Swimming pools, gyms, state-of-the-art facilities, freehold and all the glamour that comes with it – seems worth the price tag. So why are most HDB owners happier than private estate owners?
Below are 5 reasons why we think HDB owners sleep better at night:
1. Lots of grants
There are lots of grants that you can take advantage of. MoneySmart have made a very comprehensive guide on this topic.
You can also contact me or your trusted real estate consultants to advise you on the grants that are available to you. Make use of all the grants available to lower your mortgage loan.
Ensure that the grants, cash and CPF available makes up at least 25% of the mortgage loan for the downpayment. Best part of all, the grants are yours to keep. The grants will be returned to your CPF. How cool is that? Don’t let free money go to waste.
2. Low Mortgage Servicing Ratio
Mortgage service ratio is capped at 30%.
It is the formula when you divide the monthly mortgage payment to your gross monthly income (not inclusive of employers’ CPF contribution).
For example, if your pay is $3000, HDB will only allow you to use $900 to pay for your loan. (Formula : $3,000*30% = $900)
Unlike private property, borrowers can borrow up to 60% of their income. The more debt you are in, the more stress you have and the less happier you will be.
Even though HDB ruling is towards the right way, the 5 checks recommends lowering the monthly mortgage payment further to 25%. The lesser you are attached to the monthly payment, the more money you have to spend, save and invest on your loved ones.
3. Bankruptcy Protection
As long as at least one owner of an HDB flat is a Singapore Citizen, the flat is protected from creditors by law and cannot be sold or taken over by the Official Assignee.
On the other hand, the private property you own can be seized by creditors for the repayment of your debts. For more in-depth reading, you can visit Singapore Legal Advice.
Our HDB home is protected by law, hence, our loved ones living in it are protected as well.
4. Flexible monthly mortgage payment
HDB has its own measures to help those who are facing financial difficulty. Short-term solutions include reduced repayment scheme, deferment scheme and customised instalment plans.
There is a saying, “Prepare the umbrella before it rains”. Given the complexity of our new economy, there is no such thing as an “iron rice bowl”. You can rest assure HDB has schemes to help us in times of need. However, we too will have to prepare ourselves for the worst. Saving six months of expenses for an emergency is not a want, it is a NEED that should be done now!
5. Home Protection Scheme
Home Protection Scheme (HPS) protects CPF members and their families from losing their HDB flat in the event of death, terminal illness or total permanent disability.
This scheme is mandatory for HDB owners who use their CPF to service their loan.
This small but important insurance ensures that if any misfortune befalls you or your spouse, at least, there is one thing less to worry about: mortgage debt.
Everyone wants to be happy
The lesser debt you have, the happier you can be. That’s a fact. It does not matter if you live in a HDB, condo or a landed property, as long as you live within your means, you will be happier.
Understand more about my 5 basic checks before committing into purchasing a house. After you’ve covered the 5 basic checks, and have the means, you are truly ready to own a private property you can afford.
Never measure yourself against someone else. Your journey is your own. Use the 5 basic checks to ensure your home is a place of sanctuary, not a financial nightmare.
Find NOT an agent who sells to you but serves you. Make your home a safe and happy place for your loved ones.