Guide to getting a property in Singapore

ASSALAMUALAIKUM

With so many HDB BTO available in Singapore, it might be difficult to choose which estate you want to stay in. The 5 most hipster, or popular estates in Singapore are Tiong Bahru, Jalan Besar, Kampong Glam, Chinatown and Everton Park. Before you start researching for which estate to choose from, you will need to understand the process of getting a HDB in Singapore. This article will guide you through the steps in getting a HDB in Singapore.

1. Buying or renting

Firstly, you will need to decide on whether to buy a property or to rent a property. Buying a house and renting a house come with their own sets of pros and cons.

Pros of buying a house

a. Greater privacy
As this is your own house, you definitely have the whole place to yourself. You do not need to worry about sharing and losing your privacy. In addition, you are able to get things done the way you like it without having people telling you off. You do not need to deal with your housemates that are messy or Obsessive Compulsive Disorder housemates. After all, this is your house and it belongs to you.

b. Freedom
You are allowed to buy anything you want and have them in the house. There is also no need to fight for bathroom or kitchen when you need them. You are also in charge of your comfort as you are able to deal with problems immediately instead of waiting for the landlord to fix it for you, which may take a long time before it is fixed.

c. Good investment
If you do your research before buying a house, you will know that having a right house is an incredible asset. Not only it helps you to save money, it also increases in the value. If you are planning to live in it, you will not need to worry about paying for rental every month. It also provides a home for your family and you. However, if you plan to sell it off in the future, you will be making a profit if the price and timing are right.

d. Avoid unreasonable landlords
This is one of the most tedious issues that most tenants face - unreasonable landlords. Having a house on your own will save you from the problems caused by the unreasonable landlords. While some landlords can be really friendly and responsible, some landlords could be inconsiderate, unreasonable, exploitative and rude. Therefore, having a home on your own could help you to avoid all these problems of dealing with unreasonable landlords.

Pros of renting a house

a. No maintenance costs

The landlord is responsible for all the maintenance costs. For example, clogged drain, water leakage or faulty electrical appliances is under the landlord’s responsibility. You do not need to bear any cost unless the damage is caused by you.

b. Low upfront costs
Your upfront costs will be so much lower as compared to buying a property on your own, as you do not need to pay for down payment and monthly instalment for the house.

c. Low commitment
Renting a house also requires lower commitment as compared to buying a house. As you are only renting a house, all you need to do is find a house, contact the landlord, sign the tenancy agreement and you are done. If you do not like the house, you could always leave after the tenancy ends.

1. Types of properties

a. HDB Flats
HDB flats are the most common type of housing available in Singapore and it consists of approximately 80% of the residential properties available in Singapore. Most HDB flats come with 2 to 4 bedrooms, living room, dining room, kitchen and toilets. The size of HDB flats is approximately 700 sq ft to 1,300 sq ft.

b. Condominiums
Condominiums are privately owned properties in a gated compound. Those who prefer a condominium unit are mainly those who prefer the communal facilities available in a condominium, such as swimming pool, gymnasium, tennis court, BBQ area and so on. In addition, foreigners are allowed to own a condominium in Singapore.

c. Landed properties
Landed properties are catered mostly to those who need ample space. There are different kinds of landed properties in Singapore: terrace house, semi detached house and bungalows.

However, only Singapore citizens are allowed to buy a landed property as there are not many
landed properties in Singapore due to its size.

1. HDB Loan or Bank Loan

HDB loans are loans that are catered to Singaporean. The HDB loan interest rate is 0.1% more than the CPF rate, which is 2.6% as of 2016. However, HDB loans have it's terms and conditions that you will need to meet if you intend to apply.

HDB loan has a relatively stable interest rate as compared to bank loan. In addition, the loan to value for HDB loan is up to 90%. Buyers using a HDB loan can also use their CPF fund to pay for the down payment. There is also no penalties if buyer plans to pay off the home loan earlier. Most importantly, HDB loan is more lenient when it comes to late repayment. There will be a late payment fee of 7.5% per year if there is any late repayment.

As for a bank loan, you will then need to choose whether to get a fixed interest rate or a floating interest rate. Fixed interest rate are usually higher than floating interest rate, but they allow a certainty of fixing the same interest rate for a few years. As for floating interest rates, they can be really low but that is greatly dependant on the fluctuation of Singapore Interbank Offered Rate (SIBOR).

However, the loan to value for bank loan is only up to 80% as compared to HDB loan where it is up to 90%. In addition, buyer will have to include at least 5% of the property price in terms of cash for the down payment. In any event where the buyer plans to do early repayment within the commitment period, there will be a 1.5% penalty.

In conclusion, do think thoroughly before you decide on buying a property in Singapore. Make sure you set a budget and stick to it to prevent getting into a huge debt later on.