purchasing a house

Buying your first home – 4 things to consider

What to consider when buying a home in Singapore

Given that over 90% of Singapore residents are homeowners, buying a house seems to be a goal most young Singaporeans work towards. Here, we share a few essential steps to get you started on your journey towards owning a home.

When you first consider buying a home, you would do well to educate yourself on the different options available and the process of home ownership. At the same time, you need to start planning your finances. Give yourself time to build up your resources, work on your credit score and explore neighbourhoods.

Here are a few things to consider before making the decision.

Singapore’s subsidised public housing scheme – together with its CPF system – makes home ownership more affordable for young families. If you decide to go the HDB route, you need an HDB Loan Eligibility letter (HLE). The first step towards setting a home ownership goal and budget, the HLE is required to obtain an HDB housing loan and is valid for six months. The HLE process considers factors such as your income level, age and outstanding financial commitments, to ascertain your loan amount. To learn more about the buying process, check out HDB’s website.

You could also opt for private property, such as a condominium or landed property, which is significantly more expensive than an HDB flat: A two-bedroom condo in Singapore’s central business district can cost in the region of S$1.4 million in today’s market.

There are many factors to consider when you are deciding between public or private housing. So, spend some time studying the pros and cons of each before deciding what is right for you.

Cashflow, cashflow, cashflow

Be realistic about your cashflow when budgeting for your monthly mortgage repayments. If you’re a newly married couple with a dual income, you might want to opt for a shorter mortgage, before other financial responsibilities put a further strain on your income.

If you have young children, your current expenses may not leave you much room for loan repayments. But if you both have stable jobs and are confident of your long-term career prospects, you might want to consider a longer-term loan.

Either way:

A home that matches your 5-year plan

As with every long-term plan, start with baby steps. Pick a starter home that fits into your five-year plan, be it a studio apartment or a small family home. You can always upgrade as your income and family grow. Of course, there are certain restrictions when it comes to reselling HDB flats, so keep that in mind.

Budget for down payment and other expenses
Don’t underestimate the size of the deposit you will have to put down for your home and the possible shortfall or cash component. After setting aside the down payment, be sure you have enough savings to pay for a year’s worth of loan repayment instalments, at the very least.

Most down payments amount to at least 25% of the property price. You’ll also need to factor in a few other expenses:

  • Buyer’s stamp duty
  • Valuation and legal fees
  • Property agent’s commission (if applicable)

Similarly, plan for other expenses such as renovations and furnishings.

Becoming a first-time property owner doesn’t have to be a daunting prospect. With a little planning and some discipline, you can revel in the joy of owning your first home.

Find out more about Standard Chartered Bank’s Home Suite

This article is brought to you by Standard Chartered Bank (Singapore) Limited. All information provided is for informational purposes only.