I am stressed, so many numbers. How do I calculate if I can afford a 5room BTO?

Im a first time hdb buyer. we earn a total of SGD4800 (including allowances and OTs). Our combined CPF is SGD128000 (OA). We are 28 and 32 years old respectively. Do i comfortably afford a 5 room flat? Do we need to pay cash?

Discussion (8)

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Yuantai Liu

05 Jul 2020

Chief Coach at Happy Coach

Hi Anon,

I dont have a full picture of your finances, but based on your total 4.8k income, a 5 room flat may be a stretch.

For a combined income of 4.8k (assuming no debt), I wouldn't go beyond 300k for my flat.

Do ensure that you and your spouse have 12 months of emergency funds! (I personally recommend 12 months, unlike most others who recommend 6 months). This is because of the current economic situation.

Don't hesitate to reach out to me if you need more clarifications.

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K K

29 Jun 2020

Why do you need a 5 room BTO? Is a 4 room BTO suffice for your needs? Both 5 room and 4 room BTOs have 3 bedrooms which are of similar size.

Living room for 5 room is larger by about 3 window panes, is it worth the extra $100k more to put your dining table there or to have a bigger living area?

To keep costs down, you can consider low floor and/or non-matured area.

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Jefremy

23 Jun 2020

Look at the trends. Lots of boomers looking for 3 room flats after selling their bigger units. This trend will last the next decade.

Most likely your earnings will be less now than in the future, buy small now and upgrade later. High demand from boomers means more cash and with more boomers selling bigger flats, inevitably more supply of bigger flats means prices are closer or below valuation.

Don't rush to make a decision, don't cave under societal pressure.

If you are a multi generation household, living seperate means more subsidies and grants. Living small gets you more subsidies and grants. Keep your mortgage to 10% Gross income.

The house you live in is Not an asset, it's a liability. All the best in your decision making.

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Imonoyama Chiyo

23 Jun 2020

Hi... I am a house owner of a 5 room flat (368k) with household income around 4k. Spouse not working. From my point of view, it is easily manageable as we do not have wedding loan or renovation loan. our monthly repayment range slightly lesser than $1.3k (with a mix of cpf and cash). Our lifestyle is quite simple and it is very comfortable. Calculate what u can afford and keep things simple.

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