BTO Downpayment

HBD BTO Downpayment Guide 2022: The Full Cost You’ll Deal With

Built-To-Order (BTO) flats have always been in high demand for many young families and first-time homeowners in Singapore. Unfortunately, BTO HDB flats have started to decline in quality, making a resale flat or executive condominium (EC) better choices for many homeowners. 

With more Singaporeans much more discerning about the properties they want to invest in, they want to know what they need to pay for BTOs, resale, or EC flats. In this short guide, prospective homeowners will learn about the minimum downpayment, maximum loan ceiling, agreement for lease, and other details that can help them find an outstanding housing loan.

Continue reading to learn more.

HDB Down Payment for BTO, Resale, and EC

All BTO, resale BTOs, and ECs require down payment before you can move into the property. Singaporeans and permanent residents can use their CPF Ordinary Account to pay a huge chunk of their HDB or bank loan down payment. 

For HDB loans, buyers have an option to pay the down payment exclusively with cash or CPF (except for ECs). On the other hand, buyers can use a bigger part of your CPF savings and combine it with a small cash amount to complete your down payment.

HDB Loan Bank Loan
HDB BTO 15% CPF or cash 5% cash + 20% CPF
HDB Resale 15% CPF or cash 5% cash + 20% CPF
Executive Condo Not available 5% cash + 20% CPF

 

HDB Down Payment Key Features to Remember

Here are the key features of all HDB down payments.

1. Loan-to-Value (LTV) Limit and Purchase Price

The loan to value (LTV) measures the loan’s mileage in reference to the property’s total value

The interest rate charged on a loan is typically calculated as a percentage of the loan’s principal. The LTV is calculated by figuring out how much of the borrower borrows the total loan value. 

A loan with an LTV over 80% means that the borrower will be responsible for 20% or less of the total loan amount. In this case, a S $800,000 loan to pay for a property valued at S $1,000,000 is 80% LTV.

2. HDB Housing Loan Down Payment

The HDB loan down payment is the amount of money the buyer of a new HDB flat pays to secure the property before moving in. The loan down payment is typically used as a deposit for a new property, as it is not an interest-bearing form of finance. 

3. Minimum Cash Down Payment (For a Bank Loan User Only)

Bank loans have a higher minimum cash down payment than HDB properties at 20% from your CPF and 5% from cash, making it a much higher commitment. However, it has a fluctuating interest rate that has moved around 1.2-1.5% in the last few years. 

 

BTO Downpayment Amounts

Homeowners planning to buy a BTO property valued at S $400,000 will have to deal with the following figures:

HDB loan Bank loan
Loan-to-value limit 85% (S$360,000) 75% (S$300,000)
Down Payment (CPF) 15% (S$60,000) 20% (S$100,000)
Down Payment (cash) No requirement 5% (S$20,000) 
Stamp duty  S$6,600  S$6,600

 

Housing Block

You may have noticed that the down payment is quite high for new couples and young families, which is why HDB gives them the option to use the staggered downpayment scheme to pay for their property.

HDB’s staggered downpayment scheme that can help pay for an HDB BTo flat or resale flats has the following requirements:

  • Married couples with a successful application under the Fiance Scheme
  • Booked a 5-room or smaller flat in any BTO flat launches
  • One of the persons in a marriage is a first-time applicant
  • Applied for a BTO ownership before the younger spouse’s 30th birthday.

The staggered downpayment scheme will split your downpayment in two dates:

When to pay HDB loan Bank Loan (75% LTV ratio)
When signing of lease for new BTO flat 7.5% (S$30,000, CPF or cash) 5% (S$20,000, cash) + 5% (S$20,000, CPF or cash)
During key collection 7.5% (S$30,000, CPF or cash) 15% (S$60,000, CPF or cash)

 

Resale BTO Flat HDB Down Payment

A family wants to purchase a BTO flat but wants to get a much higher value for their cash and doesn’t need to buy a higher-priced new BTO flat. After settling for a resale BTO flat valued at S $600,000, the family can expect to deal with the following:

HDB loan Bank loan
Loan-to-value limit 85% (S$510,000) 75% (S$450,000)
Down Payment (CPF) 15% (S$90,000) 20% (S$120,000)
Down Payment (cash) No requirement 5% (S$30,000) 
Stamp duty (pay in cash, but reimbursable from CPF) S$12,600  S$12,600

 

Unfortunately, the staggered down payment scheme isn’t available for families buying a resale BTO flat, meaning they’ll have to pay the entire down payment figures indicated in the table above. In addition, there’s a minimum conveyancing fee chargeable, which is the transfer cost from the former HDB BTO flat owner to the new owners, which is at S $20.

