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Home > Blog > finance > How Much Must You Save to Buy Your First Flat in Singapore

How Much Must You Save to Buy Your First Flat in Singapore

05 Mar 20219 Mins Read

Information listed below is accurate as of 5 Mar 2021.

For many Singaporeans, owning their first home is like a dream. The sort of dream where you’re falling out of an airplane, or being eaten alive by piranhas. Actually, we think those are called nightmares. The reason is the cost and new responsibilities – we all want to own a house, but the price tags are astronomically high, we feel giddy just looking at the numbers. Don’t panic. If millions of Singaporeans can become home owners, you can too. Here’s how much you may need:


The numbers below are just close estimations. They cannot be exact, as each of us are living individual lives and facing different scenarios. For example, resale flats in  different locations will be priced differently and according to their condition, priced above or below valuation. We may find cheaper legal fees and/or home loan rate when we buy a home.

In essence, what we’re trying to say is that the prices listed below provide a rough gauge of what to expect.

How much does a home cost in Singapore?

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The price of a flat varies based on location, size and of course, condition. According to the median resale HDB flat prices in the 4th quarter of 2020, 3-room flats cost between $265,000 and $421,000, whilst four-room flats will cost around $370,000 to $680,000 (before subsidies). Five-room flats can cost up to $750,000 and at the best locations such as Queenstown, even more than $900,000.

In some instances, you will also have read about resale HDB flat prices going for over $1 million.

Note that these are prices for resale HDB flats but, but buyers can receive subsidies and discounted rates through government grants and if they purchase a Built-To-Order (BTO) flats.

These are just for HDB flats. Many Singaporeans may also dream to upgrade or live in condominium or more luxuries properties. These can easily cost much more.

How can I possibly afford that?!

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$1 million for an HDB flat?! This is an insane amount of money, but fortunately majority of Singaporeans do not have to fork out such a large amount of money for their homes, especially if they cannot afford it.

On top of that, you only pay between 10% to 25% of the property price as down payment with the rest taken as a home loan.

There are two options you can go for here:

The first is to apply for an HDB concessionary loan. The second is to use a bank loan. In either case, you won’t have to pay for the house all at once. You’ll just need to ensure you can afford the down payment, and the monthly mortgage.

1. Working out the down payment

For our example, we’ll use a three-room flat that costs $320,000. This is derived from taking the average median price across all locations in Singapore.

Note that we can also qualify for housing grants of up to $80,000 when buying a BTO or up to $160,000 when purchasing a resale HDB flat. You can see the full list of grants here.

How much down payment you have to fork out also depends on the home loan you are getting.

Using an HDB loan, the maximum Loan-To-Value (LTV) ratio is 90 per cent. This means you only have to pay 10% of the purchase price in down payment, either through cash, your CPF Ordinary Account (OA), or both.

So if the flat costs $320,000, you have to pay a down payment of at least $32,000 or more if you wish to. Note that, if your CPF and grant monies can cover the entire 10 per cent down payment, it’s possible to buy a flat without having to pay anything out of your pocket in cash.

Using a bank loan, the maximum LTV ratio is only 75%. The first five per cent of your flat must be paid in cash. The remaining 20% can be paid in a combination of cash and CPF OA.

So if the flat costs $320,000, you would first have to pay a down payment of $80,000. Of this, at least $16,000 must be in cash, while the other $64,000 can be paid through CPF or cash.

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One other important thing to note about down payments:

In some cases, you won’t be able to get the full LTV. This typically happens if you have a bad credit score. If this happens, you may have to fork out more in cash or CPF.

Also, if you are purchasing a flat above valuation, you will have to fork out the additional sum outside of your home loan, as it is only limited by the valuation of the property.

Similarly, if you purchase a home below valuation, you cannot take a home loan up to the full valuation. You will still have to fork out 10 or 25% of the purchase price as your down payment, depending on your home loan type.

2. Work out any additional costs for taxes and administration upon buying

You’ll need to pay a few other added costs, at the time of purchase. The most notable of these are the Buyers Stamp Duty (BSD), the conveyancing fees and legal fees.

The BSD is based on the purchase price of the flat, or the current market value – whichever is higher.

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As such, the BSD for our $320,000 flat is $4,600 (1% of $180,000 + 2% of remaining $140,000). This can be paid with cash or your CPF.

