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  • Writer's pictureBenjamin Toh

Your Ultimate Guide to your first BTO

Planning to buy your first BTO and wondering about the finance and procedure of it? Read on to find out more about how it works. 


First, it will be useful to outline the process of getting your BTO flat:1. Determine your eligibility You can check your eligibility here 2. Balloting When it comes to balloting, the truth is, there is no guarantee you will be getting a slot

3. Applying for HDB or Bank loan to finance your BTO If you are applying for an HDB loan, a HDB Loan Eligibility (HLE) letter is necessary. If you are using a bank loan, you will need the Approval-in-Principle (AIP) from the relevant bank that you are applying from.

4. Check eligibility for grants Now would be a good time to begin determining which grants you are eligible for. We have curated and summarized a list of grants in one of our earlier articles. You can look at the list of grants here

5. Choosing your flat

If you are lucky enough to be notified that your ballot has been successful, you will need to choose your flat.

6. Pay Option-To-Purchase (OTP) fee At this point, you will need to pay your OTP fee. 7. Exercising your OTP This states your intention to exercise your OTP and buy the flat. You will need to sign the lease agreement, pay your downpayment, and any other relevant fees. 8. Bonus point! Scouting for a quality interior designer

Begin looking and enquiring with interior designers so you can start planning on your finances early! Remember, slipshod work is the result of rushed timelines. Our readers will know that we advocate early planning in order to make this momentous life event go as smooth as possible.

9. Collecting your keys You will finally be invited to collect the keys and be the proud owner of a new home! Remember, there are certain criteria you have to fulfill before you collect your keys. 


In one of our earlier articles, we explained that mortgages for HDBs can be furnished by either an HDB loan or a bank loan, while the latter is only applicable for that of private properties. Here is a neat summary of the differences as shown in Table 1. 

 Table 1: HDB Loan Vs Bank Loan


BONUS: Some advice and considerations on managing the mortgage loans and repayments1. Do not let the significant downpayment amount put you off. Most young adults buying their first BTO would be concerned about raising sufficient cash for the downpayment. In such a situation, the Staggered Downpayment Scheme allows half of the total downpayment amount to be paid only when you collect your keys, giving you a longer period to save up cash or beef up your CPF Ordinary Account reserves. 

2. HDB loans are not necessarily cheaper than bank loans 

A common myth among new homeowners, this may not be the case always. Although bank loans’ interest rates are only fixed for the first four years, the rates are pegged to SIBOR(Singapore Interbank Offered Rates) and SOR(Swap Offer Rate) rates. They are usually lower as compared to that of HDB loan interest rates for the first four years. Our advice? if you can front a higher cash downpayment at the start and are confident of not missing repayments in the future, you can consider bank loans. Do go down to the bank and speak to an officer who will be able to advise you based on your specific set of circumstances.

3. Choosing the shortest loan tenure is not always the right financial decision

The reason for this? Economics 101 – opportunity cost, defined as the next best alternative that you can do with the resources. Although you may save money (HDB loans are 2.6% per annum) with a shorter loan tenure, you should consider if the extra repayment amounts can be placed in an investment vehicle with a higher expected return instead! The Straits Times Index saw a 9.4% total return in 2019 and has generally been stable and performing.


Ultimately, all of these boils down to understanding your own needs, taking the right financial steps base on your current circumstances and also forecasting your future financial stand. Investing in your first property is one of the many major milestone in your life so it is prudent that you start planning early, saving up early and execute perfectly when it's time to collect your keys.

We hope that this article has been insightful. Keep tuned to our next article and e-book, where we will explore and dispel common myths of first-time buyers and homeowners and also provide some financial and renovation guideline for all new owners

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