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5 Noticeable Differences Between Public And Private Housing In Singapore

As most of you may know, public housings (excluding the executive condominiums) are usually built without the amenities of the private condominiums such as swimming pools, tennis courts, and playgrounds.

Aside from these varied amenities, there are other noticeable differences you must take into consideration when purchasing a home in Singapore. Here are some of them:

1. FINANCIAL GAINS

Whether the purpose of your purchase is solely for your occupation or for your investment, you are surely hoping that your property will increase in value as years go by. According to recent evidence, private condominiums surpassed HDBs (Housing and Development Board) in terms of capital gains. This is observed in almost every locations.

Why is this so?

Well, since HDBs are subsidized by the government, foreigners are not allowed to purchase them. So the higher gains of private condominiums in a period of time may be due to the broader range of buyers it cater to. In contrast with HDBs, you can rent out your private flat with no limitations and no minimum years of stay! These things make private condominiums a better choice for property investment alone.

2. RESTRICTIONS FOR FOREIGNERS

Landed properties are stricter to foreigners too as they need the government’s permission from the Land Dealings Approval Unit. Quoting the Singapore Land Authority:

“The ownership of such properties (landed residential properties) by foreigners is restricted to those who make adequate economic contribution to Singapore. The ownership restrictions are provided in the Residential Property Act.”

While private condominiums are more flexible to foreigners as they just need to pay the Additional Buyer’s Stamp Duty.

Image Credits: pixabay.com (License: CC0 Public Domain

3. OCCUPANCY REGULATIONS

If you are going to sell your home, there are notable differences between private and public flats. For public housing, in order to rent out your entire flat or sell it, you must first occupy the property for at least 5 years. While for private housing, there is no minimum amount of occupancy. Your only main concern is the Seller Stamp Duty that you are selling your private flat within the first four years of purchase.

4. CPF SCHEMES

The Central Provident Fund (CPF) has two distinct schemes for private and public housing. For buying new or resale HDBs, you can avail the Public Housing Scheme (PHS) wherein you can use your CPF Ordinary Account. Use the PHS to finance the flat’s purchase price, housing loan instalments, stamp duty, legal fees, and other upgrading costs. But this comes with two catches: valuation and withdrawal limits.

On the other hand, Private Properties Scheme (PPS) to buy or build private properties for either personal or investment purposes. Use the PPS to pay the flat’s purchase price, housing loan instalments, construction loan, stamp duty, legal fees, and other upgrading costs. As the PHS, PPS comes with valuation and withdrawal limits.

Image Credits: pixabay.com (License: CC0 Public Domain

May this guide help you to decide the housing type that suits you best! 🙂

Sources: 1, 2, 3, 4, & 5

5 Surefire Signs That You’re Ready To Move Out

For a young working adult, staying at home with your parents seems like the perfect place to live in. Since the rent and food are usually free, you will be able to get a financial head start.

However, this living arrangement can hold you back if you want to live an independent and autonomous lifestyle. Think about it!

To help you, here are some signs to validate your desire to move out:

1. YOU ARE DONE ANALYZING YOUR CURRENT SITUATION

Renting or buying your own flat is one of the biggest investments you can ever make in your life. It is a long-term commitment that you should carefully analyze and plan.

Before deciding on whether you are renting or buying your own home, you must first know how much you earn, how much you can afford, and how much do you need. The type of flat you can afford to rent or buy depends on your income and savings. The exact amount of money you need includes the upfront payments and the monthly payments such as conservancy charges or housing loan installments.

You are only ready to move out when you are done examining your financial capabilities and done weighing your housing options.

2. YOU HAVE SUFFICIENT SAVINGS

In order for you to move into your own nest, you must have sufficient savings in your account. This savings is not only for your down payment but also for your emergency fund that compromises maintenance, repair, and moving expenses.

Image Credits: pixabay.com (License: CC0 Public Domain)

Since loans may take up a huge chunk of your income, it is advisable to have a sufficient cash at hand (amounting to at least four months’ worth of salary).

3. YOU HAVE ENOUGH MONEY TO PAY FOR DOWN PAYMENT

If you are purchasing a house in Singapore, the bank can give you a loan of up to 80%. This means, you will need to have 20% of down payment upfront. Instead of getting trapped in a credit hole, it is important that you can afford the down payment. And if you really cannot afford it just yet, you can either wait or find a cheaper place.

4. YOUR POTENTIAL HOME WILL NOT ELIMINATE YOUR ENTIRE CPF

As a working Singaporean, you are entitled with a comprehensive savings plan called the Central Provident Fund (CPF). This is mainly used for your healthcare, retirement, and housing needs. However, you must not blow it all on one area such as housing.

If you do not have other investment options to cover your lifespan then, it is not necessary to take the highest HDB loan possible just because you can.

5. YOUR PARENTS ARE ITCHING FOR YOU TO GET OUT

If you are constantly finding yourself in an argument over simple things especially the ones that pertain to the house rules then, it is time to consider moving out. Furthermore, if your parents are throwing subtle comments on you then, it is time to take the hint.

Moving out may be the suitable solution for you to keep your loving and peaceful relationships in tact.

Image Credits: Denis Bocquet via Flickr (CC License)

Aside from these signs, you must not overlook the pleasure and responsibilities of living on your own!

