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HDB Resale Flat – How much cash is needed – Part 2


Welcome back to my video blog posts –
today’s video is about financial planning and knowing where you can source for
funds for the purchase of your HDB resale flat. It is the second most
important consideration before buying HDB resale flat. The first is knowing if
you are eligible then you need to do up your sums to ensure you have enough
money to finance the purchase. This is where financial planning comes into play.
This planning is to let you know how much cash you need to pay for the
various items and when the cash is needed. The worst thing to happen is to
overlook an item and then to realize, you don’t have enough money to pay for it.
This can happen whenever a certain timeline is overlooked. A buyer has the
money but it’s only coming in next week and when this happened the transaction
can be aborted. It cannot be completed because of the lack of funds. You may
have millions of dollars but when the money is only coming in next week, the
transaction cannot continue. So the financial planning and the availability
of funds is very important. When you buy any property you need to be prepared for
it and be aware of the timeline. In this video I’ll just cover the various
financial options, the housing grant and some of the costs involved in the
process of buying a HDB resale flat. I’ll try to keep this video short. As for more
detailed explanation, I have prepared a blog post separately. You can find the
link in the description below. Please click on it to learn the finer points
that I believe is very important if you are looking to buy a HDB resale flat. There are only a couple of things to
talk about here – how to finance the purchase of HDB resale flat, CPF housing grant and
costs and fees. The other important point is this – know your timeline. I cannot
stress enough the importance of timeline when it comes to financing the purchase
of a property, typically, most people will have three options: cash, CPF and housing loan. You can either use the full 100% cash or a combination of all the three
options. First thing first. You need to have
sufficient cash and the ability to take housing loan if you are considering to
buy a property. This means, you must be employed or at least be running your own
business. You must be able to show you have a regular source of income. You must know where you can source for cash and where NOT to get your money from. More
about this in the blog post. The next step is to consider where your other
source of funds will be coming from. You have two options to consider. One is from
HDB and the other is from the banks, approved by MAS. There are differences in taking loan from HDB and from banks. I’ll explain more in depth in my blog posts.
if you have yet to find your preferred unit, you should still proceed the talk
to HDB or your banker to get the HLE letter or an in-principle approval for
your loan. With this information, you can set your budget and know your maximum
buying price. This will help you when you go shopping for your flat. The HLE
letter is valid for six months. Once you have your cash kept aside,
find out your CPF OA balance and know how much loan you can take. Here is a
breakdown of payment of what you need to pay at the start. Up to $1,000 cash
payment only. This is what we call the option fee. Next is up to $4,000 of cash
when you exercise the OTP. So you need to have a total of up to $5,000 cash as
deposit to pay it to your seller. The next breakdown will depend on whether
you are taking HDB loan or a loan from a bank. This will get a little bit
complicated and becomes long-winded but here’s what I want you to know. Taking
HDB loan and bank loan will have two different sets of payment structure. The
breakdown percentage is different. You need to consider the amount of loan you
take, how much you have in your CPF OA account and how much grant you qualify.
This numbers will determine how they will be combined together with your cash on hand to finance the purchase of your HDB flat. If you need any help to calculate
the numbers in the purchase of your next HDB resale flat, do let us know when we
can meet. There are couple more items to consider when working out the sums. So
please do be very careful to cover all the bases. The next financial
consideration is the CPF housing grant CPF housing grant are housing subsidies
allocated by the government of Singapore to eligible Singapore citizens. They can
be used as part of the initial funds for the purchase of HDB resale flat and to help reduce the total housing loan amount. There are various schemes designed for the different types of applicants and
the family nucleus they belong to. I’ll not go through the lists in this video.
You can find the details on my blog post as well and if you have any questions, do
drop me a message. Here’s an important note. The housing grant can help reduce
the amount of cash and loan you take. Do keep in mind there is an income ceiling
to consider when applying for this grants. There are many terms and
conditions tied to each of the grants. Do check with HDB or contact us if you need
more info. The final plart on financial calculation
is the additional fees required to complete the transaction. We have covered deposits to seller, initial payment and the cash payment for the purchase
earlier. There are also miscellaneous fees you
need to know such a admin free, valuation fee, fire insurance, buyer stamp duty and so on So to conclude this video blog post,
knowing your financial situation, know where to source for funds and getting
the necessary approvals is the next step after getting the approval to buy HDB resale flat. If you need more information and further clarification on financial
planning matters, do write to me or make an appointment with me. I’ll be glad to
meet up with you to explain in more details. The next video to watch is “What
is the HDB resale flat buying process for buyers.” In this video, I’ll explain the
processes involved in buying a HDB flat. It is important to know the steps as it
will help you plan your funds availability time, your move in, your
renovation and the completion. You want to know all this ahead of time as you
negotiate the closing price. Until the next video, I’ll see you again and all
the best

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