First Time Home Buyer Case Study
The case study below compares 3 couples. That produced 3 very different outcomes. Your first ever home can either be a stepping stone for your next move or set you back many years.
Couple 1
Summary
They bought a resale 5 room HDB at Punggol in Oct 2014 for $450,000. Like most buyers, they took HDB loan and used their CPF for down payment and servicing of their monthly installment. They took a $40k HDB first-timer grant. They spent $60k on renovation and $20k on furniture totaling 80k. After they met their 5 years MOP, they planned to upgrade and sold their place for $455,000 in Sept 2020. They made a loss of $70k, resulting from CPF accrued interest amounting to $38k and HDB loan interest of $28k.
Price breakdown when purchase:
$450,000 (Purchase price) – $40,000 (First timer grant) + $60,000 (Renovation cost) = $470,000
Price breakdown when selling:
$455,000 (Sales price) – $38,000 (CPF accrued interest) – $28,000 (HDB loan interest) = $389,000
Overall loss:
$470,000 – $389,000 = $81,000 over 6 years, $13,500 every year.
Fortunately they manage to upgrade to a 3 bedder condo at 1.6mil, but they have to use their own savings of almost $160,000 for the upgrade.
Property Purchase Price
Property Sold Price
Overall Lost Per Year
Couple 2
Summary
They bought a brand new 4 room BTO in Punggol for $360,000 in Nov 2011 with no additional grant. They collected their keys in Dec 2015. They took HDB loan and used their CPF for down payment and servicing of their monthly installment. They spent $40,000 on renovation and managed to sell their place for $495,000 after they met their MOP in Dec 2020
Price breakdown when purchase:
$360,000 (purchase price) + $40,000 (Renovation cost) = $400,000
Price breakdown when selling:
$495,000 (sales price) – $15,000 (HDB loan interest) = $480,000
Overall profit:
$480,000 – $400,000 = $80,000 over 9 years, profiting $8,888 every year, which is about $740 / month.
Took them 9 years to profit from their first pot of gold with a gain of $8,888 per year or $740 a month.