All You Need To Know About HDB BTO
More than 80% of Singaporeans reside in a Housing Development Board (HDB) flat, and one of the easiest and cheaper methods to own a flat in this metropolitan city is through a HDB BTO flat. Akin to backorders when online shopping, you “order” a flat before it is even constructed and the government proceeds to “build” it over the next few years.
As the same with all fiscal schemes and measures, there is an eligibility criteria you need to meet before applying for a BTO flat. Salary cap restrictions is one important criteria.
Salary Cap Restrictions
This is the third eligibility criteria to be an owner of a BTO flat. Also known as income ceiling, it determines the maximum income level of individuals, couples and families eligible for BTO flat. If your monthly household salary exceeds the income ceiling of BTO flats, you are no longer eligible to apply. For
- 2-room flats under the 2-room Flexi Scheme, the income ceiling is as little as $7,000.
- 3-room flats, the income ceiling can either be $7,000 or $14,000 depending on the nature of the house project.
- those looking at 4-room flats or bigger, the income ceiling is $14,000.
Additionally, if you are a multi-generational family applying for a 4-room flat, the income ceiling increases to $21,000.
Average Waiting Time
It takes about 2-3 years for your HDB BTO flat to be ready from the point of success of your application. You can find out about the application instructions and procedure on HDB’s website.
HDB Loans VS Bank Loans
To help you buy your own house, a HDB loan is put in place where you are able to borrow money from HDB at a concessionary interest rate. The question is, which is better: HDB loan or bank loan? To make things clearer for you, here are the key differences between the 2 types of loans.
Firstly, HDB loans have a higher interest rate of 2.6%, and it rarely changes, giving you a sense of stability. In contrast, the interest rate of bank loans are ever-changing and fluctuates frequently.
Secondly, there is no minimum loan criteria for HDB loans while bank loans require a minimum loan of about $100,000.
While HDB loans have a maximum tenure of 25 years, bank loans for HDB flats have a maximum tenure of 30 years. As you will need to meet the criteria for a good credit score to get a bank loan, there is an eligibility criteria when applying for a HDB loan.
Last but not least, you can use your CPF money to pay the full downpayment of your HDB loan. However, for bank loans, 5% of the 25% downpayment has to be paid in cash.
Compulsory Home Protection Scheme
If you choose to pay your monthly loan repayments of your HDB flat with CPF, it is compulsory for you to be covered under the Home Protection Scheme (HPS).
This mortgage-reducing insurance insures you and your family from losing your home in the event of an unforeseen circumstance such as death before your housing loans have been fully paid. It protects you, the house owner, till you turn 65, or when your housing loan has been fully paid. In the event of death or permanent disability, the CPF board will pay the outstanding fees of your housing loan, ensuring the house still belongs to you and your family.
Here is an important tip: The percentage of monthly installment you are in charge of paying should be at least the same as what you are insured for. For example, if you are paying 70% of the monthly loan installment with CPF, you should at least be insured for 70% of the loan.
How To Get Started
Apart from HPS, there are numerous housing schemes that are aimed to help people of different needs. If everything seems fuzzy and all too complicated for you to absorb, don’t worry! Contact Us to get started on your housing plans and schemes. We will be able to assess your financial and housing situation and draw out an action plan for you and your family.