Most hdb upgraders often face the common dilemma of buying a new launch or resales condo after successfully sold their primary HDB in resales market. Even for first time owners, they often wonder which will be a better option in term of investment or future gains after few years of holding on to the unit.
There is really no one-size fit all approach to whether new launch is a sure bet or resales unit may not be perform better. It is depend solely the objective of the home owner pertaining to this capital intensive purchase.
Benefits of buying a private property:
Less restrictions on resale unit. Though Seller Stamp Duty (SSD) applies within three years, it offer greater flexibility if price appreciate during the SSD period. Unlike HDB, all home owners are required to meet the Minimum Occupancy Period (MOP) of five years before you can sell in open market.
Immediate return of Investment. Private property allow home owners to rent out as soon as key collection. The rental amount can use to offset the mortgage interest & maintenance fee while waiting for the asset to appreciate. This helps to defray some of the costs of homeownership.
Refinancing at later stage. For private property, it allow more flexibility in financing such as using property as collateral to secure a higher quantum of loan.
Total Debt Servicing Ratio (TDSR). Strangely that buying property using TDSR will improve your affordability as it allow up to 55% of your monthly income for borrowing whereas HDB using Mortgage Servicing Ratio (MSR) will only allow up to 30% of monthly income. Hence it greatly affect the loan amount.
Difficult to get HDB / BTO when ‘right’ sizing. For private property owner who sell and need to buy a larger resales HDB will need to fulfil the 15-months waitout period or 30-months if going to ballot for a BTO flat. This is especially so for those who bought one bedder or two bedder when they are single and married on later stage to extend their families will face this issue if they want to have larger resales HDB flat.
Higher downpayment upfront. For private property, at least 25% of purchase price have to pay upfront of which 5% must be in cash. This may be challenging for young couple who going to start family.
There is always saying of buying new launch is better than resales condo. But is it true for all cases? From our past experience, not all new launches can make profit prior TOP and beyond. In fact some resales developments can appreciate even more. Depending on your objective and needs, we will cater a property journey plan with you.
Let us look at what are the key differences between both type in summary form:
