Asked by Anonymous

Me and my fiancé are renting a studio apartment and our lease will be up next March. We are planning to get a house but we did not want a BTO (need to wait 3-4 years). Should we get a balanced flat or resale flat or just extend lease and get a BTO?

We do not have much savings, + / - about 15k and servicing a car loan too.

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered on 20 Oct 2018

    If you can find a good SBF, and you don't wanna wait, I'll choose that.

    Renting is also an expense, extending your lease just to get BTO also might not make the best financial sense especially if it can go immediately towards paying down your mortgage.

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    • Question Poster
      Thank you for your reply. We have checked with HDB but they are unable to advise when will be the next SBF. As of now there will only be a BTO exercise in Nov. Hence the dilemma whether to extend half a year lease while waiting for SBF exercise or to look for resale ASAP before the lease ends.
      20 Oct 2018
    • Hariz Arthur Maloy
      Then for now, do extend, because Resale is quite a bit pricey. Unless it's a small unit.
      20 Oct 2018
  • Teo See Hwa
    Teo See Hwa, MArketing Associate at Propnex
    Level 3. Wonderkid
    Answered on 21 Oct 2018

    Need more info to advise.

    Income, CPF OA.

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  • Julie Tan
    Julie Tan
    Level 3. Wonderkid
    Answered on 20 Oct 2018

    Extending your lease can be seen as money down the drain, good to put it towards paying instalments for a flat.

    1) BTO - will need to wait 3-4 years or more (if you don’t get it the first try, unless you are not too fussed about the location). The paying for rent during this peroid doesnt sound worth it.

    2) SOB - can get a flat earlier but similar to BTO, usually for the areas with lower demand/ opt for 3 room instead of the more popular 4 room flats. In the meantime, you can extend the lease (see if can do a 6month extension?) since there is uncertainty about any upcoming SOB. the current trend seems to be twice a year (I’m not entirely sure, heard from friends).

    3) resale - resale prices can be high, lower for locations that are not too popular/units that may have shorter lease/low floor etc. you might have to spend more on renovation though especially if the house is old. Since the both of you have less cash on hand, sounds better to get a brand new house (opt in for flooring/door) and just bring over your current furniture.

    My personal opinion is for 2nd option, however this doesn’t mean option 3 is out. You have to shop around the areas you like, the size you are comfortable with. During your selections, you might want to eliminate any homes that aren’t in move in conditions to reduce renovation costs. Who knows, you might actually find a resale flat at a bargain. Factor in the extension of lease to the price of a SOB (in the location of your interest) and compare it to the resale flat to make your decision.

    All the best!

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  • Png Cheng Xi Damien
    Png Cheng Xi Damien, BSc Finance at SUSS
    Level 4. Prodigy
    Answered on 20 Oct 2018

    It depends on how much your monthly rental is. A BTO is roughly 3 times cheaper than resale. I would wait for BTO if finances are a huge concern.

    SBF is always the best. Low cost and immediate move in but based on luck...

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  • Colin Lim
    Colin Lim
    Level 3. Wonderkid
    Answered on 20 Oct 2018

    it is not detailed and thus not able to give advice on this.situation. i.need to.know your cpf balance, cashflow, etc.

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    • Colin Lim
      Ok first BTO, which location you prefer? I have my preference location.
      27 Oct 2018
    • Colin Lim
      BTO cost around 300k and if you take up HDB loan, the downpayment is 10%...if you find thw new bto location good for u, i suggest u wait and extend lease. This is about your home preference and location preference, so to me, i will not rush you to get flat asap
      27 Oct 2018