Are You Single, Over 35 And House Hunting? Here’s How To Choose Between An HDB Or Condo

35 is an important year for a single Singaporean, as this is when you can buy your HDB flat; and with new rules on flat selection, you can buy anywhere in Singapore. If you’re in a position to afford a resale condo though, would this be a better choice? Here are some of the main things to consider before you pick:

Some of the main factors in HDB flats versus resale condos

An obvious thing to note is the price differences between an HDB and condo. Singles would usually go for either a 3 or 4-room flat, so here’s a comparison between both asset types based on transactions from May 2023 – 2024.

3-Room flat equivalent

4-Room flat equivalent

Based on the data, condo prices are around 3 times more expensive than HDBs. This doesn’t mean you’ll need 3 times the income though, as private properties follow the Total Debt to Servicing Ratio (TDSR) rule of 55% while HDBs follow the Mortgage Servicing Ratio (MSR) of 30%. We’ll look into the minimum income required below.

1. Financing issues between HDB flats and condos

HDB flats can be financed with either the HDB concessionary loan, or a bank loan. 

The HDB loan is generally preferable today, as the interest rate almost never changes: it’s 0.1 per cent above the prevailing CPF rate, which comes to 2.6% per annum. This has remained unchanged for almost two decades. 

Private bank loans, which you’ll need for a condo, tend to have higher rates right now; it’s about 2.9%. However, note that these rates can change a lot over the years – in the time between 2009 to around 2018, for example, bank loan rates were actually cheaper than HDB rates. 

Do note that some buyers may be told to get a bank loan anyway, even when buying an HDB flat. This can be for reasons like your income level. That’s because HDB isn’t obliged to grant you their loan. 

Another significant factor is the LTV ratio and minimum cash down

Flats aren’t just cheaper, you also have a lower upfront payment. 

The HDB loan has a minimum down payment of 20% of the flat’s price or value (whichever is lower). A bank loan has a minimum down payment of 25% of the property’s price or value (whichever is lower). 

In addition, for bank loans, the first 5% must always be paid in cash. For HDB loans, the 20% down payment can be in any combination of cash or CPF, which means you can pay it entirely with CPF if you want.

As such, singles who have yet to accumulate a “nest egg” for their first home tend to be better off with HDB flats; not just because they’re cheaper, but because they can get financing from HDB instead of a bank.

That said, HDB loans have a slightly tighter restriction in the form of the Mortgage Servicing Ratio (MSR)

Under the MSR, your flat’s monthly loan repayment can never exceed 30% of your monthly income. This applies to all HDB properties.

For condos, the limitation is the Total Debt Servicing Ratio (TDSR). This caps your monthly home loan (inclusive of other debts like car loans) to 55% of your monthly income. 

Frankly though, the MSR and TDSR are seldom the issue for most first-time buyers. The minimum cash down tends to be the bigger concern.

Now here’s a look at the minimum income you’ll need as a single based on the MSR and TDSR rule. We assume that a floor interest rate of 3% is applied for HDB loans and 4% is applied for bank loans based on MAS’s latest ruling and the loan tenure is 25 years for HDB, and 30 years for a bank loan.

From the table, the only estate where a single earning the median income can afford a private condo is Choa Chu Kang. Woodlands narrowly follows behind. Even then, it’s not advisable for singles to max out their income.

2. Facilities and maintenance

This is the next biggest issue, beyond financing. HDB conservancy fees are very low, usually below $100 a month (unless you have an unusually big flat, like a jumbo). If you’re curious to know what your conservancy fees would look like, you can check out the respective town council’s website.

For condos, the maintenance fees are typically based on Share Value (SV). This starts at 5 for the first 50 sqm, and increases by 1 for each 50 sqm beyond that. As of 2024, monthly fees of $75 to $90 per share value are quite common, so you can expect to pay about $200 to $400 a month. 

In return for this, you get facilities such as a pool, gym, clubhouse, 24/7 security, etc. Is it worth it? It’s up to you, as it’s down to your lifestyle preferences.

3. How quickly you can monetise the unit, if you have to 

If your intent is to stay somewhere else while renting out the unit (e.g., you’re living with parents while renting out the property), then the resale condo is more easily monetised. You can start renting it out as soon as your renovations are finished. 

For HDB flats, you need to wait until the five-year MOP is over, before you can rent out the whole unit (you can rent out individual rooms though, if it’s at least a 3-room flat). Because the MOP starts from the key collection by the way, a BTO flat would require a wait time of eight to nine years (because you have to apply, and wait for it to build, plus the MOP), before you can rent out the entire unit.

Being able to rent out the unit immediately can be an important backup plan.

Even if being a landlord isn’t your main intent, you do have the option of living with parents, renting a cheaper HDB room, etc. while renting out your whole condo. This can be a lifesaver, if your financial situation takes a bad turn. 

And whilst we don’t advise using it casually, condos do allow you to use cash-out refinancing. This is when you take out a loan (even if you still have an outstanding home loan) against the appreciated value of your condo, from the same mortgage bank. This is usually close to the current home loan rates, so it’s a much cheaper way to borrow a large sum. This option doesn’t exist for HDB properties.

Stick to the usual 3-3-5 rule if you want to be absolutely prudent

The 3-3-5 rule means your monthly loan repayment shouldn’t exceed 30% of your monthly income (even if a bank allows otherwise), you should have at least 30% of the initial capital needed, and the total price shouldn’t exceed five times your annual income. 

We’d also suggest factoring maintenance fees into your budgeting. Most condos will slap a hefty 15% interest rate on late maintenance fees, so if you can’t comfortably pay it on time, it’s best to avoid the condo. 

One parting consideration is age and the subsequent difficulties in getting a home loan 

The ages of 35 to 40 are a sort of “golden period” for property ownership, especially for private properties. This is because you’re at the age when you can qualify for maximum loan tenure without penalties. That’s 25 years for HDB, or 30 years for the bank. 

However, if the loan tenure plus your age exceeds 65, then your maximum loan amount will be reduced; possibly requiring a down payment of 45% or higher. So if you wait till 45 to buy a private property, for example, your loan tenure would have to be capped at 20 years to secure the full loan. 

Don’t feel rushed into buying just for this reason – affordability is still more important. But if you do have the means to buy a condo, it’s something to keep in mind.