2018 Ultimate BTO Guide: Part 2 – Grants & Loans

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BTO Guide HDB Build To Order Flats Style Degree Sg Singapore
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Just like how we love to haggle at the pasar malam, it’s possible to get a good price for your BTO flat!

In this post, we will teach you how to and save money on your BTO by applying for grants and obtaining a loan that fits your financial needs to tee.


This post is a member of our 6-part series – View our complete guide below!

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Preparation Stage:

  • Part 1 > Research: Eligibility & Location
  • Part 2 > Financing: Grants & Loans

Action Stage:

  • Part 3 > The Application: Balloting & Flat Selection
  • Part 4 > The First Look: Key Collection

Pre Move-in Stage:

  • Part 5 > Defects Inspection: Things To Look Out For
  • Part 6 > Home Improvements: Interior Design & Home Must-Haves

1. Grants – how much am I entitled to?

 

BTO Guide 2018 HDB step-by-step tutorial style degree sg singapore

Grants are like angbaos, just that they are usually add up to thousand of dollars – you don’t get that during CNY, don’t you?

While there are plenty of HDB grants available, we will be covering 2 of them that applies to first-time applicants.

 

1.1 Additional CPF Housing Grant (AHG)

You are eligible for AGH if you fulfil the following criteria:

  • Applying for a 2-room flexi or larger flat
  • Combined monthly income ceiling of $5,000 (young couples may defer their assessment here!)
  • All applicants are first-timers
  • Your spouse and you have been continuously employed for 12 months
  • Flat lease of 30-years or more
  • Must not have owned or disposed of any private property in the past 30 months

If you are able to fulfil the above-mentioned criteria, hooray! You’re entitled to grants of up to $40,000.

 

1.2  Special CPF Housing Grant (SHG)

If you do not qualify for AHG, fret not as the SHG may be the grant for you. You are entitled to the SHG grant if you:

  • Are applying for a 2-room Flexi, 3-room, or 4-room flat in a non-mature estate
  • Combined monthly income ceiling of $8,500 (young couples may defer their assessment here!)
  • All applicants are first-timers
  • Your spouse and you have been continuously employed for 12 months
  • Flat lease of 30-years or more
  • Must not have owned or disposed of any private property in the past 30 months

Once again, if you are qualified for SHG, you might be entitled to a grant angbao up to $40,000.

 

1.3 Grant Calculation

Once you are qualified for a grant(s), the calculation is rather straight-forward as it is based on your household income. Simply tally your household income with the table below:

BTO Guide 2018 HDB step-by-step tutorial style degree sg singapore
Image credits: HDB

 

2. Loans – HDB vs Bank

Grants are perfect discounts – but you will need to pay for the rest of the amount!

When it comes to financing the remainder, there are usually 2 options to choose from, either a HDB loan or a bank loan. Let’s consider their pros and cons:

 

2.1 Interest rates & repayments:

HDB’s interest rates have been locked at 2.6% for over a decade while banks will usually loan you at an interest rate between 1.3% to 1.7%.

While bank rates seem to be favourable, keep in mind that rates will usually increase over the years and will mimic market fluctuations. As such, your repayments may fluctuate consistently as well.

This may not be desirable if you would like to plan ahead financially. Besides, late repayment is usually a financially painful experience for your wallet.

Our verdict: You can’t go wrong with a HDB loan. While they might be higher in the short-run, their predictability makes it a safe option, especially if you would like to plan ahead financially.

 

2.2 Downpayment amount

Don’t want to pay too much upfront? Then you should go with a HDB loan as it allows you to loan up to 90% of the flat’s value.

On the flip side, a bank loan only allows you to loan up to 80%. Do take note though, the more you loan, the more you will have to pay in the form of interests.

Our verdict: Applicants who would like to pay less upfront should go for a HDB loan, otherwise, there isn’t much of a difference.

 

2.3 CPF usage

Another reason to take a HDB loan is that it allows you to utilise your CPF Ordinary Account (OA) savings to pay for the downpayment fully. This means that you will have more cash on hand for other stuff!

On the other hand, bank loans require you to pay a minimum of 5% in cash (of the total value) for the downpayment.

This could increase if your loan amount decreases (you’re willing to pay more downpayment).

BTO Guide Downpayment Schemes Style Degree Sg Singapore
More details: HDB

Our verdict: Want to have cash for other expenses such as home renovation or even a honeymoon? A HDB loan might be the one for you!

 

2.4 Early repayment

The ability to repay your loan earlier without penalty is a good thing as it gives you the flexibility of reducing your financial burden in the long run.

Once again, this is in favour of a HDB loan as it allows for early repayment without penalty. On the other hand, a bank loan will cost you a 1.5% penalty should you repay your loan earlier.

Our verdict: It’s easy to see who’s the winner here – choose a HDB loan if you would like to have an option of repaying your loan before it ends.

Overall Verdict

Aside from a higher initial interest rate, a HDB loan is often a safer (and more popular) choice due to:

  • Predicable interest repayments
  • Lower downpayment amount &
  • Various CPF advantages.

Now that you have learnt the various types of grants and loan options, we will next be covering the actual step of putting in the BTO application. Catch you in Part 3!


This post is a member of our 6-part series – View our complete guide below!

Preparation Stage:

  • Part 1 > Research: Eligibility & Location
  • Part 2 > Financing: Grants & Loans

Action Stage:

  • Part 3 > The Application: Balloting & Flat Selection
  • Part 4 > The First Look: Key Collection

Pre Move-in Stage:

  • Part 5 > Defects Inspection: Things To Look Out For
  • Part 6 > Home Improvements: Interior Design & Home Must-Haves
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