The feeling of taking your first step towards homeownership can be, understandably, full of trepidation, fear and – at times – even surreal.
After all, a home could easily cost a couple thousand times more than your average payday splurge. They have 6- or even 7-figure price tags, an amount that never fails to break me out in a cold sweat if I catch myself staring at my HLE document for a tad too long. As with all expensive assets, they require decades of financial responsibility, consuming a sizable chunk of your monthly income to service your mortgage loan.
Those were just some of the concerns that went through my mind when I was applying for a BTO with my partner for the very first time. So, what have we learned from our experience as first-time buyers?
Here are 3 Truths When Buying a BTO for First-timer Applicants.
1. Getting your queue number is faster than you think – in 21 days!
Once you’ve completed your BTO application, be mentally prepared that, if the stars align and your application will be assigned to a successful queue number (i.e. one that is a smaller number than the number of units available) in just a few short weeks!
Based on our experience, we submitted our BTO application for Tampines GreenGlen on 15 September. We received our queue number via email barely a month later, on 7 October. We can’t stress this enough – one minute you would think your application is a mere drop in the ocean, and the next, you basically have a home that’s waiting to be picked. Prepare to be surprised!
2. Preparations for the flat selection appointment is more crucial than expected
Soon after receiving your queue number, you will then be notified of your scheduled flat selection appointment. The weeks leading up to that date is crucial as there are mainly 3 things to prepare. Firstly, if you’re planning to take an HDB loan, you would need to obtain your Housing Loan Eligibility (HLE). Once your HLE is ready, you’ll know your loan eligibility amount, which acts as a guide on which units are within or out of your budget.
Be sure to factor in 10% of your flat’s selling price as downpayment. This payment is due when you sign your Agreement for Lease, within 4 months of your flat selection date. That means, if the flat you selected costs $450,000, you and your partner will need to have, at least, a combined total of $45,000 in your CPF Ordinary Account to pay the 10% without the need to fork out cash.
One helpful tool you can use to enhance your financial planning is with our handy affordability calculator!
Keep in mind that this 10% deposit does not apply to those opting to take a bank loan and/or first-time buyers and homeowners right-sizing to a 2-room Flexi or 3-room flat who are qualified for the Staggered Downpayment Scheme.
3. Do your research about your BTO as future developments might surprise you
Ideally, the houses we buy are conveniently located nearby public transportation and an abundance of amenities. But that’s not usually the case with BTOs, where the area of development can get considerably ulu due to the once empty land it’ll be built on, devoid of mini-marts and coffee shops until the area gets more populated. Be sure to know exactly what you want in your next home, a list of dream home requirements you’re not willing to part with.
In our particular case, accessibility is a must. After doing some research, aside from its obvious benefits – Ikea Tampines, Courts, and Giant are merely a short walk away – we found that the previously inaccessible Tampines GreenGlen will soon have a nearby bus interchange set to be completed in 2022 and an MRT station in 2029. Location, location, location. Research, research, research!
To sum up, the entire experience was a whirlwind, with little room for delay and second guesses. That said, the span of time allocated in between each step should be properly utilised. Spend that time finding out everything you can about the property and making sure your finances are in order. If you’re servicing your mortgage payments through your CPF, the load is considerably lighter as no cash is involved at all.
Ask yourself – am I willing to fork out some cash per month in order to buy a home on the 15th floor? It should be worth noting that a few hundred dollars out of pocket might not seem like a lot now, but be sure to consider that soon you will experience new life stages such as a growing family and elderly family members to support financially.
Here’s a step-by-step guide to buying a BTO if you’re not sure where to start. Remember to take it all in stride and enjoy the journey. I wish you all the best!