Journey to buy a resale HDB flat as a single - Part 1

Here it mark the start of my journey to buy a resale HDB flat as a single. For this part mainly covers the planning, researching, etc.

As a single Singaporean, once you turned into 35 there will be one thing came to your mind. Buy your own HDB flat! Yes, a single Singaporean starting from the age of 35 you are eligible to BTO or buy a resale flat. Here are the planning and researching at the start of my journey.

HFE Letter

https://www.hdb.gov.sg/residential/buying-a-flat/understanding-your-eligibility-and-housing-loan-options/application-for-an-hdb-flat-eligibility-hfe-letter

At the beginning of the journey, this would be the very first step to do before looking for any resale flat. All the seller agents will ask for the HFE letter first. It's pretty simple. Just need to follow the steps and fill in all the necessary information. During the process I can even start to ask for the bank's IPA letter for the housing loan later. Once the HFE letter is approved, it will shows the eligibility of buying and getting a grant. 

Budget

Once I got the HFE letter, next is to find out what is my budget to buy a HDB flat. How much I could afford. There are many mortgage calculator online which we could use to find how much we could afford with the cash and CPF (OA account) we have currently. The simple rule would be 20-5-75. 

Bank loan can cover up to 75% of the resale price, and we have to pay at least 25% as the down payment. In the down payment, at least 5% have to be paid in cash, and the rest we could use CPF to pay. Based on this, I could determine how much I could afford.

Agent or Self-service

This is the part which I struggled at first. Buying a house it's different from renting a house or room which is straightforward. We just need to find the room/house, view it and negotiate the rental price, that's it. Buying a house is much more complicated, so it is always recommended to get an agent to help. Hire an agent means we need to pay the agent fee once we close a deal. The typical market rate for the agent fee is 1% of the resale price. Meaning if the resale price is $600k, the agent fee is $6k in cash. It's not a small amount. So I thought I could research everything on my own, familiarize with the buying process then I can save up that 1%. Until I found out about COV!

COV (Cash Over Valuation) means the resale price exceeds the property valuation price. In simple term, if the resale price is higher than what HDB valuate the property would be, then we need to pay that extra amount in cash, and bank loan will only loan base on the valuated price. So example, I agreed to buy a resale flat at a price of $700k, but HDB valuate the property only worth $680k, then I need to pay the extra $20k in CASH! Which is a bigger amount than the 1% agent fee. I wish I could know this earlier so that I could find an agent to help me earlier. 

It's not overly complicated to buy a resale flat (IMO), and one is definitely can buy it on his own. However one has to accept the risk that he might need to pay the COV. It's much more beneficial to find an agent because it could save you all the hassle of finding house, preparing paperwork and negotiating the price. 

Finding a Flat

This part we could leave it to the agent to help us, or find it on our own via the online portal like PropertyGuru, 99.co, etc. But first we have to know what's the budget and what is the flat type (how many bedrooms) we want. Then sort out the priority of the flat.

• The location (Any specific district to live in)
• The accessibility to the nearest MRT station 
• The floor level (Must it be high floor or don't mind to be low floor)
• Remaining lease (The built year has to be over 2000 or don't mind it to be old block)
• Availability (Need to move in ASAP or don't mind for the extension of stay for the seller)

So for me, I prioritize to find the resale flat at AMK, Bishan area, because I really like to live in this area and it's so convenient to go anywhere in Singapore. Then I want it to be at least mid floor level. So those in low floor I will ignore them. Base on my budget to find a suitable flat is quite limited. Because this area mostly are old flats and the newer flat already exceeds my budget. 

Upcoming there are a few house viewings, so hopefully I could find "the one". If not, then I will find an agent to give me some recommendation.