Dividend Warrior's 2nd Pot Of Gold Series - BTO Flat Downpayment

Yesterday, I attended an appointment at Toa Payoh HDB Hub and settled the downpayment for my HDB BTO flat using my CPF OA savings. I also paid the 'Buyer's Stamp Duty' as well as conveyancing fees. This is another step closer to owning my first residential property on this lovely tropical island. My second pot of gold! 

• The entire process took roughly 15 to 20 minutes. Not much verification of documents involved. The important thing is to remember your HDB Portal and CPF log-in passwords and bring along your smartphone/OneKey token. You are required to log into the HDB Portal on-the-spot to complete the transaction. 
• The HDB staff informed me that the key collection date should be in March/April 2023 tentatively. Could be earlier depending on the construction progress of the main contractor.
• The HDB staff also provided guidance on the home financing matters. She advised me to pay for my flat in full when I collect the keys 4 years later. Right now, after settling the downpayment, there is around $126k left in my CPF OA. Over the next 4 years, my CPF OA savings would continue to earn 2.5% interest annually and I would keep contributing to my CPF OA through my full-time job. All these add up. By 2023, my CPF OA savings should exceed $150k, so I do not need a housing loan. Buying a new flat, but staying debt-free. How awesome is that! To all my foreign readers out there, the public housing system in Singapore is pretty sweet right?  (>_<)
• The $500 option fee which I paid during my flat-booking appointment back in April would be reimbursed to my bank account. 

• After settling the downpayment, I was told to visit the SP Group counter/booth to find out more about the 'Centralised Cooling System'. This is a pilot project. The SP Group representative explained that chiller units would be built on the roof-tops of each HDB block, and the chilled air would then be piped into our flats. There is no need to do maintenance on individual condenser units because there aren't any. This is the main selling point for me. My parents had to change the faulty condenser unit in their old flat numerous times over the last 20 years. That was rather costly and troublesome. In terms of pricing, the representative candidly stated that it should be cheaper than conventional air-con, 'otherwise nobody will sign up' (his own words).

Dividend Warrior's 2nd Pot Of Gold Series - BTO Flat Booking Day!

Recently, URA released its Draft Master Plan 2019  and new expansion plans for the two Integrated Resorts in Singapore, making me more confident that Singapore's GDP growth will remain steady over the long-term. Generally speaking, there is a high correlation between a nation's GDP growth & property values, especially in a tiny city-state such as Singapore. That's why owning a tangible piece of physical asset on this glorious sunny island has often been touted as a 'sure-win' long-term investment. 

How would increased real-estate construction boost a country's GDP per capita? In simple terms, a robust real-estate sector helps to lift the finance and insurance service sectors as property loans are likely to trend up. More infrastructure developments would also lead to increased earnings for major construction companies and their smaller sub-contractors. The economic 'trickle-down' effect is potentially huge.

3D Model of BTO Launch Site at HDB Hub ground level

The URA Draft Master Plan 2019 came out before my appointment for BTO flat booking. Talk about perfect timing! Back in February, I decided to put my CPF OA to good use. So, join me on my journey to buy the single, largest financial asset of my life! :)


Preparation Work:

1. Received a SMS and email from HDB one month before the booking appointment, informing me to download & print the application form and other documents from the HDB portal. Through the portal, I was able to look at the BTO site map, interior floor plans and the units available for booking. 
2. Applied for my Home Loan Eligibility letter (HLE) 2 weeks in advance.
3. Prepared my Notice Of Assessment (NOA) & tax e-filing Form B, CPF yearly statement, CPF contribution statement over 12 months.
4. I applied for the grants (AHG & SHG) on the appointment day itself, but you can submit your application earlier if you wish to.
5. Did my sums to ensure I can afford the units I am eyeing. The higher the unit, the more expensive it is. I also observed that the few blocks closer to the future MRT station have slightly higher-priced units.
6. A day before the appointment, I narrowed down my list to 3 choices. Some of my earlier picks have been booked by people who were ahead of me in the queue.

