Singapore is a rapidly growing metropolis renowned for its architectural wonders such as The Helix, Marina Bay Sands, Thian Hock Keng Temple, and the Bishan Public Library. As well as being home to some of the world’s most beautiful tourist attractions, Malaysia’s closest neighbor is also home to an array of attractive commercial and residential real estate.
Whether you’re looking for quaint bungalows, cluster houses, stunning condos, or state-of-the-art mansions, Singapore real estate has a property to suit even the pickiest buyers. However, since Singapore is among the most expensive countries to live in, you can imagine that this reflects in its real estate market and some home-buying procedures.
One of the most feared aspects of purchasing real estate is the down payment, no matter where you’re buying. In Singapore, your down payment varies depending on if you’ve opted for an HDB or a private property, yet it can still be a worrisome factor for buyers. This article outlines several ways that potential homeowners can save for a down payment on their Singapore home to help make their dream home seem more attainable.
Keep Your Debt Low Before Applying for a Home Loan
In Singapore, property buyers are subjected to the Total Debt Serving Ratio (TDSR), a way for the government to keep tabs on Singaporean borrowers. Singapore is renowned for its strict government, which exercises control in all elements of Singaporeans’ lives, including home purchases and money management.
Granted, some individuals are better at money management than others. One person will save and invest, whereas the other will spend their money frivolously – which TDSR is a measure that works to prevent. Under TDSR, all your debt obligations, including home, car, and personal loans, are capped at fifty-five percent of your monthly income.
Therefore, potential homeowners must monitor their total loan repayments and ensure they don’t rise too high, as this directly affects how much they can borrow for their house and their credit score. Keep your debt low using some of the following suggestions:
- Buy a car after your house purchase.
- Strive to pay off outstanding debts within the twelve months of applying for a home loan.
- Pay your credit card bills in full to avoid higher interest rates.
If you’d like to learn more about applying for a home loan in Singapore, consider taking advantage of the online resources from PropertyGuru. Their website contains information on various Singapore property topics, from advice surrounding your HDB down payment and much more. Consider browsing their website or getting in touch with one of their team members for more information.
Open a Savings Account
Another way that potential homeowners can save for a down payment on their Singaporean home is by opening a savings account. These bank accounts help individuals store money away to better their chances of achieving specific financial goals or purposes. For instance, you might start a savings account to create an emergency fund or start a down payment saving account leading up the months until you purchase your home.
Opening a savings account will guide you on how to save for a down payment while earning interest on the balance. Depending on which saving account you opt to open, some let you open an account with as little as $1 and will allow you to deposit/withdraw whenever you need. Bear in mind that if you withdraw, the interest you earn on your balance might be affected.
Start by outlining how much you can afford to spare from your paycheck each month; it could be as little or as big as you like – so long as the withdrawal will not affect any of your other outgoings. Aim to deposit the same amount each month and watch your savings gradually grow. If you’re dedicated, you could even create an automatic transfer from your current account to your savings each month so that when your paycheck is deposited, you won’t get tempted to spend any.
Increase Your CPF Payments
Providing that you’re a Singapore citizen, you could save for the down payment of your house by voluntarily increasing your CPF payments. The Central Provident Fund (CPF) is a mandatory social security savings scheme for Singapore citizens funded by employers and employees and aims to meet healthcare, housing, and retirement needs.
As well as using your CPF payments for your healthcare, housing, and retirement needs, you can also use it for paying stamp duty, conveying fees, and your monthly home loan installments. You can take advantage of the guaranteed 2.5% interest rate that CPF offers is a guaranteed way to ensure that you can afford your down payment. So, instead of spending your end-of-year bonus, you could plan and put it in your CPF, so when the time draws nearer for your house purchase, you’ll hopefully have enough money to cover a large portion of your down payment and housing loan.