All You Need to Know About HDB BTO Flats
Buying a house is one of the most significant milestones of your life, and unless you are a millionaire, you are probably looking at Housing and Development Board (HBD) Built-to-Order (BTO) flats as your first home. They are the cheapest option when it comes to owning a house in Singapore, and the board also offers various subsidies with the purchase. However, applying for HDB BTO flats can be a bit confusing; hence, here is everything you need to know about the BTO flats in Singapore.
Mortgage and Subsidies
The first step in buying a BTO flat is figuring out the finances. You can either take a loan from HDB itself or a bank. Here, the biggest difference between HDB and bank loans is the Loan to Value (LTV) limit. That is, bank loans appear to be cheaper because of the lower interest rates, but they can be expensive in the long run as they require you to make a down payment of 25% of the total cost of the house. On the other hand, HDB loans only require you to make a down payment of 10% of the total cost. This can not only be easy on your wallet when purchasing the house but also cheaper in the long run.
Moreover, the government of Singapore also offers subsidies that you can apply for. Here, you and your spouse can take advantage of CPF Housing Grants that can cut down the cost of the house significantly. Moreover, you should also check if you are eligible for multiple grants, so you can also take advantage of the Special CPF Housing Grant. Each grant is capped at S$40,000, so you can save as much as S$80,0000 in your BTO flat purchase.
BTO Estates and Flats
BTO flats are located in clusters known as estates, and the location and maturity of the estates determine their price and value in the market. The estate’s location and accessibility determine the price of the BTO flats, and there are two types of estates, non-mature and mature.
Non-mature estates are those that have been around for less than 20 years, like Hougang, Sembawang, and Punggol. The flats in these estates are 10-15% cheaper than those in mature estates. However, this low price comes at the expense of accessibility since these non-mature estates are located far from major town hubs, schools, and malls.
On the other hand, the mature estates are those that have been around for a long time, and they are also easily accessible from major town hubs. BTO flats in these estates come at a steeper price, but they provide the ease of accessibility that non-mature estates do not. Some of the top mature estates for BTO flats are located at Ang Mo Kio, Bedok, and Pasir Ris.
Now, within these estates, you have the option of choosing from various types of flats, from 3-room condominiums to 4-room apartments, and even big lofts.
Eligibility Criteria
BTO flats are special category flats, part of the public housing scheme, that can only be purchased by those with lower income levels. Hence, there are several eligibility criteria that you need to meet before you can buy these flats, like.
Low-Income Ceiling
Since the BTO flats are subsidized public housing, your income has to be low enough to qualify for the purchase. For example, if you want a 3-room apartment, then your income should range from S$6,000 to S$12,000; for 4-room flats, your income should be around S$12,000; and it should be S$18,000 for 3-generation units like lofts. This pricing is aimed at first time buyers who are in their 20s.
Family Size
Moreover, you also have to have the right type of family to purchase BTO flats, unlike private houses that you can buy as you please. Here, there are three schemes concerning the structure of your family. One, the fiance/fiancee scheme, where you can purchase the flat with your spouse-to-be. Two, the public scheme where families, parents, spouses, siblings, and children are eligible for purchase. Three, the special cases scheme which is reserved for single citizens, orphans, and joint singles. Additionally, at least one member of the scheme, be it special cases or fiance/fiancee, has to be a Singaporean citizen or a PR.
Minimum Occupancy Period
Lastly, if you want to purchase a BTO flat, then you have to live there for at least five years. Here, you cannot rent out the entire property to a third party, and nor can you leave it unoccupied. However, if you have a spare room or two, then you can rent out those rooms to tenants if you want.
Procedure to Apply for BTO Flats
Once you have figured out your finances and ran an eligibility check, the next step is to apply for the BTO flats in your desired location. Here is what the procedure is like.
Balloting for Your BTO Flat
Here, you need to check the HDB website regularly for any notifications regarding the upcoming sales launches. You need to pay S$10 to ballot for the launches, and depending on your luck, it may take several tries before you are shortlisted for a flat. You should expect the results for your ballot after a month.
Selecting the BTO Flat
Once you are selected, you will be assigned a queue number, and you have to show up at the HDB Hub to choose your apartment accordingly. Remember to carry your IC and income documents, and the HLE if you are taking a loan from HDB. Once you select the flat, you can then start the purchase process on the spot by paying a nominal fee; this is also where you can apply for CPF Housing Grant.
Signing the Lease Agreement
Once you have successfully chosen the house and taken care of the due procedures, you then have to sign the lease agreement. You have four months after booking a flat to do so. And make sure your loan is arranged before you sign the deal. Here, you also have to pay the down payment along with stamp duties and legal fees.
HDB BTO flats are a great way to buy your first house, and knowing these schemes, benefits, and procedures, can help you make your purchase correctly without any hiccups.
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