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Feature: Step-by-step guide to buying a BTO flat

A BTO (Build-To-Order) HDB flat is usually the choice that 1st time homeowners will go for. We covered that in our previous article. Applying for your 1st BTO flat is generally quite a straightforward and simple process and HDB has a website that provides plenty of information for potential buyers. However for one reason or another, we know of many young couples out there that are seemingly unsure over the application process.

No worries there. We understand getting your 1st flat is a big commitment both from a relationship and a financial point of view. Nobody should overlook any details when it comes to such an important decision, at least not in our opinion. We have thus come out with 5 simple steps to guide you and your partner in this important decision.

Before we start, we must stress (especially for those who are yet to be married) that one condition to applying and obtaining your BTO flat is that you HAVE to be married by the time the flat is ready (or at least within 6 months of the key collection). If for any reason you and your co-applicant, which in this case would be your future spouse, do not get married. You will not be able to take possession of the flat and hence forfeit any down payment that has already been made. We want to inform you once and for all that changing the name of your co-applicant is not an option!

With that said, here are the 5 steps to note.

Step 1:  Have a talk with your partner

We cannot stress this any more. Communication is the key! As mentioned above, successfully applying for a BTO but not getting hitched after that is a costly matter, literally. Aside from that, there are also many other factors that require consideration such as location and unit type (i.e. 3 room, 4 room or 5 room)

Is it important to remember that purchasing a BTO flat is similar to making a future decision, as the flat would only be ready after about 3 years. For example, you might think today that a 3 room flat is of sufficient size for both of you and your spouse but may come to realize later on that you would have preferred a larger flat when both of you intend to have kids and intend to have your elderly parents stay with you. Likewise, applying for a flat near your current workplace at Tuas may seem like a smart decision today but could turn up to be not so clever if you are working somewhere else by the time you obtained your flat.

We are not advocating that you become extra ‘kiasu’ in your selection and attempt to think of all possible future scenarios, as that would make the selection impossible. Rather our point is to impress upon you on the importance of the decision and to encourage you and your partner to properly discuss these things through and make a decision together so as to reduce the possibility of any “I told you we should have bought XYZ flat at so and so location instead!” in the future.

Step 2: Check out upcoming launch

Prior to a sales launch, HDB would already have post up on their website the next upcoming launch. This will typically contain details of the different locations available as well as the respective flat types. It will be good to shortlist in advance possible locations and unit types that you would be keen to apply for as the application duration would only be open for one week. Do note that HDB will only provide the information on the next immediate launch so you will not be able to gather any information beyond that.

Step 3: Sales launch

Once the sales launch begin, the prices for the respective flats in the different location and unit type will be revealed. In this stage, it is important to consider how much you can afford. A good rule of thumb in our opinion would be to not purchase a flat that exceed 5 years of your gross combine salary. For example, if your combine monthly salary is $5000, than you should avoid paying more than $300,000 for your flat. If your combine salary is $8000 monthly, you can afford a flat up to $480,000.

We understand that some couples may apply for a flat even before they begin working. In such circumstances, we advise that you estimate what your starting pay would likely be but to be extra conservative in your estimate.

There is also a tendency at this point to tell ourselves that it is okay to purchase a flat that cost more than 5 years our combine salary as we typically expect our pay to increase over time. We would strongly suggest avoiding that. If your salary does increase in the future, good for you! Invest the excess for your retirement. If however your salary does not increase and you purchase a flat that was too expensive in the 1st place, than finances will be tight going forward which is not a good start to a possible 30-year mortgage. Thus we once again rather err on the conservative side.

There are some other things to note as well in this step.

