How To Save Money When Buying A Resale Flat

From saving on agent fees to choosing your housing loan wisely, here are some ways you can maximise your savings on your resale flat purchase.

Resale flats in Singapore definitely don’t come cheap. Aside from the increasing prices, there’s also the hefty Cash Over Valuation (COV) that we’ll have to foot. And if you want a unit located in a mature estate or near an MRT station, you’ll also have to fork out a premium due to its high appeal.

So whether you’ve chalked up many failed attempts of BTO flat applications or don’t want to pay the resale levy if you get another BTO flat after your first, you’re probably wondering if there’s any way to reduce resale flat prices.

With a few tips and tricks, you’ll be able to avoid some huge costs that could be channelled elsewhere. Here are seven ways you can save money when you buy a resale flat.

1. Do without an agent

Property agents do feel like a godsend every time you’re able to avoid the complicated paperwork and sourcing around for houses to view. But if you’re willing to go the DIY route, you can save quite a bit on agent fees. 

Property agents usually charge a percentage of the transaction price, and though there are no official guidelines for the fees, the current industry rate is 2%. It may sound insignificant, but purchasing a S$600,000 unit will already set you back by S$12,000, which you can use to cover other costs like renovation fees. 

It may seem daunting, but as long as you’ve done your own due diligence and are confident in negotiating the best price, you’ll be fine flying solo. Here’s a step-by-step guide if you’re considering buying a flat without an agent.

2. Maximise grants

You might think that only applicants applying for BTO flats are eligible for grants, but getting a resale flat also qualifies you for a number of housing grants too and even more so than BTO flats, as long as you meet the necessary criteria. Taking advantage of such grants can go a long way in helping you save money and re-channelling the funds elsewhere.

Enhanced Housing Grant (EHG)

Taking into account your monthly household income, EHG benefits those who earn S$9,000 and less, giving a maximum of S$80,000.

Proximity Housing Grant (PHG)

If you’re buying a resale flat within a 4km radius of your parents or planning to move in with your parents, you will be eligible for the PHG which entitles you to a grant amount of S$10,000 or S$30,000. The resale flat that you’re purchasing also has to have at least 20 years remaining on its lease.

Family Grant

Depending on the size of your resale flat, you’ll receive a grant amount of S$40,000 (five-room or bigger) or S$50,000 (four-room or smaller) if you and your spouse are both Singaporeans. If one of you is a Permanent Resident, you’ll get a grant of S$30,000 (five-room or bigger) or S$40,000 (four-room or smaller). 

The only thing you’ll have to consider is that the remaining lease on the flat has to cover the youngest co-owner up till they are 95 years old.

3. Choosing your housing loan wisely

Unless you’ve got a wad of cash lying around in your bank or you’ve recently sold your previous home at a higher price, you would probably need a housing loan to finance your home. And since you have the freedom to choose between an HDB or a bank loan, it’s best to think it through before blindly settling for either.

While HDB loans give you the stability of a fixed interest rate across your tenure, as well as the added leniency of allowing you to make early repayments without a penalty, bank loans usually have lower interest rates which will help you score savings in the long run.

It’s up to you to decide which you prioritise more — lower interest rates or stable rates. You may be able to save in the long run if you opt for a bank loan, but this also means that there’s a chance of you paying significantly more in certain months due to the market conditions. 

But if you’re financially stable and prepared to tide through months with higher interest rates, then opting for a bank loan will definitely do your wallet a huge favour.

4. Settle for a less expensive unit

Some homebuyers can be extremely picky — avoiding levels and unit numbers that are deemed inauspicious, setting their sights on a unit 15 floors and above or requiring a corner unit for extra privacy. 

While everyone has their own checklist of requirements for their next house, these factors usually come with a hefty price tag. So If you’re not especially particular about your unit, then here’s where you can really score on savings, up to a few tens of thousands. Choosing a flat in a non-mature estate can also help you earn significant savings.

However, bear in mind that you shouldn’t just give up on your entire checklist just because you want to save the extra pennies. If you have requirements that you prioritise and don’t wish to compromise on, that’s fair. This house will be your new home for the next few years, so settling for a unit that compromises your comfort may not be the best trade-off.

5. Go for a well-maintained house

If you’re not adamant about making your new home an exact replica of your Pinterest mood board (thus dumping a few thousand dollars into renovation works), then you can just aim for a well-maintained house.

Well-maintained doesn’t necessarily mean fully renovated. The house should just be in good condition so you won’t need to spend much on renovation or repair works. Look out for their piping systems, wall conditions and cabinetry. The most important thing to observe is any sign of termites or mouldy walls, which might indicate a more serious problem.

Try to also avoid homes with built-in furniture as they will be more pricey to repair and replace. If they are in good condition, think about whether the space is optimised and practical so you can use it too, instead of buying it over and then having to hack it down completely.

A semi-renovated home that is well-furnished with well-maintained secondhand furniture and appliances is a bonus. This means that you will be able to spend less on renovation works and furniture. However, do bear in mind that the Cash Over Valuation (COV) might be a lot more expensive. Think about whether the high COV is worth it if it means saving on furnishing costs.

6. Don't compromise on the direction of your house

Be it the humidity from the afternoon sun or the good fengshui as per your fengshui master’s advice, many homebuyers take the direction of their unit very seriously. If you’re not that superstitious and feel that the direction is not important, think again.

Personally, I’m not a huge believer in fengshui but I do think the direction is important when the sun comes into play. For example, units that are north- or south-facing are the most appealing to homebuyers as their units are able to avoid direct sunlight throughout the day, and also benefit the most from the wind. On the other hand, east- or west-facing units get direct sunlight all year round, making your apartment feel humid and warm.

Even if you’re not too bothered by the sun, getting direct sunlight might be an issue in the future as it chalks up costs. Firstly, the sun might make your furniture fade in colour in due time, and make leather furniture peel. With the heat contained in your apartment, you might turn on the air-conditioning more often (thus increasing your electricity usage) or have to fork out more for better curtains or blinds.

The bottom line? Don’t compromise on the facing of your unit if it means strong sunlight all year round as it could increase other costs in the long run.

7. Negotiate like a pro

On top of all of the things above, being able to negotiate on the offer is the ultimate way to save loads on your resale flat. 

Knowing your budget, drawing your boundaries around non-negotiables, and understanding the seller’s motivations for selling will make a world of difference. You should also do your own market research by finding out the past transactions of units nearby, and getting to know the property in question to decide how much you can negotiate.

Even if you have a property agent who can do the negotiation for you, it’s ultimately your call at the end of the day. If you’re able to negotiate skillfully, you’re one step closer to reaching your desired price.

Though you may want to save money in certain areas, you should always take a step back and consider whether these savings are worth it. If you’re giving up on a more convenient location or forgoing an agent just to cut back on a few thousand dollars, maybe take some time to evaluate whether it’s worth spending that extra money for peace of mind or the added convenience.

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