Many of the most Common Mortgage Mistakes First Time Buyers Make in Singapore happen before they even speak to a bank – from misjudging affordability to using CPF carelessly. This beginner mortgage guide for the first time home buyer Singapore crowd breaks down the biggest traps, shows real examples, and offers safer decision frameworks so your first property mortgage doesn’t become a long-term burden.
This article is part of Homejourney’s first-time buyer mortgage series and supports our main pillar guide: First-Time Home Buyer Singapore: 2026 Mortgage Guide by Homejourney First-Time Home Buyer Singapore: 2026 Mortgage Guide by Homejourney . If you want a full end‑to‑end overview of your first home loan, start there and use this cluster piece as a tactical checklist of what not to do.
1. Mistake: Starting With Property Search, Not Loan Eligibility
The most common error first time home buyers in Singapore make is browsing listings in Pasir Ris, Punggol or Queenstown before understanding how much they can realistically borrow. In a market where a standard 4-room resale HDB in mature estates like Toa Payoh can exceed $750,000, guessing your budget is dangerous.
Under Monetary Authority of Singapore (MAS) rules, your loan size is restricted by the Total Debt Servicing Ratio (TDSR) for private property and Mortgage Servicing Ratio (MSR) for HDB and ECs.[1][2] TDSR caps total monthly debt obligations (including student loans, credit cards, car loans, and your new mortgage) at 55% of your gross monthly income. MSR caps just your housing loan at 30% of income for HDB flats and new ECs.[2]
Real example: A couple earning $8,000 combined with $800 monthly car instalment and $300 in credit card repayments has $1,100 of existing debt. Under TDSR at 55%, their maximum monthly total debt is $4,400. That leaves about $3,300 for housing instalments. If they shop assuming $4,500–$5,000 is fine because “the bank will approve”, they may book an Option To Purchase (OTP) and later discover the loan falls short by $100,000 or more.
Safer approach:
- Use Homejourney’s mortgage eligibility calculator at https://www.homejourney.sg/bank-rates#calculator to estimate your safe borrowing limit based on income, age, and existing debts.
- Get an Approval-in-Principle (AIP) from at least one bank before you pay an OTP fee. Homejourney lets you submit a single multi-bank application via Singpass/MyInfo at https://www.homejourney.sg/bank-rates so offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank and others can be compared side by side.
- Only then start shortlisting units via Homejourney’s budget-filtered property search at https://www.homejourney.sg/search.
2. Mistake: Confusing HDB Loan vs Bank Loan (and Overpaying Quietly)
Another core mistake in any beginner mortgage guide is not understanding the trade-offs between an HDB loan and a bank loan for your first home loan. Many buyers in towns like Sengkang or Jurong choose an HDB loan “because everyone says it’s safer” without checking the numbers, while others rush to bank loans purely for a slightly lower headline rate.
Key differences (2026 context):
- HDB Concessionary Loan: Pegged at 0.1% above the CPF Ordinary Account (OA) interest rate, which has been 2.5%, so HDB loan is 2.6% per annum.[2] Downpayment can be as low as 10% (all from CPF), and income ceilings and eligibility rules apply.
- Bank Loan: Offered by DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, etc., at either fixed or floating (often SORA-pegged) rates. Minimum 5% cash downpayment for HDB and private properties, plus 20% CPF/cash for HDB or 20–25% for private.[2]
Common mistakes:
- Assuming the HDB rate never changes – it is technically adjustable, though historically stable.
- Choosing a bank’s promotional 2-year fixed package without understanding what happens after the lock-in, when it may revert to a higher floating spread.
- Not checking whether you qualify for an HDB loan (citizenship, income ceiling, property ownership rules) before planning your cash/CPF outlay.[2]
For a deeper comparison, see HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney .
3. Mistake: Ignoring SORA and Interest Rate Risk
Most new buyer guide materials mention “floating rates” but few explain how SORA (Singapore Overnight Rate Average) affects your instalments in real life. MAS has shifted the market from SIBOR to SORA as the main benchmark rate, and most new bank packages for first property mortgages are 3M or 6M SORA plus a fixed spread.[2]
Example: if 3M SORA is 2.5% and your package is 3M SORA + 0.7%, your effective rate is 3.2%. If SORA rises by 0.8% over a year, your rate becomes 4.0%, and your monthly instalment on a $600,000 loan over 25 years can jump by several hundred dollars.
The chart below shows recent interest rate trends in Singapore:
Homejourney tracks real-time 3M and 6M SORA on our bank rates page at https://www.homejourney.sg/bank-rates so you can see how rates are moving before deciding between fixed vs floating.
How to avoid this mistake:
- If your income is variable (e.g. commission-based in sales or property, or running a small business in areas like Geylang or Jalan Besar with cyclical demand), consider a fixed-rate package for stability.
- Stress-test your budget at +1% to +2% higher than today’s rate using Homejourney’s calculator. If a 2% increase makes your monthly payment feel tight, you are likely over-stretching.
- Review your package 3–6 months before the lock-in ends; Homejourney’s refinancing tools at https://www.homejourney.sg/bank-rates make it easier to compare across major banks and switch safely if needed.
4. Mistake: Overusing CPF for Downpayment and Monthly Instalments
CPF is a powerful tool for first time home buyers in Singapore, but using “as much CPF as possible” without thinking ahead is one of the most expensive hidden mortgage mistakes. CPF OA balances earn at least 2.5% per annum and form part of your retirement savings.[2]
For HDB and private properties, CPF can be used for downpayment, stamp duty and monthly instalments, subject to valuation limits and withdrawal limits as set by CPF Board.[2] However, overusing CPF can lead to:
- Accrued interest obligations that must be “refunded” to your CPF when you sell the property, potentially reducing your cash proceeds.
