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Think you're too young to buy a HDB flat? Well, as long as you (age-wise) qualify for a BTO or HDB flat, this might be the best time and way to spend your money.
1. You qualify for more HDB grants
Many Singaporeans put off buying a home until they’ve got enough money. But buying a home when you’re young and broke can come with a big advantage: you qualify for more government grants when your income is lower.
For instance, if you and your fiancé or spouse have an average combined income of under $9,000, you will qualify up to $120,000 worth of housing grants under the Enhanced CPF Housing Grant (for families). Apply for a modest BTO flat that costs around $300,000 and you will only have to pay $180,000 for your entire flat.
2. Capital gains
While the property market has cooled in the past few years ever since the series of property cooling measures kicked in, capital gains are still likely for couples who buy BTO flats, since these are always priced lower than their value will be when the property is built.
That isn’t to say you should run out and buy a BTO flat today. But being vigilant and watching out for good sales launches or resale HDB flats as early on as possible can help you to get a good deal. It is highly unlikely that property will be cheaper than it currently is ten years from now.
3. You’ll be closer to the 5 year MOP
The five-year Minimum Occupation Period (MOP) can be a pain for couples who’re buying their BTO flat primarily to make money out of it. You’re prohibited from renting out your HDB BTO flat in its entirety or selling it until the MOP is up.
The earlier you buy your first home, the sooner you’ll be able to rent it out or sell it at a higher price than you bought it (very likely if you bought it when it was uncompleted).
4. You’ll be closer to financial freedom
Singaporeans may have a relatively high GDP, but the average Singaporean is quite far from financial freedom, thanks to being enslaved by a hefty home loan and possibly car loan.
Buying a modest HDB property early on in life with the help of generous HDB grants can enable you to pay off your home loans faster. Singaporeans with a fully paid-up home are much closer to being debt-free and achieving financial independence.
Heck, if you’re open to living in a neighbouring country like Thailand, you could technically just retire, rent out your HDB flat and live there at a fraction of the cost.
5. Cultivate good spending habits early
A lot has been said about the shortsighted spending habits of young Singaporeans more intent on padding their Instagram accounts with pics of OOTDs and restaurant meals than saving for the future. Well, most of these people haven’t had to contend with the burden of home loans yet.
By buying property early on in life, you’ll be forced to take stock of your financial situation and cultivate good spending habits much earlier than those who’ve never had to think about it. It will probably mean you amass a tad fewer designer bags and limited edition shoes, but that’s not necessarily a bad thing.
This article was first published on MoneySmart.sg.