BTO-ready Guide: Balloting for the November 2020 launch? Earn your housing loan interest today.

November 2020 BTO is round the corner! With popular areas such as Bishan and Toa Payoh, this upcoming BTO launch will definitely be on the watchlist for many. That being said, applying for a flat entails many other considerations and planning. Let us take you through some key tips that might just save you from all the financial headaches.

Overview of November 2020 BTO Launches

This time, five estates have been listed respectively – Bishan, Toa Payoh, Tampines, Tengah, and Sembawang. Here’s an overview of the price that you’ll have to pay for your dream home.

Mature Estates

These areas are closer to the Central Business District (CBD) and elite schools, hence prices tend to be higher. 

Bishan

Forecast

Min (S$)

Max (S$)

HDB 2-room Flexi

$200,000

$300,000

HDB 3 Room

$350,000

$450,000

HDB 4 Room

$500,000

$650,000

HDB 5 Room

Toa Payoh (Bidadari)

Forecast

Min (S$)

Max (S$)

HDB 2-room Flexi

$100,000

$200,000

HDB 3 Room

$300,000

$400,000

HDB 4 Room

$450,000

$550,000

HDB 5 Room

$580,000

$650,000

Tampines

Forecast

Min (S$)

Max (S$)

HDB 2-room Flexi

$160,000

$250,000

HDB 3 Room

HDB 4 Room

$300,000

$400,000

HDB 5 Room

$450,000

$550,000

 

Non-Mature Estates

Typically, an estate that has not been around for 20 years and more would be considered as a non-matured one. 

Tengah

Forecast

Min (S$)

Max (S$)

HDB 2-room Flexi

$110,000

$170,000

HDB 3 Room

$200,000

$250,000

HDB 4 Room

$300,000

$350,000

HDB 5 Room

$400,000

$500,000

Sembawang

Forecast

Min (S$)

Max (S$)

HDB 2-room Flexi

$120,000

$180,000

HDB 3 Room

$150,000

$200,000

HDB 4 Room

$250,000

$300,000

HDB 5 Room

$350,000

$400,000

 

Are You financially Ready For Your BTO?

Buying your first house would definitely stretch your wallet thin. What can you do to gauge if you can afford your new home?

3-3-5 Rule

This rule can help you to understand the financial considerations that come with your desired property.

30% of property price

You should have at least 30% of the property asking price in cash. Of which 20% is for downpayment and the remaining 10% is for expenses such as stamp duty and legal fees.

⅓ of your monthly income

Monthly mortgage payment should not exceed ⅓ of your monthly income. If you are using more than ⅓  of your income to pay for your mortgage, you might be at risk for potential interest rate hikes or loss of employment.

For BTO buyers, don’t forget that you will also be subjected to the Mortgage Service Ratio (MSR). 

It is a limit imposed by the Monetary Authority of Singapore (MAS) which restricts on how much you can borrow when taking a home loan. Under MSR, your monthly mortgage payments are capped to 30% of your gross monthly income. For example, if you earn S$4,000 a month, your maximum home loan is capped at S$1,200 per month. This may be lower since it takes into account any loan obligations that you have already.

5 times of annual income

The total price of your new property purchase should not exceed five times your annual income. This allows you to better plan and make better choices to prevent your property purchase from becoming a strain on your finances.

Although there is no hard or fast rule, this is definitely something that is recommended as a guide for you to make prudent decisions. Remember to always think in the long-run and calculate if your choice of home is within the comfort zone of your finances.

How Do I Pay For It?

The next question after a successful ballot would be – how am I going to pay for my home? 

Let us use a 4-room HDB flat as an example. John and his fiancé have gotten a 4-room BTO flat in a mature estate priced at S$400,000. John is looking to take a bank loan, where he can only loan up to 75% of the flat price value. This means that John is borrowing S$300,000 (S$400,000 x 75%) from the bank. Assuming that his loan tenure is 25 years with a fixed interest of 1.5%* fixed rate per annum.

*https://www.posb.com.sg/personal/articles/home-car/questions-about-bank-loans-for-hdb-flats

It’s definitely daunting when you realise that you now have a S$300,000 loan to pay off; not to mention that additional S$59,000+ for interest. Well, there’s still a bright sight – smart saving that helps you to earn your loan interest while creating a safety blanket for you and your family in this next phase of your life.

Some of you may be looking to invest your money during this period, but it is recommended that you choose your instruments wisely. Starting off with zero to low-risk investments will yield you returns and you can even cover the interest on your home loan!

 

Introducing GIGANTIQ

GIGANTIQ offers 1.8%* p.a. for the first policy year up to S$10,000 premium of your policy’s account value.

