Tuesday, January 17, 2017

Can't Get BTO Flat? What Are The Other Options Available?

Applying for a BTO may not be as easy as it seems with many couples trying many times and still can't get the flat they want. BTO stands for Build To Order where the government will launch new flats every 3 months for couples to try their luck in getting one of the units. The November 2016 BTO was especially hot with good areas such as Bedok, Kallang and Bidadari (Toa Payoh). All these locations were right beside the MRT and needless to say, all were oversubscribed with the highest at 9.7 times oversubscribed for Kallang Residences. The results of the BTO were out just last week.

Besides the difficulty to get a flat under the BTO scheme, couples still need to wait approximately 3-4 years for the flat to be completed. This seems like a long time and delays marriage plans for any couple. Taking into consideration the challenges, are there any other options which couples can go for besides getting a BTO? There are indeed some other options and we shall take a look at it in this article. 



Can't Get BTO Flat? What Are The Other Options Available?

I'm sure everyone will agree a flat is important for a couple to have their own private space. Some may say its ok to live together with parents or in laws but honestly, who doesn't want their own home when they get married? Yes, an option if you can't get the BTO, is to stay together with your parents or in laws. If both are fine, then this is a fuss free choice and the couple can then slowly apply for the BTO of their choice and have all the time to wait until they get the flat and for the flat to be completed. 

If staying at parents or in laws house doesn't work, the other option is to get a resale flat. Hold on... getting a resale flat does it mean I won't get the subsidies which BTO has? Will I forfeit my chance of getting a BTO if I buy a resale flat? What are the other considerations?


Buying a resale flat

The advantages of buying a resale flat is you can choose any locations you want. You can source for the best property and go house hunting to make better decisions for the purchase. Yes resale flats are definitely more expensive. A 4 room resale flat in Ang Mo Kio cost $600,000 to $750,000 while in Serangoon, it cost about $480,000 to $620,000. Of course we can also look at less centralised areas like Hougang which cost $380,000 to $520,000. All the properties are located near to MRT.

A BTO in similiar areas will cost about $50,000-$100,000 cheaper as they are subsidised flats. For resale flats, there are also subsidies for first time buyers but there are certain conditions to take note of. 

Do take note that if you're purchasing the resale flat under the FiancĂ©/FiancĂ©e Scheme, you must:
  • Register your marriage with the Registry of Civil Marriages or Registry of Muslim Marriages
  • Submit your marriage certificate to HDB within 3 months from resale completion date 
If applying for CPF Housing Grant:
  • You must submit your marriage certificate on or before the resale completion date

Subsidies for resale flats

With resale flats at higher prices, the government also provides subsidies for home buyers. Here are the subsidies for resale flats:

Family Grant

The grant available for this scheme is $30,000. To be eligible, your household income must not exceed $12,000 (revised from $10,000 before 24 August 2015). You must be a Singaporean and form a family nucleus with another Singaporean or PR. This grant is only available for first time home buyers.

Additional CPF housing Grants

Families who earn up to $5000 will be eligible for additional housing grants under this scheme. The maximum grant available is $40,000 for those with less than $1500 monthly household income and minimum $5000 for household earning $4,501 - $5,000.

Proximity Housing Grant

Under this scheme, you can receive $20,000 in grant.

The eligibility criteria is:

Your parents/ married child are:
  • living with you in the resale flat
  • living in an HDB flat in the same town or within 2km
  • owner-occupants of private property in the same town or within 2km
If you fulfil all the above 3 criteria, you can get as much as $55,000-$90,000 in grants to buy your resale flat. This is quite a lot of subsidies. 


Disadvantages of resale flats

Even though resale flats provide the flexibility to choose and don't need to wait a long time for it, there are also some disadvantages. Firstly, choosing a good location for a resale flat is important. This is in case you want to sell it in the future. Buying a resale flat in a bad location may mean it is harder to sell it in the future. 

Secondly, some of the resale flats may be very old and their lease may be left less than 50 years only. A short lease makes it harder for other buyers to take loan from the bank and thus affects the number of buyers who can purchase your flat. This makes it difficult for selling later too. 

If buying a resale flat, it is better to choose a good location and a flat which is not too old. 

Will buying resale affect my chances of getting BTO in the future? 

Some couples may think of buying a resale flat to stay first temporarily and then try for BTO again later. In this case, will it affect your chances of getting a BTO?

Some rules which we need to take note of is when we buy a resale flat, we have to fulfil a minimum occupation period (MOP) of 5 years. This means we can only sell the house after 5 years. 

If you do not want your chances of getting a BTO to be affected, you should buy a resale flat without taking the CPF housing grants. It is stated clearly on HDB website that your BTO will be treated as a first-timer application if you and any of the other listed owners and essential occupiers meet the following criteria:
  • Not the owner of a flat bought from HDB, or an EC/ DBSS flat bought from a developer
  • Not sold a flat bought from HDB, or an EC/ DBSS flat bought from a developer
  • Not received any CPF Housing Grant for the purchase of an HDB resale flat
  • Not taken any form of housing subsidy (e.g. benefitted under the Selective En bloc Redevelopment Scheme (SERS) or HUDC estate privatisation)
It is clear that if we have received any CPF housing grants for the purchase of a resale flat, we will not be considered as a first time applicants for a BTO later on.

The Next Steps

Discussing with your partner is important if you didn't manage to get the BTO in the last exercise. There are certainly other options available which we can go for. The important thing is to plan long term as buying a house is a long term commitment. 

Looking to buy a property? Here's Your Complete Guide To Buying A Property In Singapore

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4 comments:

  1. Hi! Do you have any comments/advice and how much home loan should a couple take?
    We have previously for an 800k EC, therefore aiming for a 640k bank loan. The in-principle approvals from various banks have been more than expected, at 730 to 750k. Do most people usually take the maximum home loan they can get and buy a slightly larger apartment/more premium spot?
    Coming from stable jobs with progressive incomes, would you say it is uncommon to borrow less than what can be approved? What would you do if you were us?
    Thanks SGYI:)

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    Replies
    1. Hi Rachel,

      I wouldn't want to make myself to be in debt too much even though a lot of people say your house is your asset. It is important to consider what if we lose the income we rely on? Will we still be able to pay the monthly instalment?

      A house is for living and we wouldn't want to be living in stress. If we pay lesser for property, we will have more cash for other purposes which will make living much better.

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    2. Thanks for your insightful comments. We have indeed gone with our original plan and will be purchasing an EC closer to 800k rather than 900+k :) Coupled with an intimate wedding and a humble honeymoon, we'll hopefully be comfortable with getting a car in the near future.

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    3. Hi Rachel,

      Sounds good! All the best to you! :)

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