BTO vs Resale HDB Flats: Which Should You Choose?
Embarking on the journey of home ownership is a significant milestone for many Singaporeans. Yet, the decision between opting for a Build-to-Order (BTO) or a resale flat often poses a challenging conundrum. As you traverse the pathways of BTO vs resale considerations, it's essential to fully comprehend the unique advantages and limitations each presents.
In this blog, we’ll provide a comprehensive exploration of the nuances between purchasing a BTO flat and buying a resale HDB property, in addition to presenting key factors that could influence your decision, such as potential BTO and resale grants. Whether you lean towards the fresh start offered by BTO flats or the varied choices associated with HDB resale options, we'll guide you in determining which choice best caters to your unique needs and circumstances.
Understanding BTO Flats
A BTO flat represents a unique opportunity for potential homeowners to own a brand-new house. These flats are launched prior to their construction and offer an alluring proposition – a fresh 99-year lease coupled with the opportunity to renovate a brand-new home according to your preference.
Additionally, BTO flats are generally cheaper than resale flats, easing the financial responsibility for first-time homeowners. When searching for your new home, you should gain a more in-depth understanding of BTO flats and the application process as this knowledge will prove instrumental in making an informed choice.
1. Choice of Location and Unit
When considering HDB options, applicants often weigh the benefits of BTO vs resale. Opting for a BTO flat provides aspirants with a unique advantage: the liberty to choose from various upcoming BTO projects situated in diverse towns or estates. This decision not only offers control over their desired location but also lets them select a specific unit within the project, tailoring choices based on floor level, the direction the unit faces, and closeness to amenities.
2. Wait Time
It's important to consider the longer waiting time for BTO flats as compared to resale flats. The completion time for BTO flats typically spans between 3 to 5 years. For those in immediate need of a new home, the wait time can be a significant consideration. For those with urgent housing needs, you can opt for BTO projects with shorter waiting times of under three years. Otherwise, if you’re okay to wait a while longer, you can take the time to plan your finances and concurrently make other arrangements, like marriage or child planning.
3. Priority Schemes in BTO Flat Selection
BTO flats offer tailored priority schemes for first-time buyers, including the Married Child Priority Scheme (MCPS), Multi-Generation Priority Scheme (MGPS), and the Parenthood Priority Scheme (PPS). These initiatives significantly bolster the odds for targeted applicant groups, such as married children wishing to live near their parents or budding families embarking on parenthood, to obtain a flat. The BTO grant, combined with these priority schemes, makes buying a BTO flat a compelling option for many.
4. Fresh Lease
One of the standout benefits of opting for a BTO flat is the fresh 99-year lease that comes with it. This not only assures homeowners of the property's maximum lifespan but also provides a stark contrast to buying a resale flat, which might already have several years deducted from its original lease.
5. No Previous Occupants
Another significant advantage of BTO flats is the guarantee of having no previous occupants. This ensures that the flat is in pristine, untouched condition. Unlike buying a HDB resale flat where there might be concerns about wear, tear, or concealed issues from past residents, BTO flats present homeowners with a fresh start.
Understanding HDB Resale Flats
In contrast to BTO flats, a HDB resale flat is an already-existing unit that becomes available for sale by its current owner once the stipulated Minimum Occupation Period (MOP) is fulfilled.
Although these resale properties generally have shorter lease tenures compared to their HDB BTO counterparts, they tend to command higher prices, with fluctuations occurring based on the ever-changing dynamics of supply and demand in the property market. Delving into the intricacies of buying a HDB resale flat is key to making an informed choice in the BTO vs resale debate.
1. Availability
Unlike the process of securing an HDB BTO flat, which can involve longer waiting times, HDB resale flats present a distinct advantage with their almost-immediate availability. This is a good option for those who are looking to move in as soon as possible.
2. Location Variety
In the battle of BTO vs resale, one key advantage of choosing a HDB resale flat lies in the abundant location options available. Whether you are drawn to the charm of mature estates or the potential of developing non-mature areas, the broad selection of locations when buying a resale flat allows you to select a home that perfectly aligns with your lifestyle preferences and needs.
3. Potential for Immediate Occupancy
A key attraction of resale flats is their potential for immediate occupancy. The instant availability of these flats is especially advantageous for those facing time constraints or in urgent need of a home. With resale flats, you can seamlessly transition into your new home right after the purchase, sidestepping the wait times typically associated with BTO flats.
4. Potentially Higher Costs
Conversely, an aspect to consider in the BTO vs resale equation is the potentially higher costs associated with resale flats. Unlike BTO flats, the pricing of resale properties isn't regulated by the HDB and often reflects their desirable locations and the advantage of immediate occupancy. This could result in a heftier price tag when buying a HDB resale flat, compared to a fresh HDB BTO flat.
Key Factors to Consider
When pondering whether to get a BTO or resale home, there are a number of significant elements to take into account. Whether you're eyeing a BTO flat or exploring the route of buying a HDB resale flat, the following key factors should be carefully considered to ensure your choice best aligns with your circumstances and future plans.
1. Budget Constraints
The amount you have budgeted for your new home is a critical factor in the BTO vs resale decision-making process. BTO flats are generally less expensive as they come with generous market subsidies by HDB, providing an attractive option for those with tighter purse strings. On the other hand, if your budget allows for a larger investment and there's an urgent requirement for a home, opting for a resale flat might prove to be the superior choice.
2. Urgency of Need
Your time frame for moving in can significantly shape the BTO or resale decision. Should there be an immediate necessity for a new home, opting for a HDB resale flat could be the most practical choice, due to its potential for swift occupancy, contrasting with the longer waiting period associated with HDB BTO flats.