Another thing to note when buying resale BTO flats is the possible repair and renovation costs you’ll bear. Find out the best HDB renovation loan in Singapore. Resold BTO flats often require refurbishing fixtures, water, gas, and electric lines, and drywall repairs, so make sure you have enough cash set aside for possible repairs in the future.

 

EC Down Payment Details

Many Singaporeans who have seen executive condominiums fully understand that they’re HDB flats with much better amenities and features than traditional BTO and resale flats. However, EC flats are exempted from HDB loans, meaning prospective homebuyers will need to use bank loans all the way.

Here’s a chart of figures that prospective buyers will have to deal with when buying an EC worth S $1million:

Bank loan
Loan-to-value limit 75% (S$750,000)
Down Payment (CPF) 20% (S$200,000)
Down Payment (cash) 5% (S$50,000) 
Stamp duty (pay in cash, but reimbursable from CPF) S$24,600

 

Banks can only provide you with 75% LTV, having your CPF-OA pay for 20% with a cash down payment option of 5%. On top of this, executive condominiums are naturally expensive, but they’re long-lasting properties with efficient amenities and other in-house services.

 

Reminders for Permanent Residents Buying Properties

Singaporeans pay for stamp duty only on their first property. This is a tax imposed on the transfer of ownership of land or property. It is the government’s way of keeping the property market stable by setting property taxes according to their value. This tax is not imposed on shares, stocks, bonds, or mutual funds transfers.

On the other hand, permanent residents pay for the additional buyer’s stamp duty (ABSD), which is 5% of the property’s price. However, PRs with a Singaporean spouse do not need to pay for ABSD (and only BSD on their first property).

 

HDBs

Bank or HDB loan: Which is Better?

Singaporean buyers can use either HDB or banks for their complete BTO, resale flat, or EC financing. Is one of them a better option? Let’s use this table to learn about their differences.

HDB loan Bank loan
Down Payment 15% (can be CPF) 25% (minimum 5% in cash)
Interest rate 2.6% Currently about 1.2% to 1.5%
Interest Fluctuations No Yes, every few years
Monthly Installments Higher Lower (as long as interest rates stay low)
Term Leniency More lenient Less lenient

 

One of the biggest draws of using HDB loans is its accessibility in the form of a 15% down payment for the loan, which can come from your CPF-OA account. Plus, it has zero interest fluctuations, and you can negotiate your terms if you’re having difficulty paying. However, it’s major disadvantage is the fixed high interest rate of 2.6%, which is much higher if you compare it to banks.

On the other hand, banks may not have any wiggle room if you’re having difficulties and require a higher 25% down payment with 20% coming from your CPF-OA and 5% from cash, but it has its respective advantages. These include a low interest rate of 1.2-1.5% (non-guaranteed) and high/low interest fluctuations. In addition, you’ll pay lower monthly payments if interest rates remain low. 

We believe that both HDB and bank financing are beneficial depending on the circumstances. For example, buyers that have enough to accommodate a bank loan’s minimum cash downpayment and believe the real-estate market’s supply will stabilize with demand will find bank loans a great benefit. 

On the other hand, Singaporeans who want fixed budgets and don’t want to bother about market fluctuations will greatly benefit HDB’s low entry barrier and fixed interest rate.

 

How Do I Purchase My First HDB Flat?

Here are the basic steps to help you get your first BTO, resale, or EC

1. Ensure You’re Eligible

There are a few eligibility criteria to purchase a HDB flat in Singapore. The individual must be a citizen of Singapore, have attained the age of 21, and should not be a first-timer who has not owned or lived in an HDB flat.

