Your guide to buying a HDB BTO
July 01, 2018
To get a BTO flat is a big milestone in your lifetime. But to get a BTO flat is as tedious as it seems. You start facing different issues. You do not know where to start, how to start and when to start. You get confused with the steps, the processes and the terms when it comes to buying a HDB BTO unit. Keep on reading to have an idea on getting a BTO and say goodbye to those tedious issues.
Below are the 6 steps that you need to go through in order to buy a HDB BTO.
1. First of all, you will need to screen your
eligibility to purchase a BTO flat.
2. After meeting the eligibility of buying a BTO flat, you can start
looking for a BTO flat around the area you desire that suits your needs and
wants in terms of location or others, and try balloting for the BTO flat
online. Do wait patiently as you will need to wait for approximately a month
time to get notifications on whether you have succeeded or failed to ballot for
a BTO flat.
3. Thirdly, you need to get an approval in principle (AIP) from your
desired bank if you require a bank loan. Another alternative is that you can
apply the HDB Loan Eligibility (HLE) letter if you require a HDB loan. The
difference between a HDB Loan and bank loan is that HDB Loan is 90% LTV whereas
bank loan is only 80% LTV. The HDB Loan also allows you to pay for a lower down
payment, however, HDB loan offers less flexibility. As for bank loan, it
requires a higher down payment but comes with greater flexibility. Do take
caution that the validation for HLE is only 6 months. More information on ways
to apply can be found here.
4. Next, after getting a notification on your success ballot for a BTO
flat, you can start looking for grant available from Special Housing Grant
(SHG) and Additional Housing Grant (AHG). SHG is a housing subsidy that covers
both the low and middle income families with grant ranging from $5,000 to
$20,000, subject to buyer’s income. As for the AHG, it is a scheme that aims to
help Singaporeans with lower income to purchase their first flat with grant
ranging from $5,000 to $40,000, subject to buyer’s income as well. To qualify
for an AHG grant, your household income should not exceed $5,000 per month, for
a period of 12 months before your application for the flat. You will then be
invited by the HDB person in charge to choose your desired flat and make payment
for Option to Purchase (OTP). Again, do note that the time to wait is
approximately 2 months to 3 months between the period of successful
ballot and flat choosing.
5. After 2 or 3 months, you may sign the leasing agreement. You are also
required to make payment for the down payment, conveyancing fees and stamp
duties.
6. Lastly, sit back and wait for the collection of keys after the
completion of your BTO flat.
What is AIP, HDB, BTO and OTP
You must be wondering what are some key
terms that I have mentioned above. Let me explain. Firstly, Approval in
Principle (AIP). AIP is a loan from the your desired bank to promise you
according to your monthly salary, ratios of debt servicing and etcetera.
However, this AIP is only valid for a month and is only applicable to bank
loans. Secondly, ballot. HDB or BTO uses a computerized system for the
balloting process to determine the queueing position to secure the flats. Bear
in mind that every individual has different chances of balloting. Some applicants
have better opportunities and some do not, depending on the type of applicant,
such as (normal/public applicant,
married child priority scheme - near parents/married child or married child
priority scheme - with parents/married child).
Next, OTP. OTP as a document that
save your rights in order to buy the flat. However, getting an OTP demands a
deposit that is known as option fee. For or 4 or 5 room executive flat, OTP is
priced at $2,000, a 3 bedrooms flat is priced at $1,000, a 2 bedrooms flat is
priced at $500 and a studio apartment is priced at $250. In the event of
backing out from buying the flat, the option fee will then be forfeited unless
there is a good reason for deciding not to buy the flat. You will then need to
write a letter to HDB to ask for a refund, but with no guarantee.
After that, conveyancing fees and down
payment. Conveyancing fees are the lawful paperwork you are involve in when you
purchase the house. For example, if you are using a HDB loan, the first $30,000
is $0.90 per $1,000, next $30,000 is 72 cents per $1,000 and following amounts
above $60,000 is $0.60 per $1,000. Conveyancing fees could also be paid through
your CPF. As for down payment, it the the total amount that you are required to
pay in cash. For banks, downpayment is 20% of the property. 15% of the 20% can
be paid via CPF or housing loan. However, the last 5% of valuation have to be
paid through cash. As for HDB concessionary loans, down payment is 10% of the
property’s valuation. In addition, all of the 10% can be paid via CPF or
housing grant.
Differences Between a Bank Loan & HDB Loan
Before I conclude, it is crucial to know that
there are differences between a bank loan and a HDB loan. To make it easier to
understand, the main differences between a bank loan and HDB loan are as
follow:
i) HDB loans are able to fund as much as 90%
of the valuation whereas for bank loans, it is able to fund up to only 80% of
the valuation.
ii) HDB loan has a fixed interest of 0.1%
above the current SPF rate, which is approximately 2.6%, for the whole loan
tenure, whereas for bank loan, the interest is not fixed. However, are cheaper,
at approximately 1.7%.
iii) HDB loans typically have a tenure of
maximum 25 years whereas bank loans are able to allow the extension of the loan
tenure beyond 25 years. However, this will result in a larger sum for the down
payment.
In other words, bank loans are known to have greater down payment but
lower interest rate and better flexibility. As for HDB loan, it allows a lesser
down payment but with greater interest rate and lesser flexibility. So if you
are planning to apply for a BTO unit, think and choose wisely and accordingly.
In conclusion, the steps to getting a BTO
unit is not that tedious after all, provided you follow the guide and plan
ahead to avoid going through the unnecessary issues. You can understand more on
the process of getting a HDB flat by reading stepby step guide to buying your first BTO flat and guide tobuying a new HDB flat.
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2 comments
great sharing
ReplyDeleteGood Info
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