A Build-To-Order (BTO) flat gives Singaporeans a lower-cost homeownership solution than already-built HDB housing. While it’s true that resold HDB properties are much more affordable than BTO flats, a new property has a longer lifespan and dependability than the latter. Additionally, property aging can reach a height that involves the use of renovation loans and financing.
BTO flat ownership is a simple process, thanks to the Singaporean government’s efforts in using technology for its numerous BTO balloting, allocating, and selecting processes. Here is everything borrowers need to know about buying BTO flats this 2021.
All Singaporeans can own a BTO flat. However, each flat has various requirements. For example, a single-aged Singaporean above 35 can have up to a 2-room BTO flat only. Doing this allows the government to prevent predatory BTO and HDB flat purchases, a common practice in non-subsidized private property development.
BTO flats serve Singaporeans who couldn’t afford property housing with aid from the government. Therefore, age, income ceilings, and citizenship are critical. Only the following parties are eligible to buy BTO flats.
- At least one Singaporean citizen of any age as a spouse, legal guardian, or family member of a non-Singaporean citizen
- Single-aged citizens aged 35 and above
Take note that foreign workers and expatriates cannot own BTO or HDB flats. However, they can rent their chosen flat from a Singaporean owner.
The purpose of BTO flats is to provide affordable housing. Allowing anyone with an enormous income to purchase BTO and HDB flats contrasts with this principle. Here are the income floors and ceilings for different types of BTO flats available in Singapore.
Note: HDB evaluates every buying individual or group’s income as a collective. For example, HDB will automatically disqualify a family with a total income of S $15,000 from buying a 2-room Flexi property.
- 2-room flexi flat: S $7,000, or S $14,000 for short-lease flats of 45 years.
- 3-room flat: S $7,000 or S $14,000. Income ceilings may change.
- 4-room flat and beyond: S $14,000, or S $21,000
The HDB website lists the dates of upcoming BTO launches. Usually, they’ll post news about it within six months before the latest launch. Doing so allows prospective Singaporean buyers sufficient preparation time to save enough money or decide which financial service to use to finance their new property.
BTO launches are not private affairs, and borrowers can only find official news from the HDB’s website. Be wary of scammers trying to trick borrowers with cloned websites and false information.
These two elements might seem confusing, especially for first-time property buyers. However, both mature and non-mature estates are easy to differentiate. Borrowers might find that non-mature estates are much more affordable. Most Singaporeans believe that unbuilt or partially-built flats are non-mature estates because the government has not realized these properties yet. However, even completed apartments can be non-mature estates. Here’s an easy explanation.
- Mature: A mature flat has a thriving community. Borrowers can find the amenities borrowers need, such as malls, parks, museums, and more, within walking distance. Additionally, it’s near main roads and many attractions.
- Non-Mature: These properties can be unbuilt or partially-built flats. However, they can be complete flats that lack or have a limited supply of restaurants, tourist spots, recreational facilities, etc.
Here are significant differences between mature and non-mature estates. Keep this list handy to aid with the borrower’s purchasing decision.
- Property Location
- Number of Rooms/ Flat Size
- Amenities Available in the Area
- Price Floors & Ceilings
This is a simple process that involves personal registration on the HDB’s website’s BTO balloting page. Once borrowers have placed the necessary information, the balloting process will proceed to perform the following:
- Eligibility Check: BTO balloting authorities will investigate the documents borrowers have submitted for eligibility evaluation purposes.
- Priority Schemes: The multi-generation priority scheme (MGPS) prioritizes groups rather than individuals purchasing BTO flats and HDB properties. Even if borrowers are eligible as a single 35-year-old professional within the income floor and ceiling, the HDB will prioritize the group.
- Shortlisting: The HDB will shortlist borrowers according to the priority group the government has assigned to borrowers.
- Fees: Borrowers can retry for shortlisting as frequently as possible, but borrowers will need to pay S $10 each time borrowers submit a ballot.
- Chances of Flat Approval: Truthfully, no Singaporean can lower or increase their chances of approval. If borrowers are eligible, the ballot only guarantees that authorities will shortlist borrowers. However, because it’s a raffle, the borrower’s chances vary, and borrowers can only repeat the process every three weeks or when borrowers get their results.
Your queue number on hand will determine whether you will be scheduled for a unit selection. The farther your number is, the slimmer your chance gets, and this will require you to ballot again. If you’re lucky, take note of the following option fee when selecting your space:
- $500 for 2-room flexi flats
- $1,000 for 3-room flats
- $2,000 for 4-room or larger flats
Once you have selected your desired flat, consider applying for the CPF Housing Grant before you settle the down payment.
Both BTO and HDB flats can use banks or the HDB’s concessionary loan service. Once borrowers have received purchasing approval, the HDB will provide borrowers with an HDB Loan Eligibility letter. Borrowers will need to present this document to the HDB concessionary loan service or the bank of the borrower’s choice.
- Banks: Can only supply borrowers with loans that can pay up to 75% of the BTO flat’s value.
- HDB Concessionary Loan: Can pay up to 90% of the borrower’s BTO flat’s value.
By this time, you have decided which financing option would be best for you and have finalized your loan arrangement. Booking your dream flat comes next.
Once you have booked the flat of your choice, you must accomplish the lease agreement and down payment within four (4) months. Take note of the down payment requirements:
- HDB – 10% of the purchase price using cash and/or CPF
- Bank Loan – 25% down payment, of which at least 5% must be in cash, and CPF can cover the rest
Borrowers can pay for the borrower’s BTO flat down payments in a staggered way using the borrower’s CPF ordinary account to pay for the initial 5%. Then, borrowers can pay the remaining 5% after borrowers collect their keys. Banks have different sets of staggered down payment options according to the borrower’s needs.
Once the borrowers have accomplished all eligibility and due diligence, borrowers can collect their keys after the government contractors finish the borrower’s BTO property construction.
At this point, borrowers will need only to continue repaying the HDB or bank loan until they close the account and live with an HDB property that they will forever own.
By being smart with finances, following this easy-to-follow guide, and diligence about BTO balloting, schemes, and a little bit of luck, borrowers can own their flats in no time.
Truthfully, borrowers will need to set aside extra cash to pay for mandatory home insurance, renovation, or property down payment.
You can always count on us at Bugis Credit to help borrowers with any shortcomings. Contact us today to learn more about everything that we can do for you.