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Planning your budget when buying a HDB flat
Buying a property is a huge commitment that needs to be planned
meticulously beforehand as there are other secondary costs that will be
incurred other than the down payment. Such are fees and commissions and
although they may not be large amounts, it is always good to be
prepared so as not to be caught off guard.
The
foremost thing to remember is that the more you spend on housing, the
less you will have for retirement. Therefore you need to keep within
your budget. Ideally you should keep your monthly debt repayment below
35% of your gross monthly income and that includes your home loan
repayment.
Work out a detailed budget summary of
your total monthly income and expenses, find out your bank balances and
CPF account balances to be sure how much funds you actually have before
committing.
In an effort to make you aware of
such costs, especially for first time home buyers, here is an outline
of the costs you should expect to incur when purchasing a HDB flat.
Knowing what the approximate amount will be can help you plan your
budget better.
Cash downpayment
Since 1st January 2005, buyers who obtain a bank mortgage for their HDB
flat are required to fork out a 4% cash downpayment and another 16% is
to be paid from CPF or CPF housing grant (if any).
Real estate agent commission
This is another fee that needs to be taken into account when engaging
the services of a real estate agent whether you are purchasing or
selling your property.
Legal fees
When taking a loan/mortgage from a bank to purchase a HDB flat, you may
get HDB to provide you with legal service or you may even engage your
own lawyer to draft out the legal paperwork. There are certain banks
that package the legal fee into your loan. The amount you have to pay
as legal fees are usually within the range of 1 – 1.5% of the property
price.
Stamp fee
Stamp fee is a standard fee that is paid to the government as tax by
the property buyer. There is a fixed scale by which the stamp fee
amount is calculated. It is calculated at 1% for every $180,000, 2% on
the next $180,000 and 3% thereafter. You may opt to have this fee
deducted and paid from your CPF funds.
Fire insurance
Fire insurance is a mandatory prerequisite for all HDB flats. Banks
from which the loan is taken can provide you with options of fire
insurance providers as it is a prerequisite by banks that a fire
insurance policy be taken for all mortgaged properties.
Service and conservancy charges
These charges are a monthly payable amount for the upkeep of common
property and maintenance. It is to be paid to the town council. These
charges are calculated based on the built up area of your home.
This
guide is intended to provide you a better understanding of the various
charges to consider when you plan to make the biggest commitment of
your life. As long as you know your affordability and what you need to
have ready in hand, you can be better prepared for what to expect when
purchasing your dream home. |