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How Much Can You Save For Your Retirement If You Opt For A 4-Room BTO Flat Instead Of A 5-Room Flat?

You can save more than $280,000 for your retirement by opting for a 4-room flat instead of a 5-room flat, within the same estate.

Buying a HDB flat is one of the biggest financial commitments that many Singaporeans will make in their lives. This means it is also a decision that we should not take likely.

A Build-To-Order (BTO) flat is a popular choice for couples looking to get their first home. For applicants who prefer a larger living space, a 5-room flat may be more appealing compared to a 4-room flat. However, what some first-time homeowners may not realise is that the difference in pricing between flats of different sizes can be significant, and will inevitably affect how much you and your spouse can save up for your retirement.

To help explain this concept, let’s take our reference from the latest HDB’s February 2019 Sales Launch.

Sengkang Fernvale Vines (February 2019 Sales Launch)

Sengkang is a non-mature town that continues to see a steady stream of new BTO developments each year, and with it, greater amenities for existing residents. This development is situated next to Thanggam LRT station, which is 4 LRT stops away from Sengkang MRT station. For drivers, the location gives convenient access to TPE, which is just 850 metres away, and Central Expressway (through Yio Chu Kang Road), which is about 3 kilometres away.

The price range for a 4-room and 5-room flats for Sengkang Fernvale Vines are as follows:

Flat Type Price Range (Excluding Grants)
4-room $283,000 – $344,000
5-room $365,000 – $433,000


For the purpose of illustration, we will make some assumptions in our calculation.

  1. Couple is considering between a 4-room flat of the lowest price and 5-room flat of the highest price in the same estate.
  2. Couple takes a HDB housing loan for 25 years with an interest rate of 2.6% per annum.
  3. Couple does not receive any HDB grants.
  4. Couple has a combined CPF OA balance of $43,300 and uses the entire amount for the down payment.
  5. Couple is able to service their monthly mortgage repayment using their CPF OA only.
  6. CPF OA interest rate is calculated at 2.5% per annum. In actuality, this rate will be higher since we can earn an extra 1% on the first $20,000 in our CPF OA.
  7. We ignore renovation cost and the optional component scheme (OCS).

 Buying The Most Affordable 4-Room Flat

Reasonably priced at $283,000, a couple who has $43,300 in their CPF OA will need to take a HDB loan of $239,700. Over a period of 25 years, their monthly mortgage repayment would be $1,087. They would make a total repayment of $326,234. If we include in the down payment, they would have paid a total of $369,534 for their 4-room flat.

Buying The Most Expensive 5-Room Flat

Within the same estate, the couple can also select the most expensive 5-room flat being offered. Priced at $433,000, the couple would have just enough CPF OA funds to cover the minimum 10% down payment ($43,300) required without forking out cash.

They will need a HDB loan of $389,700. Over a period of 25 years, their monthly mortgage repayment would be $1,768. They would make a total repayment of $530,385. If you include in the down payment, they would have paid a total of $573,685 for their 5-room flat.

4-room flat 5-room flat Difference
Sales Price $283,000 $433,000 $150,000
Down Payment $43,300 $43,300 $0
Monthly Mortgage Repayment $1,087 $1,768 $681
Total Cost Of Flat (inclusive of interest cost) $369,534 $573,685 $204,151


Over a period of 25 years, buying the bigger (and more expensive) 5-room flat could cost an additional $204,151, based on our assumptions.

This excludes other cost areas associated with buying a larger flat such as renovation cost and losing out on the Special CPF Housing Grant, which is only applicable for first-time homeowner buying a 4-room or smaller BTO flats in non-mature estates, with an income ceiling of $8,500.

Read Also: How Much Does It Cost To Renovate My HDB BTO Flat?

Losing Out On Potential Interest

However, the possible difference in our retirement fund isn’t just $204,151. This is because with the higher monthly mortgage repayment of $1,768 that we have to pay for our 5-room flat, we will be paying $681 more each month. If we assume the full amount of $1,768 could be serviced using our CPF OA, it would also mean that we would have an extra $681 each month, if we choose to buy the more affordable 4-room flat instead.

With a monthly difference of $681, and assuming an interest rate of 2.5% per annum, the couple would have accumulated $282,902 in their CPFOA over a 25-year period. This means they would get to enjoy an extra $141,451 each for their retirement. This difference could easily move them up from the Basic Retirement Sum to the Full Retirement Sum, or from the Full Retirement Sum to the Enhanced Retirement Sum.

Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55

Many people don’t realise that simple decisions such as getting a smaller flat at a lower floor can amount to such a big difference for their retirement. If you are a first-time homeowner looking to buy your first HDB flat, you should definitely ask yourself whether you want to go all-in to buy the most expensive flat that you can afford, or set aside a little extra to prepare yourself for retirement.

HDB February 2019 BTO Sales Launch and Re-Offer Of Balance Flats is now open for balloting! Applications close on 18 February, 2359hrs. All the best!

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