Is BTO always the right choice or should you
forgo those sweet heavily discounted BTO price
to go for Resale or Private ?
Singapore has been named the world’s most expensive city to live in for the past 5 years. That sucks. Big time. Even then, many of us still dream of starting a family in the future and buying our very own house in this very expensive city is almost a prerequisite.
The big question is: Which housing option is the right one and how can we afford it?
For the uninitiated, here’s a quick overview of the housing types in Singapore:
The most affordable option is unsurprisingly BTO. The catch is they are usually launched in the far flung corners of Singapore and a couple usually needs to wait 3-5 years before receiving their BTO.
Resale flats are generally more expensive, depending on the location, with less shelf life. But if you are looking to say good bye to the HDB feeder bus for the rest of your life without buying a car, resale flats are your best hope in getting a place near to a train station. They also tend to be more spacious and closer to many more amenities. And hey! You can complete the sale process within 2-3 month and move in!
And finally, we have the private housing which is pretty much out of reach for most of us mortals out there. Condominiums tend to be more stylishly designed and comes with many facilities! And landed properties will finally allow you to satisfy your inner farmer or gardener!
It is very clear that for many people, Private trumps Resale, Resale trumps BTO. This means it all boils down to which you can comfortably afford!
The good news is even as a young couple earning the median salary or slightly lower in Singapore, you can most definitely afford a BTO!! No upfront cash, no monthly cash payment. Hooray! You just have to accept the need to set aside more time on commuting.
The bad news is if you are looking to stay at a decently central location that is close to a MRT, you will need to buy a Resale and chances are that even at 30 years old, earning the median salary, you still need to fork out a significant amount of cash up front and a decent amount of cash each month.
Think buying Resale is bad enough? Buying a private property at a young age can set you back as far back as S$3,302 monthly and you still need to fork out a large amount of cash up front!
If so, how are some of our friends able to stay at very well located Resale and private properties? Broadly speaking, they fall under the following two categories:
 People holding very high paying jobs
Believe it or not, some fresh graduates command a starting pay of more than S$10,000. Many doctors, lawyers & bankers easily earn more than S$300,000 annually by mid 30s. Many senior executives at MNC can earn more than half a million annually by late 40s.
 Older people who started planning very early
For those working in jobs that do not have such high paying potential, they rely on the clever use of the most overlooked & under appreciated pro tip ever – COMPOUNDING INTEREST RATE!
Not to risk boring you, basically these people started investing small amount of their savings very early in their life. By relying on the compounding nature of their investments, they will have enough cash to purchase a private property when they are in their mid 40s.
You can read more about the mechanics here.
For those of us who are not holding ridiculously well-paid jobs, let me let you in on an open secret. The trick is to plan well and start young.
AutoWealth is one such platform that helps you plan early and well in 3 simple steps and 5 min! We wish you all the best in securing of place of your own!