First Timer Dilemma, Resale HDB or BTO

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When it comes to housings in Singapore, without a doubt that HDB (Housing and Development Board) is the main developer of public homes and these high-rise apartments or HDB Flats are what most Singaporeans call home. Young couples are often facing the dilemma of choosing a new BTO or resale HDB but recently the prices of resale flats in the open market have been skyrocketing and became too expensive for most first time buyers. There are definitely some clear pros and cons when it comes to a resale or BTO, such as resale allows you to have choosing power while BTO allows you to buy a brand new HDB without being pegged to market rate.

If you are one of those that are caught in the dilemma of whether to opt for a resale flat or BTO, here are some guides and facts you can consider.

Waiting time

Both options involve waiting though buying resale HDB may take about 6 to 8 weeks for the process to complete, BTO can take up to 4 years. When you buy resale, you will not have the pressure of committing too early in the relationship on the purchase of a house that will be available four years in the future. For those in love and can’t wait to get married, the three or four years wait can be too much especially with the high rental prices in Singapore. Since the BTO are yet to be built, it means the couple has to begin plans years in advance. This means you get married then rent expensive or live with the parents with minimal privacy. The best solution for such a couple is to go straight into the resale HDB market and pick a suitable flat at the best location and price. The moment you sign the deal, the house is yours to move into, no wait or unnecessary expense in renting.

Savings on renovations

In many cases, you will not have to spend much on renovations since the apartment is already in use. The chances are that you will not need to do much about changes unless it is a poor condition. Since most property owners usually renovate before listing their properties, you may not need to do anything unless you decide to overhaul the interior decor. A new BTO come empty, so you have to renovate no matter what, but the resale unit only needs a little renovation as long as you are satisfied with what the original owner did to it. But if the condition is poor the design is totally out of sync with your personality then you have to spend a lot on tearing everything down and starting afresh

Neighborhood amenities

Buying a new BTO may place you in a community with yet to operationalize amenities, therefore, making your first apartment unimpressive to live it with many units still under renovations, landscaping not fully done and so on. However, when you opt for a resale HDB flat, you will find everything running, and families living in all the apartments meaning life and bustle will surround you. It will be easy to know how the traffic situation is, social places, schools and places of worship. The amenities significantly affect the value of the property, so it will be easy to guess what you have to part with and how the BTO prices will rise in a given estate.

Grant money or living near parents

Living near your parents makes you eligible for an extra grant amount for your new house if your parents live in an HDB flat. It is easier to get a resale HDB around 2 kilometers from your parent than to buy a new BTO. Buying a resale flat, therefore, earns you some money through the higher tier CPF grant.

Loan eligibility

Buying a resale HDB flat still, places you in the eligibility criteria for getting a bank or HDB loan. The choice between these two types of loan is for you to decide depending on your financial strategy.

Price differences

At face value, new BTO are way cheaper than buying resale flats since the former are subsidized by the government. However, if you look at the houses in detail, you find the older HDB are more spacious since HDB have been playing around with the floor sizes over the years. If you compare the price differences based on floor size, you find that the older and new ones have a very marginal price difference even though resale ones are still higher. The best way to assess this is by comparing prices per square feet. Both options come with unique financial benefits, for instance, BTO has the option for additional CPF grant and Special CPF grant making it a total of $80,000 depending on your meeting certain criteria. Resale HDB, on the other hand, offers the freedom of choosing the location you like and can, therefore, place you close to your parents making you eligible to get the proximity housing grant of a maximum $20,000.

Location

The location of your BTO flat depends on the choices of the HDB and trends over the years have proven that BTOs are rarely launched at the best places since private developers have already taken the good spots. Resale HDB, on the other hand, gives lots of flexibility regarding location since they can be sold anywhere within the island, this grants the buyer so much latitude in deciding where to stay.

This inflexibility of BTO should not, however, discourage you from buying since the government is committed to developing every part of the island and sooner or later, the spot that appears less mature in real estate will be developed, so there is no poor location. The not-so-amazing neighborhood can flourish in a matter of years to a beautiful place. But if you have no patience then going for a resale flat is the best option if you have commitments like work, college and parents to stay close to.

Lease terms

The lease term is paramount to every homeowner. BTOs all come with a 99-year leasehold meaning the older BTOs that are now in the market as resale HDB may have about 60 to 70 years left. This should make the older ones of lower value than the newer BTO with their full leasehold intact. There will come a time when this lease issue will factor majorly in evaluating the resale flats. If you plan to leave the flat to your children then instead of leaving them with a time bomb, buy an apartment with a long leasehold left in case you have no time to wait for the new BTO. With this taken into account, a resale flat is till preferable as long as it has ample time left and the price is fair to that effect.

Design

It is no secret that newer BTOs have improved design and floor arrangements compared to the older ones that are now in the resale market. The standard layout of the current BTO is much better when compared to those of the older HDB flats. They have the living room and dining space alongside the kitchen and a small walkway separating the three bedrooms to provide privacy. They now have the common bathroom near the bedrooms in contrast to the previous designs where the bathroom was near the kitchen. The older ones, with the wide open spaces, provide flexibility to the owners who can customize the home layout as desired. With a large budget and an experienced interior designer, you can plan and change the spaces as you please.

This, however, is dependent on personal preferences, some people do not mind living in a house with a decade old design since not so much changes anyway in the course of a decade. The resale HDB flats may then be the preference to most people since there is no need to hire expensive interior designers for the house has been designed and renovated by the first owner who got it as a new empty house. Just pick a resale flat that has the interior you can live with and start staying in it.

Floor size

With the ever changing floor designs over the years, HDB today creates smaller units with lower floor size compared to the older flats. If you want a larger house, then the resale HDB are the best for you and your family. This factors in the price, the older ones may appear more expensive, but when you compare the floor size, you may end up paying about the same price as the new BTO.

A BTO flat makes the most financial sense when everything is considered unless you find yourself ineligible. You get a cheaper option with 99-year lease meaning your children and grandchildren will enjoy the benefits of the house before the lease runs out. The downside to BTO is the waiting time, limited choice in location and undeveloped neighborhood. You can make the down payment and hope you and your partner will wait and stick together for the duration of the estate development or get a rental as long as you can afford it.

The choice to buy a HDB BTO or a Resale flat depends on one’s financial stability at that point in time. Each buyer would have their own preference with regards to homes that will not apply to another. What is most important is to remember that, whatever your decision is, you should not be rash as a home is an asset that you will be paying for a very long time.

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