Choose The Right Resale HDB In Singapore? – For PRs

Picture Credited: Yahoo News 

For PRs*, when we buy a resale flat, we have a lot of thought on “dream house” in mind.

In this post, We will talk aboout how to objectively get a resale HDB that you can afford and also matches what you want.
*All calculation below is  estimated based on the couple both are PRs, if either of the couple is Singaporean, it will be cheaper in the total expense, if both are foreigners (non-PR), you can’t actually get a resale HDB.

Based on the 2 years experiences that we looked for a resale flat. Lets talk about the following items that is part of our consideration list which essential.

• Cash
• Age (Tenure)
• Location
• Type, Size and Floor plan

This post helps you narrowing down the resale HDB sourcing criteria. You will find out later in the post after finish reading, why we source based on the above sequence which literally based on how much we have, how old is the block should be, how big that we want, where should that be, how does it looks like?

Buy within your mean, first priority “CASH IN HAND”

The amount of cash that you have will directly determined the HDB that you can get.

Remember, is not about what you earned right now, for example, if bank told you based on your current income, you can borrow up to SGD 800k, which is 80% max to loan from bank to purchase a resale HDB (will use this as reference for below calculation), does not mean that you can afford a house that cost 1Mil, because you will need to spare 20% cash to finally move in.

“Why is 20%, we all know that we can pay off 15% down payment from my CPF?”

Sure!
But to ensure not putting yourself broke and always on the safe zone, please consider the following. From the quoted example of a SGD1mil resale unit,

• Do you have sufficient CPF to cover? 15%
  150k or split half, 75k from each individual ordinary CPF account
• Buyer Stamp Duty (BSD) – 2.5% (this is an average sum, find BSD incremental formula in IRAS Stamp Duty Calculator)
  24.6k
• Additional Buyer Stamp Duty (ABSD) – 5% (applicable for PRs, and Singaporean non-1st time buyer), introduced on 2013, cannot escape.
  50k
• Legal fee (average 3-5k)
  3k
• Deposit (Option Fee max 1k + Exercise Fee max 4k = 5k)
  5k
• Other Administrative Fee – (Stamp duty for Mortgage, caveat, registration, other conveyancing fees)
  1.4k – is plus minus, 1.4k is to round off the number for easy calculation.
• Agent Fee – 1% of your resale price + GST (DIY, save this part! Will share with you more in the next post)

If you have sufficient CPF to pay off the 15% downpayment, the total sum f cash you need = 24.6k+50k+3k+5k+1.4k = 84k.
We need 8.4% Cash, so spare yourself 10% to work on administrations. And another 10%, which 100k is to top up for downpayment, outstanding from CPF (if applicable), for your renovation and furniture.

It seems doable. Yes of course, that is provided you have a stable income and you are a PR for 5 years and above. If you do not have sufficient CPF to pay off the downpayment, the above pre-calculation is important. Please draft your own calculation and you will find out. The purchase price for 300k, 500k, 800k, 1mil, 1.2mil definitely scaled your budget differently, but the above shall give you a rough idea of what you are signing up for.

Remember, buy within your mean, based on the cash that you have, NOT THE MAX LOAN THAT BANK OFFERED TO YOU. Otherwise, you will burnt all the efforts, lost the deposit, cannot get the house you like or the worst, ended up in debt.

Age and Tenure

Lingo example – Remaining Lease: 80 years = Age: 19 years old

all HDB has 99 years lease, it seems like:

“35 years old HDB? Hmm~~~ doesn’t matter, still a few decades to go until lease run out, that should be fine.”

In fact, you have to realize what is incoming before it is too late.

