3 Key Factors to Consider Before Buying a HDB Flat

Homebuyers tend to pay more for housing in these districts. Hence, when choosing your ideal location, you should consider the district it is located in to fit your budget.

For example, with a S$500,000 budget, you could purchase a 4-room flat in Woodlands. However, you would probably get an old 3-room flat with the same budget at a more prestigious location like Central.

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Apart from home districts, there are two other factors that can help narrow down your options — HDB’s proximity grant and the Prime Location Housing (PLH) model.

Firstly, if you intend to buy a resale flat, you might want to pick a location within 4 km of your parents’ house. You will be entitled to a S$20,000 HDB proximity grant. To check if you qualify for this grant, you can use the Distance Enquiry for Proximity Housing Grant calculator.

Secondly, if you plan to purchase a BTO flat in a prime location, the  PLH Model will affect you. Some key features of this new model include a longer minimum occupation period, tighter rental conditions, priority allocation quota for Married Child Priority Scheme (MCPS) and more.

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Therefore, these two factors are worth considering when deciding which location to purchase your HDB flat as they have a significant impact on the value and cost of your house. After you have narrowed down a few locations, you should also survey the neighbourhoods before making your final decision.

If public transport is your regular mode of transport, you might want to find a flat close to a bus stop or MRT station. On the other hand, finding a flat near an expressway would be more convenient if you drive daily. You should also consider amenities such as coffee shops, supermarkets, malls, hospitals, playgrounds, schools and hawkers.

2. Financing Your Flat in Singapore (HDB Loan vs Bank Loan)

For most Singaporeans, home financing is a necessity. Buying a home is one of the greatest financial commitments you will ever make. Hence, you must pick a home loan that is right for you. You can either opt for a HDB loan or a bank loan when you buy a HDB flat. But what are some differences between these two types of housing loans in Singapore?

HDB Loan

If you opt for a HDB loan, you are looking at an interest rate of 2.6%. The Housing & Development Board offers housing loans with a concessionary interest rate pegged at 0.1% above the CPF Ordinary Account (OA) interest rate. This rate, is currently more competitive than bank loans, though bank loan rates have been dipping in recent months.

Furthermore, HDB loans have a higher loan-to-value (LTV) limit of 80%. Secondly, the required down payment can be paid using CPF, housing grants or cash. Lastly, if you want to repay your HDB loan sooner, you can do so without a penalty fee.

HDB Housing Loan Eligibility Summary

Bank Loan

Bank loans, while slightly more expensive, are the more flexible option.

What are some key features that make bank loans stand out? Firstly, there are fewer eligibility requirements. While HDB loans require one buyer to be a Singaporean, bank loans do not. Secondly, borrowers are able to refinance their loans every few years to get more competitive interest rates.

Home Mortgage Loan Calculator (Singapore)

To get a better understanding of how much a bank loan will cost, you can use the home loan tool below. This mortgage calculator uses live interest rates that are currently available in Singapore. This is critical due to the fact that bank’s home loan rates tend to fluctuate often.

Key Differences Between HDB Loan and Bank Loan