5 Things I found out while buying a HDB flat

I don’t know how or when we started talking about getting a place together, but somehow the idea popped into our heads and it stayed. Frankly I had gotten used to shuttling in between 2 houses, which was made easier when we got the car, where the drive on KJE (expressway) wasn’t too bad either. However the thought of owning a place together was rather sweet and soon we began arguing over the layout of our games room. Note it’s games room, we don’t even pretend to call it “study room” when it’s really used for not so studious purposes.

However in our research for suitable lodging I realised that while there’s a lot of information out there, you just need to know where to find it. there are numerous property websites and blogs that have a lot of information but not quite the information you’re looking for. it’s like trying to find a needle in Google. A lot of times it was through pure chance that we come across the right site for information or it was through sheer persistence that I finally collected enough information after hours of filtering out the nonsense sites. Half the time I wished there had been a dummies’ blog to tell you step by step what are the things you have to look out for when you’re thinking of buying HDB flat.

1.HDB.GOV.SG is your best friend – Do you qualify?

I started trawling through HDB website for rules and regulations on public housing but you can get really lost in there especially when it’s around the time the government decided to put in place new measures to cool the property market to help poor fools like myself, AND these new regulations might not be updated on the website as yet (ah you now see where the problem begins). But then I’m also a lazy reader (I gloss over the facts and don’t read stuff thoroughly as it’s boring) so that could be the problem.

For HDB, the housing comes in qualification / price tiers. For us, we didn’t meet lowest and cheapest tier of BTO (build to order flats) which are reserved for lower income people (below household income for $8,000). We’d have been forced to buy an overpriced condo which we don’t really need, but luckily for us the government raised the combined household income ceiling for DBSS / EC flats to $10,000 around the time we were looking. This means to get a flat before either one of us gets a pay raise. time to get slacking.

In a bid to ostracise those who refuse to cop out and fall for the government’s “get married and make more babies” campaign, they reserve public housing for those who are either already part of a family nucleus or are going to form one (except for those aged 35 and single – the government accepts that by that time you’re a gone case for sure). Bryan and I would fall under the “fiance/fiancee” scheme although he really hasn’t proposed. my tongue trips every time I had to refer to him as fiance, and I shudder every time I fill in the form as such, like I just swallowed a large serving of slug sashimi.

2. What is out there? New vs resale

since we were first-timers and still qualified for some form of public housing, we had a few options: (1) HDB flats (albeit the more expensive DBSS / EC ones), (2) private apartments (to the tune of ONE MEEEEELLLEEEEEON DOLLARS) or (3) resale flats (or pre-owned flats, like pre-owned LV bags). Because I’m all for checking out all options before deciding on something (which sometimes is the downfall for my indecisiveness), I first checked HDB’s site to see what new HDB property is available.

For resale flats, I went onto Propertyguru to check out what’s available. I still haven’t figured out the trick to Propertyguru, if there’s any. but man, are there some really badly furnished houses in this world. I found one with pink walls. PINK WALLS! no amount of new paint is going to wipe out that monstrosity. While resale flats negates the long wait a new flat demands, the amount of renovation required to change someone else’s idea of a dream home into yours is challenging.

Another useful site I found was h88, although this site tends to focus more on new private condominiums and upmarket HDB flats. it gives rather good insight on certain properties and the web owner goes so far as to do market analysis on property prices at the area of any particular launch of the moment.

The last way to search for new property is to flip through Saturday’s edition of The Straits Times. apparently Saturday is the day where people wake up early to see show flats for fun so developers have taken to putting up full colour full page spreads to publicise their property.

3. Home loans

When it comes to calculating finances, I’m really bad at it so thank goodness Bryan took on the duty of reading up on available loans and consulting his banker friends. You could either go to a bank branch and ask for a home loans banker, or go to a sale launch and there will be a few banks represented there.

There were too many things to take note of:
(1) length of loan is apparently usually 30-40 years long.

