Opting to buy an HDB Flat or Executive Condominium could be one of best decisions that you and your family will benefit from. It's a good investment to start with, then the rest is just so much freedom in everything. There will no more restrictions in decorating it and there's even an opportunity to get extra income by renting your extra room out. But before you buy a flat you must consider and study the benefits of buying as a Singapore Citizen or as a Singapore Permanent Resident.
BUYING A FLAT AS A SINGAPORE CITIZEN
As a Singapore Citizen you have many options when choosing an HDB Flat. You can buy a New HDB Flat, an Executive Condominium Flat (different from Private Condominiums), an Apartment under the Design, Build & Sell Scheme or a Resale Flat. As a Singaporean, you are allowed to take up a housing loan direct from HDB. You are required to pay a 10% initial payment of the valuation price for the flat and the 90% will be loaned to you in a maximum repayment period of 30 years depending on your age when you make the purchase. If you are a first time buyer, you will have additioanl priviledge of getting a CPF Housing grant of 30K in the form of CPF monies, meaning this amount will be credited into you CPF Ordinary account which you can then use to pay off the initial 10% down payment for the flat. If your ordinary account fall short of the 10% down payment then this solves your problem. If you have to pay 300k for the flat , the 10% down payment is 30k, if your CPF Ordinary account is only 10k with this amount you will have a total of 40k.You can use the full amount of 30k to pay the down payment and the balance for other fees for the purchase such as Stamp fees & conveyancing/legal fees. The income ceiling to be eligible to take an HDB housing loan is $8000. The total monthly income of the family must not exceed this,it also applies to the CPF Housing grant.
Here's the link showing the types of CPF Housing Grants available and requirements for eligibility.
http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatCPF%20Housing%20Grant%20Scheme%20-%20Overview?OpenDocument
Buying a new flat will take about 3 years. HDB will announce the location for a new development, if you wish to get a flat you will have to submit an application to be included in the balloting program. If you are considered waiting time will be about 3 years before you can move in.
If you are a Singaporean flat owner, you will have the priviledge to vote when your block is selected for upgrading. And if the upgrading works are approved by the residents, Singaporean owners will enjoy a subsidized rate to pay for such works. An example would be $800 for lift upgrading which is further divided into a 10-year installment plan that can be paid using your CPF Ordinary account.
You can use your funds in your CPF Ordinary account to pay for the Monthly repayment and if there's not enough funds you will have to pay cash. When you are renting a flat, you have to make cash payments monthly.In addition, you are contributing 20% of your monthly salary to CPF. This 20% is divided into three accounts namely Ordinary Account, Special Account and Medisave.For example your monthly CPF contribution is $1000.What goes into the Ordinary account is the biggest portion which is $670,that is 67% of this amount.The rest goes to Special Account (15% for retirement) and Medisave (18% for hospitalization).Since a big portion of your contribution goes into the Ordinary account, over the years you would have accumulated enough funds to use for the flat down payment or monhtly repayment.The Government created this scheme for Singaproean to fully utilize their Ordinary account. That means no more cash out monthly for housing fees. That would be additional savings for the family.
BUYING A FLAT AS A SINGAPORE PERMANENT RESIDENT
As a Singapore PR, you are not eligible for a loan direct from HDB. You will have to seek the help of a Bank or Financial Institution. Usually they will allow you to loan 90% of the flat selling price and pay the 10% in the form of cash and CPF. The 10% initial deposit is divided into 5% cash payment and 5% from CPD Ordinary Account. Unlike Singaporeans who can pay the full 10% from their CPF Account, you will have to produce cash payment, for example the 10% down payment for a 300k flat is 30k. Your cash payment will be 15k and you can only withdraw 15k from your CPF Ordinary account.
You are also not eligible for any CPF Housing Grant and will not enjoy the 30k CPF monies. So your CPF Ordinary account must have 15k to purchase a 300k flat or pay the full 10% (30k) down payment in cash.
You will have to pay higher rates when upgrading works hit your flat. You cannot exercise voting for the upgrading proposal. If a Singaporean paid $800 for the lift upgrading, a Singapore PR will pay $8000. But you can still make payments using your CPF Ordinary Account in a 10-year installment period. But still that's a big difference. But the Government will give you a chance to enjoy the subsidized rate, if you become a Singapore Citizen within a year.
If you become a Singapore Citizen after your flat purchase you will only enjoy the CPF Housing Grant when you buy a new flat.
I hope I have given light to some queries on this much discussed matter. Make your choice now and create that dream home.
http://www.hdb.gov.sg/
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