What To Consider When Buying Your HDB Flat! (updated 2019)

​5 Key factors to consider when buying your HDB Flat

1) HDB loan or Bank loan? (Mainly for resale HDB flat)

Although the HDB mortgage rates is higher at 2.6%, it is fixed!!

Hence it's a much safer option financially. You can even prepay anytime without penalties.

But if you are unable to qualify for a HDB loan because of income ceiling or certain other restriction, I would recommend the POSB HDB loan and you may click on this link to find out more.

Details of POSB HDB mortgage promotion package

They are offering mortgage interest to be capped at 2.5% for 5 years.

You are protected from any interest rate shocks 5 years while other packages in the market are capped for 2-3 years at most.

Their formula now with FHR8 (Mar2019 is 0.95%) +1.55% which gives a total interest cost of 2.5%p.a.

Back in 2016, this was only 1.8%p.a. So you can really feel the interest rate rise over the last year or so.

If you are considering taking a bank loan instead of a HDB loan by refinancing, there are other costs such as engaging a conveyancing lawyer which may cost an extra $2,500 or so.

That means your loan size must be sufficiently big for it to be worthwhile. POSB has a cash rebate of $1,800 currently though, do check if its still valid.

Do note that you may only choose this option if it is a resale purchase (ie completed flat and not BTO/SERS/ROF).

2) Proximity Housing Grant (PHG) -

Do you want to stay near your parents (For resale HDB flat)

Basically, a grant is FREE money and it really makes sense to get it! Moreover, its 4km distance, so easy!

HDB gives an additional $30,000 grant if you buy a resale flat near your parents as a family and $15,000 as a single. (NEW from budget 2018)

Click here for more info

Speaking from personal experience as a parent, I've saved on travelling costs when getting help from my mum.

She helps me babysit my boy and I go over frequently for meals.

You would most likely have to use infant care centres if you stay far away from your parents. Infant care centre fees are around the $1,200 to $2,000 range.

If you are a single at age35 and looking to buy a HDB house for homestay or rental income, this PHG is really beneficial.

It reduces your outlay for the purchase by either $10k or $15k!

3) When do you need the house to be ready?
(Resale HDB flat vs BTO/SERS/ROF)

I always feel concerned when friends need to wait for 3-5years for their BTO houses to be ready.

For example, The Clementi Crest project requires a waiting period of more than 4 years as it is only completed in May 2021.

While staying a few more years with your parents can save you money, the process of building a new home with your spouse is PRICELESS. Resale flats require only 3-6mths for it to be handed over.

You may explore renting with the parenthood provisional housing scheme from HDB if you are waiting for your house but it will cost you between $800-$1500/mth. Since 2013, more than 1,300 couples/families have taken up this option.

You may check this post I wrote on the benefits of SERS/ROF

4) How much is your Housing Loan Eligibility (HLE) and
how much mortgage loan are you taking

The first step to taking a HDB loan is to do your Housing loan eligibility (HLE).

As a rough calculation guide, the amount of loan you can qualify for is about 60x your combined monthly income.

Next, consider how much mortgage loan you would be taking.

A mortgage loan of $600,000, requires you to pay $2,723/month for 25years.

It will be ideal if your total CPFOA contributions is enough for it to avoid any cash required for monthly mortgage repayment. So choose a house within your budget.

5) Choice of HDB flat design (For BTO)

HDB provides you with two options: the Optional Component Scheme (OCS) and the Universal Design (UD).

The OCS includes options that the buyer can add into the flat. These include finishings, moldings, and even flooring.

While it is hassle free, there may not be a lot of choices for you to choose from other than the selected options for you.

Do go down to view with HDB directly just in case the design is not to your taste.

On the other hand, UDs are offered by HDB and enjoy features that are friendly for the more elderly buyers.

Further UD features include:

  • Low height windows to enhance your view and enhance natural light
  • A larger eye-viewer at the main entrance door
  • Ramps at the main entrance, bathrooms, and service yard for easy access
  • Wider internal corridors and doorways to accommodate wheelchairs
  • Adjustable shower head in the bathrooms

You may check this link for more information.

My friend's BTO house and high floor units

I met up with a close buddy G and congratulated him on moving into his house.

It was a 3room flat and as childhood friends, I was glad he chose to build his home somewhere near. Anything relating to current property trends always draws my interest. I quizzed him about the purchase price.


I was taken aback and struggled to put a smile back on quickly.

I remembered that an aunt of mine got a 3 room unit in Sengkang for $230k or something few years back. I'm pretty sure 4 room unit in many other regions would roughly be in the $370,000 price range.

However, areas that are near town like Telok Blangah don't come cheap.

G's unit was also the top floor and higher floors do command a good premium.

From my experience, high floor units can fetch a very good price in future if you want to sell!

​Do you want to upgrade sometime in future?

New generation families nowadays are smaller and there can still be enough space with a 3 room flat.

I've quite a few friends who do not plan to stay in the same house for life and want to upgrade at some stage.

If it is something that is part of your plans, do some financial planning to achieve these goals.

Subscribe to my youtube channel for financial planning tips and HDB house budgeting tips below!

The Astute Parent

A parent who has a sharp acumen on sieving through 'alien' financial jargon to dish out bite size financial tips from a parent's perspective.

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