The 1.8%* p.a. can be broken down into 1% p.a. guaranteed + 0.8% p.a. bonus. GIGANTIQ has no lock-in period, hence you can make top-ups and withdrawals anytime. 

It is an all-in-one insurance savings and protection plan, offering both life protection (death benefit of 105% of your account value) and savings.

 

How Can GIGANTIQ Help You?

The total sum for 25 years of housing loan with added interest may seem intimidating. But if you break it down to a month on month basis, it becomes a lot more approachable and simplified for you to adequately plan out your finances.

Year

Interest Rate

Monthly Installment

Housing Loan interest Payable

1

1.5%

S$1,199.81

S$4,431.67

2

S$4,281.15

3

S$4,128.35

Figures based on a 1.5% fixed rate per annum across 25 years loan tenure from DBS’s Repayment Schedule Calculator.

Here you might wonder, what kind of savings will be able to generate a return of S$4,000+ annually with the amount of cash that you can afford to set aside? Let’s take your housing loan schedule and flip it inversely, starting from your last year of payment.

Year

Interest Rate

Monthly Installment

Housing loan interest payable 

25

1.5%

S$1,199.81

S$116.30

24

S$328.79

23

S$538.12

Figures based on a 1.5% fixed rate per annum across 25 years loan tenure from DBS’s Repayment Schedule Calculator.

Now doesn’t this look a lot more achievable? Using the GIGANTIQ plan as an example, it can help you to save up steadily for your future home expenses and also allow you to earn your housing loan interest with its returns. 

 

With GIGANTIQ:

Assuming John has signed-up with an initial premium of S$10,000 and deposits a top-up of S$1,600 monthly to build up on savings. John will be able to earn 1.8% p.a. on his first S$10,000 for a year and 1% p.a. thereafter. 

Tip: This can be a joint effort between you and your spouse, hence, each party only has to set aside S$800 a month.

Figures based on a 1.5% fixed rate per annum across 25 years loan tenure from DBS’s Repayment Schedule Calculator.

John will be able to use his returns from GIGANTIQ to pay for his housing loan interest and still earn a net interest gain. In addition, he would also have accumulated a savings amount of S$107,562.79 over a five year period. 

Just in time for key collection! This sum of money can then be used for renovation, furniture, and even wedding expenses.

With Etiqa being a registered insurer by the Monetary Authority of Singapore, GIGANTIQ is protected under the Policy Owners’ Protection Scheme, which is administered by the Singapore Deposit Insurance Corporation (SDIC). Your hard earned money is definitely well protected.

 

PolicyPal x GIGANTIQ promotion: Sign up now and get up to 8%# bonus credits!

We’re running an exclusive promotion on our platform where you can get bonus credits as high as 8%# p.a. when you sign up for GIGANTIQ with us! 

With a simple and easy application process as well as earning bonus credits by simply sharing with your friends and family, your returns can be more than GIGANTIQ with PolicyPal.

 

Important Notes

1 Guaranteed 1% p.a. + non-guaranteed 0.8% p.a. for the first policy year up to S$10,000 premium of your policy’s account value. 

2 Selected Life or General insurance products offered as supplementary coverage under GIGANTIQ from time to time. <Coming soon>

3 If you have applied for GIGANTIQ before 18 Nov 2020, 23:59PM, you will still be entitled to earn 2% p.a. crediting rate (1% p.a. guaranteed + 1% non-guaranteed) for the first policy year up to S$10,000 premium of your policy’s account value.

# Up to 8% p.a. bonus credits will be accumulated by friend referral of this product or purchasing other policies via PolicyPal. 

Terms and Conditions Apply.

 

GIGANTIQ is not a bank account or a fixed deposit. It is an insurance savings plan that earns a crediting interest rate.

This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). As buying a life insurance policy is a long-term commitment, early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You are recommended to read the Product Summary, Policy Illustration and policy document for the exact terms and conditions, specific details and exclusions applicable to this insurance product. You should seek advice from a qualified financial adviser who will be able to advise you on a suitable product. Otherwise, you may end up buying a plan that does not meet your expectations or needs. As a result, you may not be able to afford the premiums or get the insurance protection you want. In the event that you choose not to seek advice from a financial adviser, you should consider whether the policy is suitable for you and meets your needs in light of your objectives, financial situation and particular needs.

Full details of the GIGANTIQ policy terms and conditions can be found here.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg).

This advertisement has not been reviewed by the Monetary Authority of Singapore.​ Information is accurate as of 19 November 2020.

 

Read More:

GIGANTIQ Review: Should You Purchase This 1.8% p.a. Insurance Savings Plan?

How to Maximise your GIGANTIQ account and Earn $1,000

Best Home Insurance in Singapore (2020)

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