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Planning your budget when buying a HDB flat
Buying a property is a huge commitment that needs to be planned meticulously beforehand as there are other secondary costs that will be incurred other than the down payment. Such are fees and commissions and although they may not be large amounts, it is always good to be prepared so as not to be caught off guard.
The foremost thing to remember is that the more you spend on housing, the less you will have for retirement. Therefore you need to keep within your budget. Ideally you should keep your monthly debt repayment below 35% of your gross monthly income and that includes your home loan repayment.
Work out a detailed budget summary of your total monthly income and expenses, find out your bank balances and CPF account balances to be sure how much funds you actually have before committing.
In an effort to make you aware of such costs, especially for first time home buyers, here is an outline of the costs you should expect to incur when purchasing a HDB flat. Knowing what the approximate amount will be can help you plan your budget better.
Cash downpayment
Since 1st January 2005, buyers who obtain a bank mortgage for their HDB flat are required to fork out a 4% cash downpayment and another 16% is to be paid from CPF or CPF housing grant (if any).
Real estate agent commission
This is another fee that needs to be taken into account when engaging the services of a real estate agent whether you are purchasing or selling your property.
Legal fees
When taking a loan/mortgage from a bank to purchase a HDB flat, you may get HDB to provide you with legal service or you may even engage your own lawyer to draft out the legal paperwork. There are certain banks that package the legal fee into your loan. The amount you have to pay as legal fees are usually within the range of 1 – 1.5% of the property price.
Stamp fee
Stamp fee is a standard fee that is paid to the government as tax by the property buyer. There is a fixed scale by which the stamp fee amount is calculated. It is calculated at 1% for every $180,000, 2% on the next $180,000 and 3% thereafter. You may opt to have this fee deducted and paid from your CPF funds.
Fire insurance
Fire insurance is a mandatory prerequisite for all HDB flats. Banks from which the loan is taken can provide you with options of fire insurance providers as it is a prerequisite by banks that a fire insurance policy be taken for all mortgaged properties.
Service and conservancy charges
These charges are a monthly payable amount for the upkeep of common property and maintenance. It is to be paid to the town council. These charges are calculated based on the built up area of your home.
This guide is intended to provide you a better understanding of the various charges to consider when you plan to make the biggest commitment of your life. As long as you know your affordability and what you need to have ready in hand, you can be better prepared for what to expect when purchasing your dream home. | 
