We embarked on our hunt for a resale flat about six weeks ago and found ourselves utterly confused with the procedure. Finding a house we like seemed simple enough. There are so many on PropertyGuru! It was the financial calculations that got us. It came to a point where we contemplated engaging the service of a property agent just so that we could be spared the pain of figuring it all out on our own.
But I guess our stubborn natures could not be moved. After spending countless nights poring over HDB’s website, repeatedly asking different people the same questions about CPF limits and housing loans, and arguing between ourselves, we finally got it.
Yes, we got it. And it’s actually quite straightforward.
Now that we got it, it’s hard to explain what made us so confused in the first place. The procedure seemed complicated probably because of the restrictions put in place by HDB and CPF to ensure that home buyers have enough funds to “protect their future”. With many factors to consider, I guess we didn’t know where to start.
I’m sure that there are many others out there who are like us, first-time home buyers looking for a resale HDB unit without engaging the service of a property agent. (We know your struggle and your pain. Oh, the pain.) Or are we the only ones?
Anyway, what we did know was that we needed to figure out the maximum amount that we were willing (or could afford) to pay, so we started from there. After much research and distillation, these are the 7 components that first-time buyers need to consider:
1. The 5k deposit to the seller
2. First-timer housing grant, if eligible
3. Additional housing grant (AHG), if applicable
4. Special housing grant (SHG), if applicable
5. Proximity grant, if applicable
6. Money in the CPF Ordinary Account
7. Housing loan amount we’re eligible for, whether HDB loan or bank loan
All these 7 components together make up the purchase price of the flat, or rather the amount we can offer the seller without coughing up extra cash. If the agreed purchase price ends up being higher than this amount, we will have to either pay cash or take up a bank loan which is said to offer a higher loan amount than HDB’s.
Taking a bank loan is really tempting actually, because of the low interest rates and supposed higher loan amount. But we read about the two types of loans (fixed rate and floating rate) and decided that neither seemed that attractive after all so it was back to HDB housing loan for us.