How To Save Up for a Home in 2021
Are you a first time home buyer? Or are you about to buy your second home but have doubts about the state of the real estate market this year?
If you’ve already started looking at flats for sale in Singapore or browsed through the latest new launches, you should start saving for one as early as now. Property investments, while safe, are a huge fiscal responsibility; one of the largest and most expensive purchases you’ll have to make in life.
In fact, the average cost of three-to-five-room HDB properties in Singapore is somewhere between $500,000 to $600,000. And if you’re gunning for a condominium or a landed property, then expect the prices to shoot up all the way to millions, not even considering inflation.
Of course, you can secure a loan from the Housing Development Board (HDB) or bank, or even use your CPF for the initial down payment, but the fact remains that investing in real estate is not simple mathematics. So whether you’re planning on getting a home loan or paying with your own savings, your preparation must start now.
Here are some things that will bring you one step closer to your dream house:
Create a budget and start tracking your expenses
Before starting to save up for your dream house, you have to decide the type of home you want to buy, know its price, and create a budget around it. If you want a condominium, then you’re going to need more or less two million dollars—notwithstanding the stamp duties you might be liable to pay.
Dive Deeper:
- 7 Factors to Consider When Buying Residential Property for Singaporeans
- A Brief Explanation of the Stamp Duties in Singapore
- Everything You Need To Know About Buyer’s Stamp Duty (BSD)
- All About Additional Buyer’s Stamp Duty (ABSD) Rates
For most, that could be an overwhelming amount of money to reach, which is why you need to start tracking your expenses as early as now. January is always a perfect time to create a budget and estimate your monthly expenses for the entire year.
It would also help to reflect on your spending habits last year to avoid committing the same mistakes. Once you’ve taken a look at all your expenses, you will have a clearer picture of your current financial standing and what you can do to gain more savings.
You have to be disciplined in cutting down your expenses because saving up for a home and maintaining it will incur an endless list of costs.
For example, you need to settle a loan origination fee, protect your home with insurance, hire moving companies, and purchase additional furnishings—which leads to the next point.
Don’t let go of old furniture pieces and household items
An effective way of reducing the expenses of getting and possibly renovating your home is keeping some of your furniture pieces and household items. Let’s be honest: purchasing new furnishings for your home can sometimes be just as expensive as the itself.
Some of the important furniture pieces you might want to hold on to are bed frames, dining tables, bookshelves, ceiling fans, centre tables, and cabinets. Even if these items are already broken, having them repaired is much cheaper than getting a new one.
For instance, according to ceiling fan technicians, the average cost of repairing a ceiling fan is only around $90 to $150, while a new one costs as much as $400.
Ohmyhome offers some of the most budget-friendly handyman rates on the island, so don’t hesitate to give us a call to see if our fees complement your budget.
Don’t forget the down payment
You have higher chances of getting approved for a mortgage if you either have a low income or a low debt to income ratio. In Singapore, a 25% down payment is often needed to secure any type of residential property.
A quarter of a down payment may not seem like much, but that’s actually a huge amount of money since we’re talking about millions of dollars.
If you don’t have that much in cash, then you might want to consider borrowing money from a bank or trusted money lenders.
Dive Deeper: Should You Get an HDB Loan or a Bank Loan? Consider These 5 Crucial Factors
When it comes to reliable mortgage services, Ohmyhome is the one to turn to. We work with multiple banks on the island to help clients get the best rates that won’t hurt their pockets.
All clients are given a chance to talk personally with our mortgage advisors for them to understand their financial capacity and provide the best course of action for their situation. Ohmyhome works with almost all the banks in Singapore, with unbiased mortgage specialists who seek to understand your financials and compare home loan packages to offer you the best rate that fits your needs, for free.
Your current savings are another aspect of your financial capacity that banks and financial institutions would want to see. If a bank or lender knows that you’re capable of paying the mortgage, then it wouldn’t hesitate to approve your application.
Check if you’re qualified for housing programs
Another way to finance your dream home is by applying for government housing grants. The HDB in Singapore offers housing loans to Singaporeans whose monthly income doesn’t exceed $7,000 and haven’t previously taken two or more housing loans from HDB in the past.
Dive Deeper:
- CPF Housing Grants for First-timer Applicants
- Enhanced CPF Housing Grant (EHG): Eligibility Requirements Checklist
- Available Grants for HDB Resale Flats
- Buying My Dream Home: Fiancé or Fiancée Scheme Eligibility Conditions
- Single Singapore Citizen Scheme
- Joint Singles Scheme or Orphans Scheme
- Non-Citizen Spouse Scheme
- Assistance Scheme for Second-Timers (ASSIST): Helping Divorced/Widowed Parents Start Fresh With New HDB Flats
- Multi-Generation Priority Scheme (MGPS): Buy HDB Flats for Your Family
What makes it a better option compared to conventional loans from banks and money lenders is the lower down payment, attractive interest rates, and lenient application process.
Based on HDB’s policy, the housing loan amount one can receive will be based on credit assessment, remaining lease of the flat you’re taking over, Loan-to-Value limit, and other rules applicable at the point of the loan application.
Look for ways to earn more money
If you’re determined to get your hands on the keys of your dream house as soon as next year, then now’s the time to start looking for ways to earn more money. These days, working a single day job isn’t enough to pay the bills, let alone saving money for a new home.
In that case, getting a second job would be a huge help in saving for a down payment and paying off current debts. Some people even look for second jobs in order to get the chance to retire early.
We recommend looking for one that allows you to work over the weekends, such as babysitting, house sitting, or even at retail, so as not to affect your main job.
There’s no shortcut to saving money for your dream home. There are lots of factors to consider, from your current financial capacity down to what you’re earning at your day job.
You also need to track your budget, think about which furniture to keep, make yourself eligible for loans, and sometimes, work extra jobs to earn more money.
However, as long as you remain committed to your goal of earning the keys to your dream home, you’re already one step close to achieving it!
Engage a Super Agent to develop a plan for your property purchase
And we’ll refer you to our mortgage specialists so you can see a detailed breakdown of the various home loans you can consider.