steps to buying your first home

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Financial Planning

Are you putting aside savings to buy your first home? Home ownership is a major milestone as you put in years of hard work to purchase your dream pad. It is a long and arduous journey and a big financial decision, so you definitely need to draw up a game plan for how you will achieve this. We are here to help you have all your bases covered.

Brandan Chen

Financial Planner

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Crunch the numbers

Before you get started, you need to know the loan amount you can afford and what the monthly mortgage repayments will be. As a rule of thumb, your monthly mortgage payment should not exceed 28% of your gross income. However, you would also need to take your monthly expenses into account. If there is insufficient surplus, you will need to either make some cutbacks or rethink the whole property purchase. CPF has a great 'Our First Home' calculator and a bunch of other useful calculators to help you budget accordingly.


Factor in ongoing costs

Besides paying for the property, some other extra costs you need to factor would include stamp duties, agent’s commissions, lawyer’s fee, home insurance and more. Make sure you include all these extra costs when you do your budgeting. After making the property purchase, there are likely to be more associated costs, such as monthly conservancy fees and contributions to a sinking fund. Furnishing cost is also an important cost component for consideration.


Pick the right property

Your budget will ultimately decide what type of home you can purchase comfortably.

It could be a private condo, an executive condo or a built-to-order (BTO) flat. For a first time homebuyer, a BTO could be a smart move as it provides an easy and cheap entry onto the property ladder. And if you’re a Singaporean first-time buyer, you get priority over everyone else.

The next step can be both exciting and exhausting, but if you are ready to hunt your dream home, start your hunt on the property portals out there and make the most of your surfing time. Much can be done from the comfort of your current home, but make sure you get out there and view all the properties that appeal to you.

If you need a head start, use the URA Master Plan to learn about the up-and-coming areas. Sometimes, property prices may be lower in an area undergoing development and has lesser infrastructure. However, future plans may include public transport connections and major retail complex, which could increase the potential property value in the area. Other factors worth considering include your comfort level with each neighbourhood and its proximity to amenities like schools, supermarkets and other public facilities. And for some, you may wish to stay closer to your parents too.


Start saving!

Found your dream home, but can’t afford it now? Work towards a financial plan and time frame so you can! If you need some help in enforcing savings to fund the mortgage payments, search for a suitable savings plan to ensure that you are putting aside money to fund your dream home.



There’s not a lot you can do until you get the mortgage secured. Until then you can get a pre-approved loan in place. You will at least know what your budget is when it comes to searching for properties. It should also make things easier when it comes to applying for the mortgage as the bank already feels comfortable lending to you. For the mortgage itself, there are two basic types – fixed and variable and they are fairly self-explanatory. For a first-time buyer, a fixed rate could appeal as your monthly mortgage payments won’t suddenly change if interest rates go up. You also need to consider the length of the deal. While 30 years is the standard length, the shorter the period the less interest you ultimately pay.


Down the deposit

Banks tend to lend only 80% of the purchase price, so you will need to make up the remaining 20% as a deposit. While you could take out a loan to fund the deposit, this would mean financing two major loans and could be risky. Instead, take the time to build up the deposit on your own, which gets you into the savings habit. To ensure that your loved ones can still enjoy the comforts of the house in any unforeseen circumstances, a mortgage plan such as ManuProtect Decreasing would be an essential addition to pay off any existing loans.


This advertisement has not been reviewed by the Monetary Authority of Singapore. The information in this article does not necessarily reflect the views of Manulife (Singapore) Pte. Ltd. All stated information, including external links, are general information and does not constitute or form any recommendation of insurance plan. Certain information in this article may be taken from external sources, which we consider reliable. We do not represent that this information is accurate or complete and should not be relied upon as such.

This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Manulife Financial Consultant before making a commitment to purchase a policy.