HDB Loan: Some people are unsure about how this HDB loan works so I thought it would be good to elaborate on it. Basically before you are allowed to purchase a flat, the flat seller (HDB in this case) needs to know that ’someone’ (such as a bank) would be extending you a mortgage in the future to pay for the flat when it is ready.  HDB however can also be that ‘someone’ to extend to you that mortgage in the form of a housing loan from HDB. To qualify for this loan, your joint monthly income cannot exceed $10,000. This is the same salary cap that applies to applying for a BTO in the 1st place. Thus by default if you are eligible to apply for a BTO flat, you will be eligible for the HDB loan.

The next thing that many will ask, is just how much HDB will be willing to lend you. The exact amount will depend on your joint income at the time the flat is ready and not now. Essentially, that means that HDB will qualify you for the loan today but determine the exact loan amount in the future.

For those who still do not understand, here is an example to illustrate the point. Suppose you and your co-applicant are still schooling currently. Both of you will be eligible for the HDB loan since by default you have no income and are thus below the $10,000 salary cap. If you happen to be fortunate enough to earn $20,000 monthly by the time your flat is ready, you will still be eligible for the HDB loan and the amount extended to you will be based on your $20,000 salary.

As a guide, for a couple who are both in their mid 20s and have a combine salary of $5000, based on a 30 year repayment period, the maximum loan amount extended would be about $315,000

Down payment required:

Another area that many people are frequently unsure about is just how much is required as an initial down payment for purchasing a home and this figure could typically change depending on whom you talk to. To make things clear once and for all, based on current regulation, the amount required is 20% of the selling price of the home provided you have no existing housing mortgage (meaning this is the 1st home you are buying) This apply both to public housing (i.e. HDB Flats) and private housing (i.e. Condominiums)

If you however take a HDB housing loan, the amount required will be just 10% of the selling price of the flat. This is a concession that the HDB loan offers. The 10% can be fully paid by amount in your CPF ordinary account. That means you do not have to fork out any additional cash provided you have sufficient amount in your CPF. If either you or your co-applicant are below the age of 30, you would need to pay only 5% of the down payment upon purchasing the flat with the remaining 5% being paid when you get the keys.

If for any reason you decide to take a bank loan instead, you would need to pay the usual 20% down payment for the flat with a minimum 5% of it being cash. For a flat that cost $300,000, that is a full $30,000 additional that is required. This is one of the main reasons why a HDB housing loan is typically preferred despite the lower interest rates that banks currently offer.

Step 4: Check out the different schemes available

There are a few different schemes available for couples applying for a BTO. One such scheme is the Married Child Priority Scheme (MCPS). Basically the MCPS allows you to have more ballots (higher chance) if the location of your BTO is within 2km of where your parents currently stay.

Another scheme to consider is the Additional Housing Grant (AHG). This allow couples with a combine monthly income of below $5000 to be eligible for an additional grant which can be use to reduce the price of the flat. Note however that to be eligible for this grant, one of the applicants have to be working for a minimum of 1 year.

There are other schemes available so do remember to check out the HDB website to get full details.

Step 5: The Application

For each BTO sales launch, you are allowed to apply for one location and one unit type only. As you should already know, BTO flats can be considered somewhat of a ‘lucky draw’ at times as they tend to be oversubscribed especially in popular estate. With the application period lasting 1 week along with HDB policy to update the amount of applicants for each location and unit type on their website, it could be advantageous to apply later on so that you have a better picture of your chances in each location.

If you are not fuzzy with the different locations, it could even be a huge plus if a BTO sales launch includes a popular location as that can help attract away applications from the less popular locations. Basically the idea is to put your ballot into the ‘lucky draw box’ that has the least amount of other ballots to maximize your chances.

Once the application period is over, HDB would announce the ballot results about a month after. If you are successful in obtaining a queue number, a letter informing you of your selection date along with a sales booklet will be mailed to you. There are websites such as that helps breakdown where possible choice units are situated. The friendly HDB staff would be able to guide you through the rest of the process and advise you appropriately on any enquires you might have.

It is really not that difficult after all. If you however still have questions, drop us a comment or an email and we will try our best to answer your questions.


Original photo by Benjamin Lim. Used with permission.


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