1. Price & Size
   The newer the HDB, the higher the price, the smaller the size of the same unit type.
   So you can prioritize on what is your main concern, then get what you want.
   The same type of unit (e.g. 5 room)
   low price big unit, older unit
   low price small unit, newer unit
   high price big unit – older and more central unit, or go to another tier, the executive condo (EC)
   high price small unit, newest resalable unit (5 years old)
2. Upgrading programmes
   Around age of 30-34 years old HDB, Lift Upgrading Programme (LUP) and Home Improvement Programme (HIP) will take place, which mainly upgrading/repairing concrete cracks, pipes, toilet and lifts, which in another word (especially for PRs, the cost will be charged to you, LUP 3k max, HIP 2.5k max, which is around 5.5k)
3. The Selective En bloc Redevelopment Scheme (SERS) a.k.a En-block
   The en-block criteria is remains in black box, there is somehow no way for us to trace. My suggestion is not to consider this as an option, there is a chance lease has ran out, yet no plan to en-block, for even the 57 years oldest HDB block e.g. Block 45 Stirling Road.

4. “It (SERS) is only offered to HDB blocks located in sites with high redevelopment potential. These are typically sites where the land has not been well utilised. It is also subject to the availability of suitable replacement sites for residents and the Government’s financial resources.This is why only 4% of HDB flats have been identified for SERS since it was launched in 1995. We will continue to maintain this strict selection criteria. So please do not assume that all old HDB flats will be automatically eligible for SERS.”

5. by 24th March 2017 National Development Minister, Lawrence Wong

6. Next Buyer headache (assume that you want to sell your HDB a decade later at the same price, SDGD1mil)
   After 40 years old, your next buyer has to be cash rich to buy your house due to the following rules set by CPF.

• From 1 July 2013, CPF (Central Provident Fund) usage and HDB loan was restricted for purchase of flats with remaining lease less than 60 years.
• For flats that are 64 years old, banks are unwilling to extend loans to finance the purchase of these flats.
• For flats which are 69 years old (or less than 30 years of lease remaining), CPF money cannot be used for down payment or to service the monthly mortgage.
• From the 79th year onwards, the property has to be paid for in cash.To translate how this impacts you, when your block is at the Age 40 and above, buyer can only loan up to 50% from bank, and requires 50% Cash to buy the unit (500k excluding administration fees), resulting the lower demand in buying your unit as not many buyers can afford that, so your unit value will be forced to reduce too.

From the above, it should gives you an idea of what Age range that you shall consider. Prioritize your concern and the follow as my recommendation.

1. Prize & SizeIf you want low price and big unit: above 25 years old;
2. 1. If you are okay with price and size: 5-15 years old or another tier;
3. Upgrading programmes – If you want to skip this hassles: above 32 years old
4. En-bloc – if you still want to try your luck: Above 35 years old
5. Next buyer headache: If you want skip this hassles: Below 20 years old

Location

Public Facilities – shopping malls, markets, hospital and clinics, community centre, sport hubs or stadium, childcare and good schools etc. 

It may seems to be the most important factor, but we shall already subconsciously realized the different of buying a HDB at Choa Chu Kang compares to Central Area. Don’t be too ambitious, you will never able to buy any HDB if you get Price A in Choa Chu Kang and expecting to buy the same at Central Area.

Find the location that suits you based on the following criteria

1. Familiarity to the neighbourhood
   Form what I heard from most of my friends, if they used to stay at West (Jurong, Choa Chu Kang etc.) they will likely buy a house at West area, whoever used to stay North (like Toa Payoh, Ang Mo Kio etc.) they will get somewhere near there too. Same goes to East too. Which I think it make sense, you just have the good feeling and very used to commute somewhere around there.
2. Mature or new estate
   Do you like mature estate or new estate? To translate it, I am more like asking (for mature estate) do you mind staying in a crowded and busy place with complete public facilities or (for new estate) a place with lesser people, natural and greens but still lack of some public facilities?
3. Convenient to your workplace/school
   If you stay at West, just try to avoid applying any job at East, if you work at the Central, everywhere is fine. If you don’t mind your kids to non-famous school, within the neighbour usually has all necessity like nursery, childcare centre, primary and secondary schools
4. Close to LRT/MRT/ Interchange?
   Within 5 mins walking distance, or 2 bus stops away, you may have different interpretation, but all translated to cost, the closer the block to all these public facilities , the higher the price.
5. Stay close to parents (If applicable)
   Singapore has proximity grant to encourage kids to buy HDB near to their parents.
   You can find more information here.
6. Lookout for estate up-coming development from News
   Town Council or HDB, they will usually announce the up-coming projects for certain locations, this may be one of the source for you to check-out the area.

