How much money to set aside before you "BTO" with your future spouse

[SINGAPORE] Applying for a Build-To-Order (BTO) flat in Singapore is more than just securing a home; it's a significant step in a couple's relationship that requires careful financial planning and open communication. As young couples embark on this journey, they must navigate the complexities of budgeting, saving, and making long-term financial commitments together.

Before diving into the specifics of budgeting, it's crucial to understand what the BTO process entails. Build-To-Order flats are new Housing and Development Board (HDB) apartments in Singapore, typically more affordable than resale flats but requiring a longer wait time for completion. The application process involves several stages, each with its own financial considerations.

Initial Costs and Deposits

When applying for a BTO flat, couples need to be prepared for the initial costs. These include:

• Application fee
• Option fee (which varies depending on the flat type)
• Down payment (can be paid using CPF or cash)

It's important to note that these initial costs, while not exorbitant, can still be significant for young couples just starting their careers.

Assessing Your Financial Readiness

Before committing to a BTO application, couples should take a hard look at their financial situation. This involves:

• Evaluating current income and job stability
• Reviewing existing savings and debts
• Discussing financial goals and priorities

Financial planner Chuin Ting Weber emphasizes the importance of this step: "Couples should have an open and honest conversation about their finances before making such a significant commitment. It's not just about affording the flat now, but also about maintaining it in the long run".

Creating a Comprehensive Budget

Once you've assessed your financial readiness, the next step is to create a detailed budget that accounts for all aspects of the BTO journey and beyond.

Short-term Budgeting: Application to Key Collection

Application and Down Payment: Set aside funds for the application fee and initial down payment.

Stamp Duty and Legal Fees: Budget for these necessary costs, which can be substantial.

Wedding Expenses: If you're planning to get married before key collection, factor in these costs.

Savings Buffer: Build an emergency fund to cover unexpected expenses or changes in income.

Long-term Budgeting: Post Key Collection

Mortgage Payments: Calculate your monthly mortgage payments and ensure they fit comfortably within your budget.

Renovation Costs: Plan for the expenses of making your new flat a home.

Furnishing and Appliances: Budget for essential items to make your house livable.

Monthly Maintenance: Factor in conservancy charges and regular upkeep costs.

Insurance: Consider home and life insurance to protect your investment and each other.

Leveraging CPF and Housing Grants

Understanding and maximizing the use of your Central Provident Fund (CPF) and available housing grants can significantly ease the financial burden of purchasing a BTO flat.

CPF Housing Grants

Eligible first-timer applicants can benefit from various CPF housing grants, including:

• Enhanced CPF Housing Grant (EHG)
• Family Grant
• Proximity Housing Grant

"Couples should thoroughly research and understand the grants available to them," advises HDB property agent Sarah Tan. "These grants can substantially reduce the upfront costs and make homeownership more achievable".

Optimizing CPF Usage

While using CPF for housing is common, couples should also consider the long-term implications on their retirement savings. Financial advisor Michael Lim suggests, "It's important to strike a balance between using CPF for housing and preserving it for retirement. Consider setting aside a portion of your CPF specifically for retirement, even as you use it for your home purchase".

Discussing Financial Compatibility

Applying for a BTO flat is not just a financial decision; it's a test of a couple's compatibility and communication skills. Here are some crucial discussions to have:

Financial Goals: Align your short-term and long-term financial objectives.

Spending Habits: Understand each other's attitudes towards spending and saving.

Debt Management: Discuss any existing debts and strategies to manage them.

Income Allocation: Decide how you'll split expenses and savings.

Financial Responsibilities: Determine who will handle various financial tasks.

Relationship counselor Dr. Lim Siew Hoon emphasizes, "Financial discussions can be uncomfortable, but they're essential for building a strong foundation for your relationship and future home. These conversations reveal a lot about your values and priorities as a couple".

Planning for the Future

While the immediate focus might be on securing and affording your BTO flat, it's crucial to think beyond the present. Consider these aspects:

Career Progression: Discuss your career goals and potential income changes.

Family Planning: If you're considering having children, factor in future expenses like childcare and education.

Upgrading Plans: Think about whether you might want to upgrade to a larger home in the future.

Retirement Planning: Start thinking about long-term financial security.

Financial planner Chuin Ting Weber adds, "Young couples often focus solely on the immediate costs, but it's crucial to think about how this decision fits into your overall life plan. Your first home is a stepping stone, not the final destination".

Seeking Professional Advice

Navigating the financial aspects of applying for a BTO flat can be overwhelming. Don't hesitate to seek professional advice from:

• Financial planners
• HDB property agents
• Mortgage brokers
• Relationship counselors specializing in financial matters

These professionals can provide valuable insights and help you make informed decisions tailored to your specific situation.

Applying for a BTO flat is a significant milestone that requires careful financial planning and open communication between partners. By thoroughly budgeting, understanding available resources, and having honest discussions about financial compatibility, couples can lay a strong foundation for their future together.

Remember, the journey to homeownership is not just about securing a physical space; it's about building a life together. As you embark on this exciting chapter, let your financial planning be a testament to your commitment to each other and your shared future.