2. Submit Your Ballot

The HDB flat buying balloting system is an HDB’s mechanism of allocating the successful applicants to purchase public housing flats with the least odds of disappointment.

The balloting process is done through a computerized ballot draw. Every successful applicant is assigned a ballot number and account number. The successful applicants will be required to complete and submit their ballots by filling in their ballot number and account number. Successful applicants are then ranked according to ballot numbers, with the lowest ballot numbers being called first.

3. Get Your HLE Letter

The HDB HLE letter is a letter of exemption that an HDB resident can use to waive the waiting period for applying for the HDB concessionary flat. It is important because it can allow an HDB resident to apply for a flat sooner by waiving the waiting period.

In the HLE letter, HDB explains the eligibility criteria and required documents to apply for their Home and Leasehold Exemption Scheme. It also contains a form that must be filled out with the necessary information.

The HDB will mail this to you in both physical and digital format.

4. Select The Flat You Want

You can choose to own a new BTO, resold HDB flat, or executive condominiums available during the balloting season. To confirm your choice, you’ll need to exercise your option-to-purchase (OTP), which HDB will provide for you.

5. Sign Your Lease

After exercising your OTP, you will sign your lease, pay all BSD and ABSD, and other legal fees.

6. Collect Your Keys

Congratulations! You’ve just purchased your new HDB property!

 

Answers to Questions That  Further Knowledge on HDB Purchases

1. How Much Is the Deposit for BTO?

You’ll need to provide 15% (HDB loans) and 25% (Bank loans, CPF + cash) of the total property valuation.

2. How Much Do You Need in Your CPF to Buy BTO?

You’ll need at least 15% of your CPF when using HDB loans to finance a BTO. On the other hand, you’ll need at least 20% from your CPF and use 5% cash to fulfill the rest of the 25% downpayment to use a bank loan to pay for your BTO.

3. How Much Do You Pay Monthly for BTO?

The property’s value, remaining LTV to pay, and interest rate agreements for either HDB or bank financing will dictate the amount you’ll pay for BTO monthly.

4. How Much Is the Deposit for Resale Flats?

You’ll need to provide 15% (HDB loans) and 25% (Bank loans, CPF + cash) of the total property valuation.

5. How Much Do You Need in Your CPF to Buy Resale Flats?

You’ll need at the minimum of 15% from your CPF when using HDB loans to finance a BTO. On the other hand, you’ll need at least 20% from your CPF and use 5% cash to fulfill the rest of the 25% downpayment to use a bank loan to pay for your resale flat. Keep in mind that you’ll be paying an additional conveyance fee as well.

6. How Much Do You Pay Monthly for Resale Flats?

The property’s value, remaining LTV to pay, and interest rate agreements for either HDB or bank financing will dictate the amount you’ll pay for the resale flat monthly.

7. How Much Is the Deposit for ECs?

You’ll need to provide a down payment of at least 5% cash plus 20% CPF to complete the 25% required for executive condominiums.

8. How Much Do You Need in Your CPF to Buy ECs?

Homebuyers should have at least 20% of the EC’s LTV and 5% of the LTV in cash to complete their down payment.

9. How Much Do You Pay Monthly for ECs?

The property’s value, remaining LTV to pay, and interest rate agreements for either HDB or bank financing will dictate the amount you’ll pay for the resale flat monthly.

 

Our Final Thoughts

Buying a BTO, resale flat, or executive condominium in Singapore is easy. Just make sure you can accommodate all the expenses we’ve listed here to help you have a smooth experience in buying your very first home.

  • BTOs, resale flats, and executive condominiums need you to pay their bank payments using your CPF-OA savings and cash.
  • BTOs and resale flats need only 15% of their LTV as down payment for their HDB flat. They can finance it using their CPF or saved cash.
  • On the other hand, executive condominiums cannot use HDB loans, but buyers can use their CPF and cash combined to pay for the property’s 25% down payment

Instant Loan can provide you with up to three high-quality quotes from Singapore’s highly-trusted and dependable licensed money lenders. Fill out our quick form today to get your free quotes and apply for the best financing today!

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