So at this point, once you make up your mind, then you identify the type and size of the hdb, and nail down to see if there is any match with the $, age that matched your desire location. For location, atleast you have a brief idea on should it be  East, North, Center or West, should it be mature estate like Bishan, Woodland, Clementi and Bedok, or newer estate like Chinese garden, Punggol and Pasir Ris.

Type, Size, Floors and Floorplan

I lump it together as it is co-related one another. Type has not been causing us a lot of issues because we are both aligned on what size that we wanted.
But perhaps it is still a concern for you.

Based on the cash that you have, you can choose to buy in the following range according to size.

1. 2 Rooms
2. 3 Rooms
3. 3-4 Rooms
4. 4-5 Rooms
5. 5 Rooms or EC

You can find the definition here.

The size of the Unit is generally determined by the room type, but some of it also affected by the design, the Age of the HDB block, placement of the unit and location.
An example, 5 Rooms, is bigger than 4 Rooms, but there is some designs (grey areas) where an older 4A corner unit (109sqm), is on par with newer 5i unit (110sqm).

You can find out more details here.

If it is for free, everyone want the biggest house for sure, but in this event how do you determine which one suits you?
We are using this “Resale Flat Price” in HDB Portal to pull out the past transactions for reference. Key in the criteria, as example that I am using, let’s see what we can get with 800k-1mil 4 and 5Rooms in central area, This is what you get.

Download the list, compare and refine your list, you will roughly know what and where you can get.

Once you narrow down to few places, start to request for viewing. We heavily rely on Property Guru. We don’t request for an Property Agent for Buyer to source (save us some cash), will share with you in another post on what should we take note without a Property Agent for Buyer.

Checkout the available property, with suitable price and take note on

The floors/levels

• low floors (1-3)
• mid floors (4-7)
• high floors (8 and above)

The different floors may cost like 5-10k request price differences.

The “Negotiable”

NONE OF BUYER OR SELLER WANT TO BE A THE LOSING SIDE.
Usually seller will put “Negotiable”, where how do I know if I am a losing side or winning side?
You can use X-Value from the SRX website as a reference, (Click SRX FAQ if you are asking “how accurate X-Value is?”), it may not be so accurate if the unit that you are buying is like 5years old, because it lack of history transaction to begin with.
But likely when you see the term “Negotiable”, they are usually refers to 10-30k like 10k reduce for a  300k property or 30k reduce for a 1mil property if that make sense.

The floorplan

We found that when we want to optimize the space, floor plan played an important role, where in Sinapore HDB, there are a lot of very weird looking and non space conscious floorplan that you cannot freely decorate your house (e.g. by looking at the living room, there is only 1 place you can put your TV. that’s it).

We don’t likely buying a floor plan (but you will need it for renovation if you bought the house), usually the Seller Agent will purchase upfront, SGD5 per floor plan, so in any case you want to buy one, here you go.

TO CONCLUDE

Remember, buy within your mean, based on the cash that you have, NOT THE MAX LOAN THAT BANK OFFERED TO YOU.

I can send you a spreadsheet to work on budget, just press Follow and PM me your details. (Don’t worry, I will not ask you for money or sell your email to anyone, I want to build a real “sharing is caring” community)

• What we have experienced, is that cash is always the key, don’t slip away and overspend.
• Prioritize what is important to you. From what we plan, initially after Cash as first priority, the prioritize the 2nd as location, lastly by age, but nothing turn out great, and is not what we wanted.
• So we changed it to current order, cash, age, location, type and size, then by filtering floor plan.

Let me know in the comment section if you need more information. I will add it in if essential. Next, I will share more on another post about Procedure to buy a HDB and things to take note if you buy a HDB without Buyer Agent.

Additional Information

Any other things to take note, I will keep it here.

Refuse Chute/ Rubbish Chute: For older HDB blocks, before 1990, it is attached with the Kitchen, you can conveniently throw your rubbish without stepping out your door, and on the flip side, you need to seal it whenever fogging is on-going to avoid roaches escape to your house.