(2) there are 4 kinds of interest rates (fixed, variable, SOR, SIBOR), which different banks adopt.  fixed rate means your interest rate is fixed for all time, some feel safer with it but it’s usually high. variable means it varies according to the board. I wanted to ask the banker what board is she referring to (board of bankers? board on the wall?) but I decided to pretend I knew. hopefully someone reading this could explain. SOR rates depend on the world economy (US currency) while SIBOR rates depend on local currency. Please note I’m using very layman terms here and I’m repeating whatever I’ve been told but to get a true meaning of both rates, you can get it here.

(3) when your loan repayment actually kicks in which is the day the foundation is laid apparently, I always thought it was when you got your key. time to start eating grass for a few years.

most people would choose a bank based on the terms above plus a few perks (like no lock-in clause and such). but given a choice, I’d not go with UOB because I didn’t like how pretty the UOB banker was and she seemed to be making eyes at MY “fiance”. Instead I like the DBS guy coz he’s so unassuming and nice and not wearing too much eyeshadow on his face, unlike the UOB banker.

Whoever said my choices had to be rational?

4. Timeline

The timeline in purchase of a new flat is critical coz there are so many processes involved, especially when registering things with a government agency and you know these agencies work at the speed of a crippled snail.

Day 1: E-application day – where you apply for HDB flat.

4 weeks later: Letter of Yes You Got it. HDB takes an extraordinary amount of time to check if you’re eligible, but once they’ve figured out you are, apparently you get a ballot number to determine which place in life (or rather in the queue to get your dream home).

2 weeks later: Booking. The day you go down to decide on which unit you want, and to pay the option fee. For most it’s between $500 – $2000. for us, it’s 5% of sale price which could go as high as $30,000. I think this is bollocks as I’m penalised for studying hard as a child, getting good grades and a good job. If I had  a choice I’d tell future generations not to study too hard. just be stupid and poor, the government will somehow find a way to help you (see how bitter I am).

Here is where you get your home loan too because only after picking your unit would the bank know how much you’d be forking out for the rest of your life.

8 weeks later: after booking, next comes the 15% downpayment, which fortunately can be covered by CPF grant $30,000 for first-timers and your CPF (so if you marry late, you have more CPF to cover this. take my advice young paduans, don’t marry early).

2-3 weeks later: Stamp duty. turns out I now have to pay $14,000 to the government for doing nothing except to allow me to buy a house. WTF?

9 months after Day 1: foundation is laid. home loan repayment starts. The beginning of the end, as my boss likes to tell it.

5. Property smart friends

These people are very useful to have around. I’m truly lucky that my boss loves to teach me stuff about how HDB and loans work. he was also the one who taught me how to finance a car. We spend our long drives in between meetings talking about these things. He also regaled me with stories of his own property hunt, how his stupid wife didn’t know how to pretend she didn’t like the unit they were viewing to get a better rate (“this one has sea view. I want.” Gua Gua), and how his property agent said Malay homes are better to buy coz it’s always in good condition coz Malay owners are house proud.

My other colleague treats every home purchase as an investment so he was the one who told me to go visit showflats to get a feel of it. Thank goodness I took his advice coz now we have a 2nd option in case the 1st one falls through, and we now know that all HDB flats built at the same time albeit different districts, have the same look and finishings. all 3 show flats i looked at, all had the same grey / white exterior with the same boxy balcony. their floor plans are THE SAME. They even use the same cupboards and kitchen cabinets. so in the grand scheme of things, if you’re buying a new place at a particular time, you’re really paying for the location, not the look of your house.

another guru I sought advice from was my friend’s husband, who’s a property agent himself. Often joking and full of shit, imagine my surprise when he replied my emails in a formal professional manner. I thought I’d emailed the wrong person. but he was very much in tuned with the government’s cooling measures and was the one who advised me on the regulations.

These are the sort of friends you need around you when you’re making your decision on your new home. Those who give you the WTFOMGBBQ look when you say you’re saving for a flat, probably aren’t planning to move out of their parent’s homes soon, those you can ditch coz they are obviously of zero use to you. they are the ones who would probably come to your house warming and buy you a totally useless gift, like Tiffany & Co crystal ashtrays.

so these are the things I figured out in the past 3 months. Hope it’s of some use to any of you who are first timers to HDB buying.