Buying a home needs careful planning. Find out what you have to pay upfront and on a monthly basis, and why you should be insured. Show Key takeaways
What do you have to pay?Buying a home is a big financial commitment that needs careful planning. The home that you buy should meet you and your family's needs now and in the future. With this in mind, take a moment to think about what's important and what's nice to have. Before looking for a home to buy:
What you can afford depends on your income, expenses, debts and savings as well as the amount you may be eligible to borrow. You'll need to make some upfront payments, and keep up with monthly housing loan instalments, and other recurring charges. Upfront paymentsThe payments you need to make to purchase your home include:
Let's look at a few of these in detail. Option feeYou pay the option fee to reserve the property of your choice. The tables below show the option fees for the various housing types, all payable in cash. If you choose not to exercise the option, you must be prepared to forfeit the option fee paid. For an HDB flat:
Learn more: Costs and fees when buying an HDB flat. For an Executive Condominium (EC) or private property:
DownpaymentHow much downpayment you have to pay in cash or from your CPF savings depends on:
For an HDB loan
For a bank loan
Third-party costs
Recurring paymentsIn addition to your monthly home loan repayments, you'll also want to budget for other recurring costs that come with owning a home. These include:
Maintenance, conservancy charges and utilities HDB homeowners pay monthly service and conservancy charges to their town councils for maintaining their housing estates. You pay a higher fee for a larger flat. Owners of private properties such as condominiums and apartments typically pay monthly maintenance fees. Utility charges (power, water and gas) depend on their usage. Property tax The property tax payable annually is computed based on a percentage of the annual value of the property. The annual value is the estimated annual rent that your property can fetch, regardless of whether you rent it out or not. Find out more about property tax from the IRAS website. You pay lower property tax if you live in the property you own, compared to if you rent out your property. Mortgage insurance For HDB flats If you're buying an HDB flat and using your CPF savings to pay your monthly instalments, you must be insured under the CPF’s Home Protection Scheme. This insurance scheme protects you and your family against losing your home should you become permanently disabled, or pass away before the housing loan is paid up. Even if you're not using your CPF monies to pay for your monthly instalments, you're still encouraged to be insured under the Home Protection Scheme. You can use your CPF monies to pay for this. For private propertiesA mortgage reducing term insurance protects your dependants if you (the borrower) should pass away or become permanently disabled and can no longer service the loan. All propertiesIf your property is mortgaged to a bank, you may be required to take up a mortgagee interest policy. Insurance for your home For peace of mind, it's a good idea to insure your home against fire and other perils. The cost of such insurance is generally low relative to the potential loss. Some policies, like fire insurance and mortgagee interest policies, may be required by your bank. Here's a comparison of the different types of home insurance and what they are for: Fire insurance
Home contents insurance
Mortgagee interest policy
Note: Extraneous perils include earthquake, windstorm, flood, riot and strike damage, landslip, smoke, damage, sprinkler leakage, explosion, water damage due to overflowing or bursting water tank. These are subject to policy terms. Find out moreGetting Married - Planning your finances together booklet - A booklet targeted at couples who are planning to get married or newly married. The booklet provides financial planning tips on the various financial decisions that couples have to make in their marriage journey. Download : Getting Married - Planning your finances together |