Common Mortgage Mistakes First-Time Buyers Make in Singapore
First-time home buyers in Singapore often make mortgage decisions that cost tens of thousands over 25-30 years. The most common mistakes include overborrowing beyond TDSR (Total Debt Servicing Ratio) limits, choosing the wrong loan type without comparison, ignoring interest rate trends, and mismanaging CPF funds for down payments. These errors lead to rejected loan applications, financial stress, or overpaying on interest—all preventable with proper planning.
At Homejourney, we prioritize your safety by providing transparent, verified information to help you avoid these pitfalls. This cluster article breaks down the specific mistakes first-time buyers make and provides actionable steps to prevent them. For a comprehensive overview of first-time buyer financing, see our complete mortgage guide.
Mistake 1: Overborrowing Beyond TDSR and MSR Limits
The single most costly mistake first-time buyers make is borrowing at the maximum Loan-to-Value (LTV) ratio without stress-testing their finances. Under MAS regulations, you can borrow up to 75% of your property value for your first HDB flat (85% if you're under 30), but this doesn't mean you should. Many buyers focus only on the maximum they can borrow, ignoring the TDSR cap of 55% of gross monthly income for all debts combined.
Real example: A $500,000 HDB flat at 75% LTV = $375,000 loan. At 3% interest over 25 years, your monthly payment is approximately $1,770. If your household gross income is $8,000, your TDSR limit is $4,400 (55% of income). With other debts (car loan, credit cards, personal loans), your mortgage payment alone could exceed your safe borrowing capacity.
For HDB flats, the MSR (Mortgage Servicing Ratio) adds another constraint: your mortgage payment cannot exceed 30% of gross income. This is stricter than TDSR and often the limiting factor for HDB buyers. Conservative buyers target mortgage payments at 25-30% of gross income to preserve financial flexibility for rate increases or income disruptions.
Action step: Before viewing properties, calculate your actual borrowing capacity using Homejourney's mortgage eligibility calculator on our bank rates page. This tool considers your income, existing debts, and CPF balance to show your true borrowing power—not just the maximum banks will lend.
Mistake 2: Ignoring Interest Rate Types and SORA Trends
Many first-time buyers lock into fixed rates (typically 3-5% for 2-3 years) without understanding what happens when the fixed period ends. In Singapore's mortgage market, 90% of loans are now benchmarked to SORA (Singapore Overnight Rate Average), the central bank's key interest rate. When your fixed period expires, your rate reverts to SORA plus a bank spread (typically 1.2-1.8%), which could be significantly higher than your initial fixed rate.
The chart below shows recent SORA trends to help you understand how rates have moved:
As you can see from the chart above, SORA rates fluctuate based on economic conditions. In 2026, SORA is hovering around 3%, meaning a fixed rate of 3% that reverts to SORA+1.5% could jump to 4.5% or higher. This rate shock catches many buyers off-guard, significantly increasing their monthly payments.
Floating vs. Fixed comparison: Floating rates track SORA directly and adjust monthly, while fixed rates lock your rate for a set period. Floating rates are lower initially but carry rate risk. Fixed rates provide certainty but are typically 0.5-1% higher than floating rates at origination. The "right" choice depends on your risk tolerance and rate outlook.
Action step: Use Homejourney's real-time SORA tracking on the bank rates page to monitor current rates before locking in a fixed rate. Compare offers from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks to understand the full picture of fixed vs. floating options available to you.
Mistake 3: Choosing the Wrong Loan Type Without Comparison
First-time HDB buyers often default to HDB loans simply because they assume it's the cheapest option. While HDB loans offer stability with a fixed 2.6% rate and up to 90% LTV for flats under $800,000, bank loans frequently offer better rates in 2026's falling SORA environment.
HDB loans are straightforward: 2.6% fixed rate, 90% LTV for first-timers, and 25-30 year tenures. However, they lack flexibility—you cannot refinance to a lower rate, and you're locked into HDB's terms. Bank loans, by contrast, are SORA-based (currently 2.5-3.5% depending on your profile), offer refinancing options, and provide flexibility for high earners with investment properties or multiple income sources.
Key differences:
- HDB Loan: 2.6% fixed, 90% LTV, no refinancing, suitable for conservative buyers prioritizing stability
- Bank Loan: SORA+spread (2.5-3.5%), 75-85% LTV, refinanceable, suitable for high earners or those expecting rate drops
Many buyers choose HDB loans without realizing they could save $50,000-$100,000 over the loan tenure with a bank loan. Conversely, some high-risk borrowers choose bank loans without the financial buffer to handle rate increases, leading to payment shock.
Action step: Compare HDB and bank loan offers side-by-side on Homejourney's bank rates page. Enter your property price, down payment, and income to see real offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and CIMB. For deeper guidance, read our HDB vs. Bank Loan comparison guide.
Mistake 4: Underestimating Hidden Fees and Stamp Duties
First-time buyers often focus only on the mortgage payment and down payment, overlooking significant upfront and ongoing costs. These hidden expenses can total $15,000-$30,000 or more, straining your finances right when you're taking on a large mortgage.
Common hidden costs:
- Stamp Duty: 1-4% of property price for first-time HDB buyers (Additional Buyer's Stamp Duty of 17% applies to second properties)
- Loan Processing Fees: $1,000-$2,500 charged by banks for mortgage origination
- Valuation Fees: $300-$800 for the bank's property valuation
- Legal Fees: $800-$1,500 for conveyancing and legal documentation
- Mortgage Insurance: If borrowing over 75% LTV, mortgage insurance premiums add $5,000-$15,000 depending on LTV
- HDB Administrative Fees: $60-$100 for HDB flat transactions
Additionally, first-time buyers often forget about ongoing costs like property tax, maintenance fees (for condos), and home insurance. These can add $300-$800 monthly to your housing costs beyond the mortgage payment.
Action step: Create a detailed budget that includes all upfront fees, stamp duties, and ongoing costs. Use Homejourney's mortgage calculator to estimate total costs, then add a 10-15% buffer for unexpected expenses. This ensures you're not caught off-guard by costs you didn't anticipate.
Mistake 5: Mismanaging CPF for Down Payments and Payments
CPF (Central Provident Fund) is a powerful tool for first-time buyers—you can use your CPF Ordinary Account (OA) to pay your down payment and mortgage payments. However, mismanaging CPF often leads to cash flow problems or insufficient retirement savings.
The key rule: You must maintain a CPF OA balance of at least 55% of your property value or $90,000 (whichever is higher) after your down payment and mortgage payments are made. Many buyers drain their CPF entirely for the down payment, then struggle to meet monthly mortgage payments because they've used up their CPF balance.
