Common Mortgage Mistakes First Time Buyers Make | Homejourney

First-time buyers in Singapore often fall into common mortgage mistakes like ignoring TDSR limits or choosing the wrong loan type, leading to rejected applications or higher costs. This Homejourney cluster article reveals these pitfalls and actionable steps to avoid them, building on our pillar guide to first-time buyer financing.

Why Avoiding First Buyer Mistakes Matters in Singapore's Market

Singapore's property market in 2026 features strict rules like the Total Debt Servicing Ratio (TDSR) at 55% of gross income and Loan-to-Value (LTV) limits of 75% for first homes, preventing overborrowing[1]. These protect buyers but trip up the unprepared. Homejourney prioritizes your safety by verifying data and offering transparent tools like our bank rates page to compare DBS, OCBC, UOB, and more.

Costly home loan errors can add thousands over 25-30 years. For a $500,000 loan at 3% vs 4%, you save over $100,000 in interest. Use Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator to check affordability instantly with Singpass.

Mistake 1: Not Understanding HDB Loan vs Bank Loan

Many first-timers grab the HDB loan assuming it's always cheaper, but bank loans from partners like HSBC or Standard Chartered often offer lower rates in 2026's falling SORA environment[3]. HDB loans cap at 2.6% (90% financing for flats under $800,000), but banks peg to SORA + spread (currently ~1.3-1.8%)[3].

Insider tip: For a $600,000 BTO in Punggol, HDB might cost $2,500/month, but a bank loan could drop to $2,200 if SORA hits 1%[3]. Check Homejourney bank rates for real-time comparisons across 10+ banks.

Action step 1: Calculate both using our tool – HDB suits stability, banks for savings.
Action step 2: Apply via Homejourney for multi-bank offers with one Singpass submission.
Action step 3: Factor CPF Ordinary Account usage (up to 80% for HDB, full for banks under rules).

Mistake 2: Ignoring TDSR and MSR Limits

TDSR caps all debt at 55% of income; MSR for HDB is 30%[1]. A couple earning $10,000/month can borrow ~$550,000 max under TDSR, but car loans eat into it. New buyers overlook this, facing rejections.

Example: $8,000 salary, $1,000 existing debt – borrowing power drops 20%. Homejourney's calculator auto-includes this via MyInfo for accurate results.

Understanding SORA and Current Rates

SORA (Singapore Overnight Rate Average) is the key benchmark, trading 1.3-1.8% recently and potentially dipping below 1% in 2026[3]. Fixed rates start at 1.36% for loans over $500k[3]. The chart below shows recent interest rate trends in Singapore:

As seen, SORA's downward bias favors refinancing or new loans now[3]. Track live rates on Homejourney to time your application.

Mistake 3: Overlooking LTV and Stamp Duty Rules

First-timers forget LTV drops to 55% on second properties and Additional Buyer's Stamp Duty (ABSD) at 17% for citizens buying second homes. For resale HDB over $800,000, pay 5-12% ABSD if ineligible for grants.

Avoid by checking eligibility on Homejourney's search at https://www.homejourney.sg/search. Pair with projects directory: Projects Directory ">Projects Directory .

Mistake 4: Poor Timing with Interest Rates and Market

Locking fixed rates too early misses SORA drops; floating saves if rates fall[3]. In 2026, expect softer rates but steady supply[1][2]. Don't rush BTO without resale comparison – MOP flats flood market[1].

Monitor SORA weekly via Homejourney.
Submit multi-bank apps for best offers.
Refinance if rates drop 0.5% – our brokers guide you.

Mistake 5: Neglecting CPF and Affordability Buffer

Max CPF use seems smart, but depletes retirement funds. MAS advises 20% cash buffer. For $700k loan, interest-only phase hikes payments – plan ahead.

Pro tip: Use Homejourney's affordability tool to simulate scenarios, including post-retirement income.

Actionable Framework to Avoid Mortgage Traps

Follow this 5-step plan:

Assess eligibility: Input income/debts at calculator.
Compare rates: View DBS to Maybank on bank-rates.
Apply smart: One-click multi-bank with Singpass.
Consult brokers: Homejourney connects you free.
Review annually: Refinance via our process.

Disclaimer: This is educational; consult professionals. Rates as of 2026[3].

FAQ: Common Mortgage Questions for First-Time Buyers

What are the top first buyer mistakes in Singapore?
New buyer pitfalls include TDSR miscalculations and HDB vs bank confusion. Use Homejourney tools to verify.

How to avoid mortgage mistakes avoid with CPF?
Limit to available balance post-55% OA reserve. Simulate on our calculator.

Is now a good time for loans in 2026?
Yes, with SORA potentially under 1%[3]. Compare on Homejourney.

Can I refinance as a first-timer?
After 2-3 years if rates drop. Our step-by-step guide helps.

How does Homejourney ensure safe financing?
Verified data, Singpass integration, and multi-bank transparency build trust.

Avoid common mortgage mistakes first time buyers make with Homejourney's trusted platform. Start at https://www.homejourney.sg/bank-rates and explore our pillar on first-time financing for full details. Your safe property journey begins here.