Sources: 1, 2, 3, & 4

4 Tips You Need To Know Before Buying A Home As A Single Singaporean

According to the latest Population Trends report, single-hood rates are highest among lower-educated Singaporean men in their 30s and 40s and among higher educated women. It is clearly observable that the number of unmarried Singaporeans have been growing over the years but that does not stop one to contemplate about purchasing his or her own flat.

With the hefty housing prices in the market today, can an individual with an average income really afford a huge investment single-handedly?

To tell you honestly, the answer is YES!

It is possible, but you have to consider these few things:

1. KNOW ABOUT THE AVAILABLE SCHEME AND GRANT

In 2013, the government introduced a scheme that allows first-timer singles aged 35 and above earning up to S$5,000 a month to purchase a 2-room flats in “non-mature” estates. At that year, HDB launched 3,861 flats for sale in Sengkang, Bukit Merah, and Yishun under the Build-To-Order (BTO) exercise.

This relatively new scheme is called Single Singaporean Citizen (SSC). As you are aware of, before SSC, singles could only buy either private properties or resale HDB flats which can be costly! Thus, this will give a great opportunity for all the singles out there that are planning to become home owners despite of their average incomes.

Say you are an unwed Singaporean who just turned 35 a few months ago and you draw an average of S$3,000 a month, you can be entitled to receive the Special CPF Housing Grant (SHG) worth S$10,000. However, the eligibility of SHG is only given to first-timer citizen who is applying for a 2-room flat in non-mature estates. Furthermore, his or her average gross monthly income must not exceed S$3,250.

By knowing the available scheme and grant, one can safely conclude that owning a 2-room flat in Singapore is possible without the need to fork out loads of cash upfront.

2. ANALYZE YOUR BUDGET

Since purchasing a house is probably the biggest financial commitment you have at this point, it must be planned carefully. Before you start looking for a flat in the non-mature estates, know what you can afford as well as what you need to pay for first. Even if you are purchasing a new private property, you will need to reserve extra money to cover repair, taxes, and maintenance. Affordability is certainly a huge issue!

3. PROTECT WHAT YOU OWN

There is a huge sense of comfort and independence in owning your own home wherein you make your own decisions as days go by. Along with that comes the responsibility to take care of yourself. It is important that you have sufficient insurance to cover your health and your life.

Image Credits: pixabay.com (License: CC0 Public Domain)

4. CONSULT THE PROFESSIONALS

As I said before, buying a home is a huge commitment to make. This is why you must take your time and do your research with the available resources you have. Aside from this, it is always a good idea to talk to real estate agents or to consult a financial adviser beforehand.

Sources: 1, 2, & 3

Bank Loan and HDB Loan: Which Has More Advantage?

For any potential home buyer, home loans should be a serious business. Pick the wrong kind and it can cause a cascade of unfortunate events, including being trapped in a huge debt and even losing your home.

But between a bank and an HDB loan, which one is better? Let’s compare them:

How much can you borrow?

Under the HDB loan, you can borrow up to 90% of the purchase price or the market value, whichever is lower.

Banks, on the other hand, can provide you with up to 80% Loan to Value (LTV) of the property. This the ratio of the loan quantum to the property’s appraised value.

Take note, though, that both HDB loans and bank loans cannot guarantee the full LTV. Simply stated, it can be lower than 80% or 90%. This means that you have to use your own money to pay off the rest of the mortgage or consider other bank loans.

Taking out a personal loan to cover the rest is an option, but this might affect your debt servicing ratio. Always compare to find the best personal loans.

How much is the down payment?

HDB loans would require 10% down payment, which may be fully covered by your CPF savings. Banks would need 20%, 5% of which should be in cash as only 15% can be absorbed by the CPF. Regardless of which loan you choose, though, repayments may be made through the CPF.

How do they calculate the interest rate?

One of the biggest differences between HDB loan and bank loans is in the way they determine the interest rate. For a home buyer, you need to learn this as it’s the basis for the amount you pay on top of your principal loan.

The HDB loan is pegged at 0.1% above the CPF Ordinary Account (OA) rate. Do note that the CPF rate is reviewed quarterly, so the rate may still change, although it is quite consistent.

Banks can offer either a fixed or a variable rate, although the fixed rate is not perpetual: it’s fixed for only a few years, say, three to five years. Then the rate becomes variable.

Either way, banks have three possible bases for computing their interest rates: SIBOR Singapore Interbank Offered Rate (SIBOR), Swap-off Rate (SOR), and Internal Bank Rate (IBR). On top of that, the bank adds a spread, which is the bank’s charges. As an example, the SIBOR rate (we’ll use this since it’s the most preferred bank rate) may be 1.1% and the spread is 0.9%, which means the overall interest rate is 2%.

Banks express the interest as 0.5% + 3-month SIBOR, which means the rate is revised every three months.

Although banks can offer similar home loan packages, they can still differ on the interest rate alone. Thus, to make sure that you can make the right decision about that, speak to a mortgage broker.

Over the last few years, homeowners with bank loans have been enjoying lower interest rates, but that’s due to quantitative easing (QE), which somehow repressed the bank’s interest rates. But now that it’s over, the rates may significantly change.

Hopefully, with this article, you can make a much better choice whether to get an HDB loan or a bank loan.

(This article is brought to you by SingSaver.com.sg)

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