Common Mortgage Mistakes First Time Buyers Make | Homejourney

Common mortgage mistakes first time buyers make in Singapore include overborrowing beyond TDSR limits, choosing the wrong loan type, and mismanaging CPF funds, often costing thousands over the loan tenure.

These pitfalls lead to rejected applications, higher payments, or financial stress. This Homejourney cluster article provides actionable steps to avoid them, linking to our pillar guide on first time buyer mistakes costing thousands on mortgages . Homejourney prioritizes your safety with verified tools like our bank rates page for transparent comparisons.

Why First-Time Buyers Fall into Mortgage Traps in Singapore

Singapore's 2026 property market features strict MAS regulations like Total Debt Servicing Ratio (TDSR) at 55% of gross income and Mortgage Servicing Ratio (MSR) at 30% for HDB flats[1][2]. First-timers, excited by BTO launches or resale surges, overlook these, facing rejections or overcommitment.

Emotional buying amid MOP flat influx doubles resale volumes, per HDB data[1]. Homejourney helps by verifying your eligibility instantly via Singpass/MyInfo on our bank rates page, ensuring confident decisions in a trusted environment.

Mistake 1: Overborrowing Beyond TDSR and MSR Limits

The top common mortgage mistake is maxing Loan-to-Value (LTV) ratios—75% for first HDB flats (85% if under 30)—without stress-testing at 4% rates, as mandated by MAS[1][2].

Example: A $500,000 HDB flat requires a $375,000 loan at 75% LTV. At 3% over 25 years, monthly payments hit ~$1,770. For a $8,000 household income, TDSR caps debt at $4,400 (55%), but existing car loans reduce this further[2].

Actionable fix: Use Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator to simulate scenarios, including debts and rate hikes. This prevents rejections common in the new buyer loan process.

Mistake 2: Ignoring Interest Rate Types and SORA Trends

Many lock fixed rates (3-5% for 2-3 years) without tracking SORA (Singapore Overnight Rate Average), now the benchmark for 90% of loans[1][2]. Fixed rates revert to SORA + 1.2-1.8% (3M SORA ~3% in 2026), potentially raising costs.

The chart below shows recent interest rate trends in Singapore:

As seen in the chart, SORA dips in 2026 favor floating rates from banks like DBS or OCBC[1]. Avoid this in your step by step mortgage by comparing real-time rates on Homejourney's bank rates page across DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, and more.

Mistake 3: Choosing Wrong Loan Type (HDB vs Bank)

First-timers default to HDB loans (2.6% fixed, 90% LTV for flats under $800,000) without comparing bank options, missing lower SORA-based rates (~2.5-3.5%)[1][2]. HDB suits low-risk profiles, but high earners benefit from bank flexibility.

Singapore-specific tip: For resale HDB in mature estates like Toa Payoh, banks offer cashback incentives. See our guide on HDB loan vs bank loan 首次购房者：HDB贷款vs银行贷款 | Homejourney指南 .

Step-by-step avoidance:

1. Check HDB eligibility on their portal.
2. Compare bank rates on Homejourney.
3. Apply multi-bank via Singpass for quotes from UOB, HSBC, and others.

Disclaimer: Rates fluctuate; verify current figures. This is educational—consult Homejourney mortgage brokers for personalized advice.

Mistake 4: Mismanaging CPF for Downpayments

Using all CPF Ordinary Account (OA) for 20-25% downpayment depletes buffers, as CPF earns 4% interest—higher than most loans[1]. Pitfall: No cash for monthly payments or emergencies.

Example: $100,000 CPF downpayment accrues ~$20,000 interest over 5 years if preserved[1]. MAS advises 20% cash buffer. Homejourney's calculator factors CPF via MyInfo for accurate first property financing planning.

Pro tip: Limit CPF to post-reserve balance (55% OA at age 55). Pair with property search on https://www.homejourney.sg/search to find flats within budget.

Mistake 5: Overlooking Hidden Fees and Poor Timing

Forget stamp duties (ABSD 17% on second homes) or fees ($2,000-5,000 for refinancing), plus valuation costs[2]. Rushing BTO ignores resale options flooding 2026 market[1].

Decision framework:

• Budget +10% for fees/renos.
• Track SORA before locking rates.
• Refinance if spread >0.5% via Homejourney's process.

Read step by step first home loan application Step by Step First Home Loan Application Singapore | Homejourney Guide for full details.

5-Step Framework to Avoid Common Mortgage Mistakes

Secure your first home loan application safely:

1. Assess: Calculate eligibility on Homejourney (income, debts, CPF).
2. Compare: View rates from all major banks at https://www.homejourney.sg/bank-rates.
3. Apply: One-click multi-bank submission with Singpass.
4. Consult: Connect with Homejourney brokers free.
5. Monitor: Review annually for refinancing.

Homejourney builds trust through transparency, verifying data for your peace of mind.

FAQ: First-Time Buyer Mortgage Questions

What are the most common mortgage mistakes first time buyers make in Singapore?
First-timers ignore TDSR (55%), pick wrong loans, or misuse CPF. Use Homejourney's tools to verify[1][2].

How do I choose between HDB and bank loans?
HDB for stability (2.6%); banks for lower rates in falling SORA. Compare on our bank rates page[2].

Can I avoid TDSR rejections?
Yes—input debts in our calculator for accurate borrowing power. See improvement guide How to Improve Your Loan Approval Chances | Homejourney .

What's the best way to use CPF for downpayment?
Preserve buffer; simulate on Homejourney[1].

When should I refinance my mortgage?
If rates drop 0.5%, minus fees. Track via our chart.

Avoid common mortgage mistakes first time buyers make with Homejourney's verified guidance. Start your first property financing securely—visit https://www.homejourney.sg/bank-rates or our pillar guide . Your safe property journey begins here.

References

1. Singapore Property Market Analysis 1 (2026)
2. Singapore Property Market Analysis 2 (2026)