The conveyancing fee is paid to the law firm, to handle the legal paperwork. For HDB loans, check their website for the appropriate legal fee. For our four-room resale flat, legal fees worked out to around $725.

3. Working out the monthly cost

The interest rate on the HDB loan is always 0.1 per cent above the prevailing CPF rate, which is currently 2.5 per cent. As such, the HDB loan rate is 2.6 per cent.

The interest rate on a bank loan is…more complicated. This is a topic that can cover an entire article (or several!) on its own. Without bogging you with details in this article, it’s safe to assume that bank loans fluctuate. Many will average around 1.2 per cent per annum today.

Note that bank loans are typically cheaper for the first three years, and then can jump substantially afterward. Homeowners have to refinance or reprice your home loans after two to three years to keep your home loan rates competitive.

With banks, there are no perpetual fixed rates for home loans. At best, you can get a fixed rate for a certain time period, such as three to five years. After that, it goes back to a floating rate.

For our example $320,000 flat, we’ll assume the maximum loan amount of $288,000 from HDB, and $240,000 from the bank. We’ll also assume a loan tenure of 25 years, which is typical for many Singaporeans.

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The monthly home loan repayment on an HDB home is much higher mainly because you can take a bigger home loan and pay a smaller down payment, as well as have to fork out a larger interest rate for this benefit.

One other thing to consider: the MSR

There is a loan curb called the Mortgage Servicing Ratio (MSR) framework. The monthly repayment of your HDB home loan cannot exceed 30% of our monthly gross income.

For example, say you have a monthly income of $3,875 (which happens to be close to the median income in Singapore in 2020). With the MSR cap, this means your total monthly repayments cannot exceed $1,162 per month. Of course, your spouse can also contribute to the home loan repayment with his or her income.

If you are purchasing a private property, another scheme – the total debt servicing ratio (TDSR) – applies to you instead.

The monthly repayments can be made via your CPF OA, or in cash.

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Other monthly costs include property tax, insurance, and conservancy charges.

Your property tax is based on the Annual Value (AV) of your flat. This is how much it could theoretically be rented out for. The AV is determined by IRAS (you can check their website for their valuation of your flat).

To determine your property value, just key in your AV in the IRAS property tax calculator, along with the relevant date. Assuming our three-room flat has an AV of $26,400 (about $2,200 per month if fully rented out), the property tax comes to $736 per annum, or about $61.30 per month.

Conservancy charges vary in different districts in Singapore. But for a three-room flat, it’s normally in the range of $62.00 to $73.50 per month.

After that, you’ll want to insure your property with home contents insurance. This provides pay-outs if your house catches fire, if someone breaks in to steal things, or if your burning house damages your neighbour’s (you could be liable for damages). This usually costs about $106.32 a year (or less than $10 a month) with AXA SmartHome insurance, providing coverage of $100,000 for your fixtures, fittings and renovation and $45,000 for your home contents.

4. Finally, work out the cost of renovations and furnishing

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Many contractors or interior designers will quote you around $65,000 to renovate a resale HDB flat. The cost of renovating a resale flat is typically more expensive than renovating a BTO.

If you want to take out a loan for renovations, the interest rate is usually in the range of 5% per annum – you should compare between banks for the lowest rate.

We won’t get too fancy for our example flat, and stick to basic renovations like vinyl flooring and painted walls. It’s always possible to “do up” a four-room flat for less than $30,000, but it really depends on your preference here.

All in, here’s how much you’ll probably need for your four-room home purchase

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While you can see  your estimated total cash outlay is already hefty, you cannot also ignore the fact that you’ll also have to fork out for your monthly home loan. This can be a heavy financial responsibility and weigh you down if you have other loans you are servicing or find yourself out of a job (especially in a COVID-19 hit economy).

How are you going to pay for all this?

If you’re planning ahead, one way to afford the property down payment is to use an endowment plan to invest ahead of time. An insurance endowment plan can grow your money by around three per cent per annum, for a given period (e.g.15 years).

For example, if you were to set aside just $300 a month, compounding at three per cent per annum for 15 years, you could accumulate over $$68,800. This allows you to more than cover the down payment, while still leaving your CPF intact.

When you are purchasing a property, it is also important to ensure you are able to afford the purchase, rather than stretch your finances to the brink. Once you are on the edge, it is much easier to fall over – which can leave you and your family struggling to keep the roof over your head.

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This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.

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