Here's one way to find out if you can afford that 500k as we've detailed in this article: https://blog.seedly.sg/what-type-of-hdb-flat-ca...
The typical HDB BTO project nowadays takes about 5 years on average before you collect your keys. So firstly, you'll need to figure out what your average monthly household income is going to look like in about 5 years' time.
Next, as an agar-ation, you can use the Mortgage Servicing Ratio (MSR) which caps the amount that you can spend on mortgage repayments to 30% of your gross monthly income. Oh, and let's just assume that you'll pay for everything with cash. This will be amount $X.
Once you figure out what kind of grants you can potentially get as well as deduct the downpayment from the price of your $500k BTO, you can use this calculator by HDB (https://services2.hdb.gov.sg/webapp/BB29MTHLY/B...) to figure out what your monthly instalments will look like. And yes, I know that this calculator assumes you're taking an HDB CPF loan, but just assume that you're taking a bank loan that charges you 2.6%. Or if you want to be more detailed, look online for a monthly instalment calculator which allows you to change up the monthly interest to something that's within the 1 to 2% range which a bank loan would usually charge. This will be amount $Y.
Side note: this will actually be a good exercise for you to see if maybe you might wanna consider a bank loan instead of your CPF to service your monthly mortgage
If $Y is more than $X
Then it means that you technically can't afford that $500k BTO flat. Of course, if you choose to service the loan with a mix of CPF + cash, then yeah, maybe you can. But trust me when I say that you don't want to do this because all your cash will be tied up in your flat (fixed asset) and you'll lose liquidity which you can use for investments or for (touchwood) emergencies.
If $Y is less than $X
Then it means that you can afford that $500k BTO flat comfortably. The wider the difference, the more comfortable you can afford it.
Now... you'll notice that all our calculations involve you paying with cash.
Why?
Because if you can make your monthly mortgage with cash, you confirm plus chop can make it with your monthly CPF contributions. Makes sense right? Since your CPF contribution is a fraction of what you actually take home.
Now back to the issue of your HLE. Your first HLE is only a gauge. 4 to 5 years later when you're about to collect your keys, you'll need to get another HLE done again and that will determine how much you can actually get for your HDB CPF loan.
So... don't worry too much about your HLE. Do the math first and figure out if you can actually afford the $500k BTO before taking the plunge.
Here's one way to find out if you can afford that 500k as we've detailed in this article: https://blog.seedly.sg/what-type-of-hdb-flat-ca...
The typical HDB BTO project nowadays takes about 5 years on average before you collect your keys. So firstly, you'll need to figure out what your average monthly household income is going to look like in about 5 years' time.
Next, as an agar-ation, you can use the Mortgage Servicing Ratio (MSR) which caps the amount that you can spend on mortgage repayments to 30% of your gross monthly income. Oh, and let's just assume that you'll pay for everything with cash. This will be amount $X.
Once you figure out what kind of grants you can potentially get as well as deduct the downpayment from the price of your $500k BTO, you can use this calculator by HDB (https://services2.hdb.gov.sg/webapp/BB29MTHLY/B...) to figure out what your monthly instalments will look like. And yes, I know that this calculator assumes you're taking an HDB CPF loan, but just assume that you're taking a bank loan that charges you 2.6%. Or if you want to be more detailed, look online for a monthly instalment calculator which allows you to change up the monthly interest to something that's within the 1 to 2% range which a bank loan would usually charge. This will be amount $Y.
Side note: this will actually be a good exercise for you to see if maybe you might wanna consider a bank loan instead of your CPF to service your monthly mortgage
If $Y is more than $X
Then it means that you technically can't afford that $500k BTO flat. Of course, if you choose to service the loan with a mix of CPF + cash, then yeah, maybe you can. But trust me when I say that you don't want to do this because all your cash will be tied up in your flat (fixed asset) and you'll lose liquidity which you can use for investments or for (touchwood) emergencies.
If $Y is less than $X
Then it means that you can afford that $500k BTO flat comfortably. The wider the difference, the more comfortable you can afford it.
Now... you'll notice that all our calculations involve you paying with cash.
Why?
Because if you can make your monthly mortgage with cash, you confirm plus chop can make it with your monthly CPF contributions. Makes sense right? Since your CPF contribution is a fraction of what you actually take home.
Now back to the issue of your HLE. Your first HLE is only a gauge. 4 to 5 years later when you're about to collect your keys, you'll need to get another HLE done again and that will determine how much you can actually get for your HDB CPF loan.
So... don't worry too much about your HLE. Do the math first and figure out if you can actually afford the $500k BTO before taking the plunge.