Young couple old 3 room resale (without grants) -> 4-room BTO?

Hello, my fiance and I (late 20s) were wondering if it'll be advisable for us to purchase a cheaper (but old, 50-60 years left on lease) 3-room resale flat (we can fairly comfortably afford this with a cpf housing loan and without grants, but paying with cash instead of cpf oa) for now, then KIV upgrade to a 4-room BTO after MOP if we have kids within the next 5 years. We don't really want to stay with in-laws after marriage, but we don't want to commit to a flat that we're not sure we'll be able to finance comfortably for now either... any words of caution for us?

Discussion (8)

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Robin

25 Apr 2023

Administrator at SG

Why not rent first? Understand your cosiderations on not wanting to stay with in-laws.

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Pet N

12 Apr 2023

Mmm You might want to check. If you buy a resale now, your status with HDB might change and you might not be considered a pure first-timer because that was what happened to me. If you're not a first-timer, it might be really difficult to get your BTO/SB later on. Already some first timers go through the process 4-5 times before they get one and wait many years.

If you queue for your BTO now or go for sale of balance, you might have a better chance now.

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Javier Tan Yan Kai

11 Apr 2023

Actuarial Analyst at AIA

Be wary of lease decay. It's cheap for a reason

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Chen Zhirong

11 Apr 2023

Definitely, this is my strategy as well.

TLDR: Good idea, go for it and laugh at all the people staying with their parents while waiting for their BTO to be built.

I'm going to summarise the arguments against this from previous posts:

Expect some losses: As compared to renting for the same length of time, purchasing a 3 room resale is financially wiser as there would be less cost incurred. Staying with in-laws is not an option on the table.
Buy 4 room resale straightaway: No, taking on more debt than necessary in the hopes of "earning" some money when selling down, is foolhardy as it depends on factors beyond one's control. More prudent to save on debt first and invest the extra cash instead rather than be asset rich, cash poor.
Remaining lease will be harder to sell off: Not possible. A simple research will show that even flats that are 50 years old, do not depreciate much (around 100k as compared to a 10 year old flat) https://stackedhomes.com/editorial/older-hdb-flats-dont-depreciate-as-quickly-as-you-think-heres-what-the-numbers-show/.

Finally, speaking from experience. As a 53 yr old, living in his 3rd house, my colleague will finally be buying his BTO as his 4th house. He will make more than 500k in cash and retire early as he sells off his resale HDB and shifts into his BTO.

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