Discover The Little-Known Truth To Buying A Resale Flat 43% Cheaper Than BTO

Did you know?

You could be “rewarded with free money” when you sell your flat?

Recently, Housing Development Board (HDB) clarified that your CPF housing grants would be returned to your CPF accounts (plus accrued interests) when you sell your flat.

That busted any myth saying that you must give the grants back to the government. No.

To be exact, when your new or resale flat is subsequently sold, the first $60,000 of the housing grants will be credited to your CPF Ordinary Account (OA). The remaining housing grants received will be credited to your CPF Special or Retirement Account (SA/RA) AND Medisave Account in equal portions.

Simply put, you get a “CPF Reward” just for owning a HDB flat.

This would give you more money for your retirement, housing or medical needs in the future.

But since you can get grants for Resale and BTO flats, why would buying a resale flat be better?

That’s simple – You can get MORE grants for resale flats.

Type of Grants

Here is a summary of the latest grants available for buyers:

Read on to find out what each grant is about…

Enhanced Housing Grant

 

The new EHG replaced the AHG and SHG (from 11 September 2019) to benefit more first-time home seekers. This grant is available to eligible buyers, regardless of whether they purchase a new or resale flat.

Its staggered payouts allow lower income families more money to buy a home.

There are also no restrictions on flat buyers’ choice of flat type and location.

And here’s the best part.

For families – The monthly household income ceiling will be increased from $12,000 to $14,000 to buy a HDB flat.

For singles – The monthly household income ceiling for eligible first-timer singles aged 35 and above will also be raised from $6,000 to $7,000.

For Singaporeans/PRs wanting to buy an executive condominium (EC), the monthly household income ceiling increased from $14,000 to $16,000.

If you want to know how much EHG grant you could get, refer to the infographic below.

Source: CNA

CPF Housing Grant (Resale Flat Only)

Table Summary of Grants

Source: PropNex

So, how does buying a resale flat becomes nearly twice cheaper than BTO?

Let’s look at various scenarios of buying a flat, for comparison…

 

Scenario # 1 – 3-room HDB at Woodlands

 

a)     BTO project: Champions Green (May 2019)

Source: HDB

List Price: Between $165,000 and $194,000 (Median price of $180,000)

 

b)     Resale flat: Champions Court, Woodlands Ave 1 (Completed 2012)

List Price: $300,000

 

 

c)     Price comparison with available grants

 

Picture this:

If you and your spouse earns a total household income of $5,000 per month, below are the ‘discounted’ prices of the flats for both BTO and resale – assuming you get the maximum available grants.

BTO: $135,000 (Discount from list price = 25%)

Resale: $175,000 (Discount from list price = 42%) à Bigger Discount!

By buying a resale flat, you can capitalise on more grants.

That’s not all – You will get a bigger flat and instantly get your keys upon completion of the sale. Unlike BTO, where you have to wait 3 to 4 years before moving in to your new home.

Let’s look at another scenario…

 

Scenario # 2 – 4-room HDB at Punggol

 

a)     BTO project: Punggol Point Cove and Punggol Point Crown (September 2019)

Source: HDB

List Price: Between $287,000 and $398,000 (Median price of $340,000)

 

 

 

b)     Resale flat: Punggol Way (Completed 2014)

 

Source: Google Images / PropertyGuru

List Price: $460,000

 

c)     Price comparison with available grants

Same thing here…

 

 

Assuming your household monthly income is $5,000, here is the final price of both BTO and resale flats after grants.

 

BTO: $295,000 (Discount from list price = 13%)

 

Resale: $335,000 (Discount from list price = 27%) à Bigger Discount!

 

 

 

Scenario # 3 – 4-room HDB at Kallang/Whampoa

 

a)     BTO project: Kallang Breeze and Towner Crest (February 2019)

 

Source: HDB

List Price: Between $523,000 and $674,000 (Median price of $620,000)

 

 

 

b)     Resale flat: Towner Road (Completed 1982)

Source: PropertyGuru

List Price: $700,000 to $850,000

 

c)     Price comparison with available grants

So What’s In It For You…

 

Take a look at the comparison again.

 

For buyers with household monthly income is $5,000, here is the final price of both BTO and resale flats after grants.

 

BTO: $575,000 (Discount from list price = 7%)

 

Resale: $575,000 (Discount from list price = 18%) à Bigger Discount!

 

And that’s not all… When you zoom in closer, both the price of flats after grants are the same for BTO and resale. Which means, you get to own a flat faster at the same price if you get a resale one.

 

Even better, you might get a flat with newly renovated conditions. That will save you even more money.

Buying A New House Will Be So Much Easier In 2020!

So, where else can you source for your ideal resale flat (other than PropertyGuru and 99.co)?

 

According to HDB, a new online portal will be rolled out by the end of 2020 for buyers and sellers to transact HDB flats seamlessly.

Source: HDB

What It Will Include:

 

       Flat-listing service for buyers

       Comparison feature with resale alternatives

       Listing and advertising service for sellers

       Resale application on the same platform

       And much more

This will remove tons of work in the resale process. Buying a home will become so much easier, especially for first-timers.

 

 

What’s In It For Your Future…

 

 

We discussed about your CPF allocation when you decide to sell your flat in the future earlier in this post.

 

What would it mean for you when you used more grants buying a resale flat, and end up selling later?

 

Remember: The CPF amount you used (including grants, down-payment and loan repayments) will be subjected to CPF accrued interest, which will be rolled back to your CPF accounts for your retirement, medical or housing use.

 

Imagine using this as another investment vehicle so you won’t have to worry about having enough money when you retire.

 

Simply put – Don’t wait for the next BTO or SBF launch (which only happens once every quarter)… There are many resale units available that would suit you and your family.

 

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