Appointment Day:

1. Brought along all the prepared documents.
2. Brought along my ATM card to pay the booking fee through NETS. 
3. Arrived at the HDB Hub 15 minutes earlier to look at the materials that HDB is using for the Optional Component Scheme (OCS). These materials are displayed just next to the waiting area on the ground floor. I opted for the OCS. 
4. Got my queue number at the kiosk. Plenty of seats at the waiting area. My number was called within 10 minutes. Approached a friendly HDB sales officer in a rather spacious cubicle setting.
5. After going through the documents, the sales officer told me that they need my CPF statement for 2017. To my relief, there was a laptop on the desk for such situations. I logged into my CPF account and printed the statement.
6. Told the sales officer my choice of unit and she entered the booking into the system. My 1st choice unit, which is near the future Tengah Park MRT station is available. YES!
7. Signed the 'Option To Purchase' and paid the option fee.
8. The sales officer explained the home financing calculations to me. She told me to note that this was just a preliminary estimate because my financial situation might change 4 years later when I collect the keys. As long as I stay employed and keep contributing to my CPF ordinary account, I should be fine. 
9. I would be notified to come down to HDB Hub again to exercise my option to purchase within 4 months. By then, I would also know whether my grants have been approved or not.

The entire booking process was smooth-sailing and not as nerve-wrecking as I expected. The sales officer was polite and helpful. Shook her hand firmly as I thanked her and walked out of the HDB HUB with a bright orange plastic file ^__^ 

Owning a home is a keystone of wealth

Dividend Warrior

Building My Second Pot Of Gold

Many Singaporeans earned their first 'pot of gold' from property investments, specifically HDB flats and private condominiums. An entire generation of Singaporean 'Baby Boomers' was lifted into middle-class status during the 1980s to 1990s as they entered the workforce and used their CPF savings to purchase government-subsidised flats. Suffice to say, the public housing eco-system has been a bedrock of Singapore's economy in recent decades. 

Climbing the property ladder has been a well-trodden path to building wealth in Singapore. A tried-and-tested method. That's how our grandparents and parents did it and it has worked out pretty well so far. The appetite for properties has been ingrained into our psyche for generations. We like the physicality of real estate - owning something tangible. In the Singapore market, real estate is a reliable store of wealth and has the potential for long-term capital appreciation.

Being a Singaporean myself, it seems unorthodox that I have 'neglected' this part of wealth-creation for so long. Since I have already built my first pot of gold in the form of a dividend portfolio, the time is ripe to switch my focus to owning a tangible stake on this tiny red dot.

Long-time followers of my blog would know that I rarely (if ever) write about CPF-related topics. To be honest, I did not bother much with CPF in the past. That's because when I first started working in my first full-time job years ago, buying a property was far from my mind and there was no point keeping track of the measly amount in my CPF account. I gave 100% focus on building my dividend portfolio over the last 9 years. I thought I would just treat whatever savings I have in my CPF as a nice retirement 'bonus' when I hit 65 years old. Let it run on auto-pilot. Well, not anymore.

Now, it is time to make good use of my CPF OA. Last year, 2 financial bloggers (Heartland Boy and Turtle-investor) opened my eyes to maximising benefits from the CPF system. I was convinced to do voluntary cash top-ups to my SA & MA. I have been keeping track of my CPF account ever since I made the decision to start my property investing journey this year. So, imagine the surprise when I saw more than $100k in my CPF OA! This would help me pay off a significant chunk of the down-payment.


Over years of navigating through online forums and the financial blogosphere, the eternal debate on 'Investing in REITs vs Owning properties' would re-surface periodically. Both camps present some compelling arguments, but I say, why not strive to achieve both!



Don't wait to buy real estate, buy real estate and wait
Dividend Warrior