3. Location Preferences
Your geographical preferences also come into play when choosing your next home. Resale flats provide a broader spectrum of location choices, spanning across both mature and non-mature estates. Therefore, if you have a specific area in mind, whether it's closer to your workplace, schools for your little ones or simply a neighbourhood you cherish, opting for a HDB resale home can offer more flexibility compared to BTO flats.
4. Size and Layout Preferences
The physical dimensions and design of your potential home are pivotal factors to mull over. Older resale flats often come with more generous square footage compared to BTO flats, offering larger living spaces that could be more conducive to your lifestyle or family needs. Furthermore, if specific layout configurations appeal to you, buying a resale flat can provide an array of unique and diverse floor plans, unlike the more standardised blueprints of BTO flats.
Financial Assistance and Schemes
In the ongoing debate of BTO vs resale, your choice between a BTO flat and a resale flat is often significantly influenced by available financial assistance and grants. Based on your eligibility, a myriad of grants exist for both BTO flats and resale flats. Key among these is the Enhanced CPF Housing Grant (EHG), which can be used regardless of whether you're buying a BTO or a resale flat, and the Proximity Housing Grant (PHG), available for those purchasing a resale flat near their parents or children.
The eligibility conditions for these grants are manifold, and factors such as your family nucleus, household income, and first-timer status play a significant role. For instance, to qualify for the maximum EHG of S$80,000, your average gross monthly household income must not exceed S$9,000. In comparing BTO grants and HDB resale grants, it's also important to note that buying a resale flat can be financially advantageous as HDB resale grants offer a wider variety and larger amounts, potentially summing up to S$190,000. Understanding these nuances of financial assistance for both BTO and resale homes is essential to making an informed housing decision.
Scenario Comparison: BTO vs Resale
Let’s look at some scenarios to better illustrate when one might be preferable over the other:
Example #1: Immediate Need for a Larger Space
Suppose a couple is expecting a child and needs to move into a larger space as soon as possible. In this case, a HDB resale flat might be a more suitable option due to the shorter transaction period, immediate availability, and larger sizes typically available in older resale flats.
Example #2: First-Time Buyers with a Limited Budget
A young couple purchasing their first home with a limited budget, planning to get married, and don't mind waiting a few years for their home may find a BTO flat a suitable option due to lower upfront costs and potentially lesser cash payments than a resale flat purchase.
Secure Your Home with the Right Insurance For You And Your Family
Whether you've decided on a BTO or are considering purchasing a resale flat, it's critical not to overlook the importance of comprehensive home insurance. Securing your home can give you peace of mind, knowing you're protected against unforeseen incidents.
An option you may consider is Income's Enhanced Home Insurance. It offers extensive coverage, covering the physical structure of your house1, your home contents2 such as like appliances and furniture, as well as renovations3.
Comparing BTO flats to resale alternatives might seem daunting, but the key is understanding your unique needs, preferences, and financial circumstances. With your dream home comes the necessity to safeguard it. Income's Enhanced Home Insurance helps to reinstate your home to its original state in the event of fires4, theft5, or other damages like burst pipes6. It also provides liability coverage, in the event of damages (such as house fire) caused to neighbouring houses. This flexibility, combined with their additional benefits such as the removal of debris and emergency cash allowance, ensures you are well-protected. Not to mention, for peace of mind during home emergencies, there's complimentary Emergency Home Assistance7.
We offer 24/7 assistance for issues like plumbing, electrician services, locksmith needs, pest control, and air-conditioner repairs via our dedicated hotline. Contact us today for more information or purchase the Enhanced Home Insurance plan online.
1Building means the following: For Housing Development Board (HDB) flats, condominiums, apartments or cluster houses, it will include the building structure (but not the foundations), fixtures and fittings based on HDB’s or the property developer’s standard specifications. This means we will not cover areas you do not own or which are not provided just for your use. For example, this can include shared areas such as corridors, car parks, stairways, lift lobbies and swimming pools. For landed properties such as bungalows, semi-detached and terrace houses, it will include the building structure (but not the foundations), garages, outbuildings, swimming pools, terraces, footpaths, driveways, gardens, gates, fences and other private areas you own and which the public do not have access to.
2Contents means any physical and movable household items or personal belongings including money and valuables kept within the premises that belong to you or your family members. But it does not include, amongst other items, motor vehicles, pets and items connected with your business or trade. Please refer to the policy contract for the exclusions and the benefit sub-limits for each type of content.
3Renovations means improvements and additions made within the premises by you or any previous owner or tenant in the form of fixtures and fittings. For example, this could include flooring, built-in wardrobes and kitchen cabinets. They do not form part of the building cover.
4Fire is an insured event.
5Actual or attempted theft as long as force and violence are used to get into or out of the premises. You must not leave the premises unoccupied. Unoccupied means when the premises have not been lived in by you, or by a person authorised by you, for more than 60 days in a row.
6Bursting or overflowing of domestic water tanks, apparatus or pipes in your premises (but not damage to water tanks, apparatus and pipes and expenses for tracing the source of the leak). The premises must not be left unoccupied. Unoccupied means when the premises have not been lived in by you, or by a person authorised by you, for more than 60 days in a row.
7Income has arranged for our appointed Emergency Home Assistance company to provide policyholders with emergency plumbing, electrician, locksmith, pest control and air-conditioner repair services 24/7, subject to policy conditions. This bonus service is a complimentary service provided to policyholders. It does not form part of the benefit provided under the policy contract. Income reserves the right to amend or discontinue the service at any time at its sole discretion without prior notice. Learn more at www.income.com.sg/home-insurance/EHA.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income Insurance advisor. This advertisement has not been reviewed by the Monetary Authority of Singapore.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org. sg).
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