23 May 2025
SOURCE: CPF Board
Moving into your first home is both exciting and nerve wracking. As one of the most significant purchases you'll likely make, the home purchasing process deserves careful consideration and planning. After all, rushing this decision could leave you with a house you might regret for years.
While Build-To-Order (BTO) flats are a popular path to homeownership, buying a flat from the resale market is another alternative worth considering as it allows you to own a home as fast as eight weeks after HDB accepts the resale application. Plus, the resale market includes a vast selection of properties across different neighbourhoods, ages, and layouts - options you might not find in BTO or balance flat launches.
Having recently navigated this journey, this writer breaks down the resale homeownership process into five key steps.
Step 1 – Determine your budget
Setting a realistic budget is the first step you should take in your housing journey. A mortgage commitment can stretch up to 30 years, so settle for one you can manage sustainably. The last thing you want is to make lifestyle cuts or be forced to sacrifice your other life goals because of your home purchase.
Consider these four rules of thumb when setting your housing budget:
● 25% rule: Your monthly mortgage payment shouldn't exceed 25% of your household income
● Set aside enough savings in your Ordinary Account (OA): Use cash to help pay for part of your home purchase and retain an amount equivalent to half a year's worth of your monthly instalment. This ensures that you can still service your housing loan in unforeseen situations such as losing one’s job
● Plan within the monthly contributions to your OA: Keeping your monthly loan instalments within your CPF monthly contribution amount could free up your cash for other expense
● Buy within your means: Buy properties that are priced within five years of the combined income of all potential owners
Don't forget to explore the housing grants that might be available to you. The Enhanced CPF Housing Grant offers up to $80,000 for eligible buyers, while the Proximity Housing Grant provides up to $30,000 if purchasing to live with or near your parents or children.
Step 2 – Decide on your priorities
While finding a "perfect" home is tempting, this often requires compromise. Sit down with your partner or family and create a priority list broken down into two segments: non-negotiables and nice-to-haves. This will make your search more efficient and decision-making less emotional.
Some priorities can include:
1. Flat age and condition: Newer flats have more years left on the remaining lease but often command higher prices
2. Unit position: Corner units offer more privacy but are also more expensive
3. Floor level: Higher floors generally provide better views and ventilation, but may cost more
4. Accessibility: Proximity to MRT stations typically translates to convenience, but also higher prices
5. Amenities: Consider what you use daily (e.g. hawker centres, shopping malls, parks) versus occasionally
6. Family proximity: Living near your loved ones offers practical support and qualifies for grants
7. Proximity to schools: Being near schools would make commuting easier for your children.
Some might want to live near their parents to make family gatherings more convenient, while others may prioritise a unit within walking distance of an MRT station if they don't own a car. Understandably, this would mean paying a premium compared to flats in more distant locations.
Step 3 – House hunting
With your budget set and priorities clear, it's time to begin the search. You can engage a property agent (for a fee) or search independently through property portals.
Consider these factors when viewing the property:
● Visit during both night and day to assess natural light and noise levels
● Look for signs of moisture problems (peeling paint, mould, musty smells)
● Open and close all windows and doors to ensure they function properly (windows and doors are costly to replace, so it’s a good idea to check for their functionality)
● Chat with neighbours to learn about the community
Don't be discouraged if the process takes longer than expected. Some buyers view many properties before finding "the one”, while others can connect immediately and put down an offer on their first viewing.
Step 4 – Negotiate and offer
Negotiating and landing on the final price can be the most anxiety-inducing part of the homeownership process. After all, every thousand dollars negotiated could mean months of additional savings or years added to the mortgage.
What can make it particularly nerve-wracking is the constant second-guessing - is your bid too high or too low?
Time pressure can also add to the stress. In a competitive market, hesitating on an offer could cost everything, yet rushing into a financial commitment of this magnitude can feel terrifying.
Research is your strongest ally, and it’s important to study recent transactions on HDB’s website for similar flats in the area to understand the market value.
It’s also necessary to be mindful of Cash Over Valuation (COV)—the difference between the agreed purchase price and HDB's official valuation. This amount must be paid in cash and cannot be covered by loans or CPF savings, so it directly impacts your immediate cash outlay.
Most sellers request an extension of around three months after the sale to arrange their move. If you're not in a hurry, you can use this to negotiate for a better price.
The last thing to note is that negotiation is part of the process, and it can feel quite disheartening if you miss out on a potential home by not offering enough. Ultimately, it’s important to stick to your housing budget and do prior research to ensure you walk away with your new keys at the right price.
Step 5 – Designing and furnishing your first home
Congratulations, you’re a homeowner! Now comes the challenge of transforming it to one that truly reflects who you are. Consider engaging an interior designer that can help provide design and spatial ideas for a comprehensive renovation or a contractor if you already have a clear vision in mind.
Either way, establish a budget with at least 10% contingency for unexpected issues such as electrical wiring and plumbing.
When planning your space:
● Consider your lifestyle needs rather than just following trends
● Look for ways to express your personality through items like furniture and décor
● Prioritise function first, then aesthetics
● Balance quality pieces with budget-friendly options
While there's excitement in setting up quickly, taking your time to plan and curate your home would lead to a more satisfying result.
The journey to homeownership
The home ownership journey is a fun and exciting process, and one that’s going to be memorable for you. While it might come with its challenges, and at times you might feel lost, keep chipping at it and know that the result is living in a place you can truly call your own.
All the best for your home ownership journey!
Information is accurate as of the date of publication.