- Insufficient OA funds later for children’s tertiary education or emergency needs.
Insider tip: Many couples buying their first flat in estates like Punggol or Tengah choose to pay the minimum monthly instalment portion in cash that they are comfortable with, and the rest via CPF. This keeps some OA savings growing at 2.5% while still meeting instalments comfortably.
Practical framework:
- Decide how much cash buffer you want for 6–12 months of instalments and essential expenses.
- Use Homejourney’s mortgage calculator to simulate three scenarios: 100% CPF instalment, 50% cash/50% CPF, and mostly cash.
- Choose the mix that keeps your OA above a minimum comfort level for future needs, especially if you foresee upgrading after your HDB Minimum Occupation Period (MOP).[2]
5. Mistake: Underestimating Total Upfront and Ongoing Costs
First time buyers often focus on the purchase price and loan quantum, forgetting other costs that affect long-term affordability. In mature estates like Bishan or Ang Mo Kio, where prices are higher, these costs scale up significantly.
Upfront costs to account for:
- Buyer’s Stamp Duty (BSD): Payable to IRAS within 14 days of signing the sale and purchase agreement in Singapore.[3] For example, for a $800,000 property, BSD is calculated on a tiered basis and can run into tens of thousands.
- Additional Buyer’s Stamp Duty (ABSD) if this is not your first property.[3]
- Legal fees for conveyancing, usually in the range of a few thousand dollars, depending on lender and law firm.
- Valuation fees, which may be required for bank loans.
- Renovation (often $30,000–$80,000+ for a 4-room flat depending on condition and design)[1][2] and basic furniture/appliances.
Ongoing costs:
- Monthly conservancy charges or condo maintenance fees.
- Property tax (higher if it is an investment property).[3]
- Home insurance and, if applicable, fire insurance as required by HDB or the bank.
- Regular servicing of air-conditioning and other household systems – Homejourney’s vetted aircon servicing partners Aircon Services help keep these costs predictable and safe.
Use these figures in Homejourney’s affordability calculator and avoid assuming that “if the bank approves, it must be affordable”. Regulations ensure you are not over-leveraged on paper, but they do not account for your lifestyle choices, parents’ allowance, childcare or upcoming car replacement.
6. Mistake: Rushing the Process Due to FOMO or Seller Pressure
In popular areas like Tiong Bahru, Redhill or near MRT clusters in the East-West Line, good units can move quickly. Many first time buyers panic and commit after one viewing, afraid of “losing out”, only to realise later that the loan structure, facing, or long-term costs do not suit them.[1][2]
Red flags to slow down:
- Agent or seller insisting you exercise the OTP before your bank issues a written AIP.
- Being told you “must” use a particular law firm or in-house banker without transparent explanation of costs.
- Pressure to waive important conditions, such as valuation or financing clauses.
Homejourney’s platform is built around safety and transparency. You can:
- Check bank rates and indicative monthly repayments quietly at https://www.homejourney.sg/bank-rates during or right after viewings.
- Save listings in your budget range via Homejourney’s property search and compare them calmly later at home.
- Request a call from our mortgage brokers through the same bank rates page – they will walk you through scenarios without any obligation.
7. Mistake: Not Planning for Future Life Events and Exit Strategy
Your first property mortgage may last 25–30 years, but life rarely stays the same that long. A couple currently renting near Raffles Place might buy a condo in city fringe areas like Lavender or Boon Keng for convenience, only to find five years later that school proximity in places like Bukit Timah or Tampines becomes more important.
Key questions to ask yourself:
- Will you still be comfortable with the instalment if one partner takes a career break or switches to a lower-paying but more flexible role?
- Does the property type impose constraints, such as HDB’s 5-year MOP before selling or investing in private property?[2]
- Is the layout and location likely to remain attractive for tenants or buyers later, which affects your resale and rental options?
Think at least one property cycle ahead (7–10 years). Use Homejourney’s projects directory Projects Directory to review upcoming MRT lines, nearby commercial developments, and historic price trends before committing. For buyers considering future upgrading, our pillar piece BTO Buyer Complete Financing Guide | Homejourney 2026 BTO Buyer Complete Financing Guide | Homejourney 2026 explains longer-term pathways.
8. Mistake: Applying to Only One Bank (or Randomly Picking the First Offer)
Different banks price risk differently and run promotions at different times. In one month, DBS might have a competitive fixed rate; in another, UOB or HSBC could lead for SORA packages. Yet many first time home buyers simply walk into the bank where they have their salary account and sign the first term sheet.
Why this is risky:
- Small differences in interest rate or lock-in penalties can easily add up to five figures over the life of a 25-year loan.
- Some packages have partial prepayment penalties or stricter conditions that make future refinancing costly.
- You may miss better deals from Maybank, CIMB, RHB or Standard Chartered that better match your income profile.
Homejourney’s bank rates page at https://www.homejourney.sg/bank-rates is designed to fix this exact mistake:
- Compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank and more in one clean view.
- Use Singpass/MyInfo to auto-fill your details so you can apply to multiple banks in minutes, not days.
- Connect with Homejourney Mortgage Brokers for personalised guidance on which mix of fixed vs floating, lock-in length, and repayment options best fits your risk profile.
9. Mistake: Treating Online Content as Personal Financial Advice
While guides like this beginner mortgage guide can provide frameworks and common pitfalls, they are not a substitute for regulated financial advice. Your situation – including family support, business ownership, or variable income – will heavily influence what is truly “safe”.
Important disclaimer:
