7 Common Mortgage Mistakes First-Time Buyers Make in Singapore

First-time home buyers in Singapore often make critical mortgage mistakes that cost them thousands of dollars and years of financial stress. Many of these errors are preventable—but only if you know what to watch for. At Homejourney, we've helped thousands of buyers navigate their property journey safely, and we've identified the most common pitfalls that trip up first-time borrowers.

This guide walks you through the seven mistakes we see most frequently, explains why they matter, and shows you exactly how to avoid them. By understanding these common errors upfront, you'll make smarter financial decisions and position yourself for long-term success in Singapore's property market.

Mistake #1: Not Knowing Your True Budget Before House Hunting

The most dangerous mistake first-time buyers make is starting their property search before understanding what they can actually afford. Many buyers browse property portals, fall in love with a unit, and only then figure out financing—which often leads to disappointment or worse, overcommitting financially.

The problem is that "price" and "affordability" are two different things. A $500,000 property isn't just about the purchase price. You also need to budget for:

Down payment (25% for HDB, 25% for private properties)
Buyer's stamp duty (BSD) — approximately 1-4% depending on property value
Legal fees and conveyancing costs
Renovation and furnishing ($30,000–$80,000 or more)
3–6 months of emergency savings
Monthly loan repayments, conservancy fees, and property taxes

How to avoid it: Before viewing any property, calculate your true budget by working backwards from your income. Use Homejourney's mortgage eligibility calculator at Bank Rates to determine your maximum borrowing power based on your income, CPF balance, and existing debts. Then subtract your down payment and upfront costs to find your realistic property price range.

Speak to a mortgage broker early in the process. Homejourney's Mortgage Brokers can review your financial situation and give you a clear picture of what you can afford without stress.

Mistake #2: Ignoring TDSR and MSR Loan Eligibility Rules

Many first-time buyers assume that if they earn a high salary, the bank will lend them whatever they need. This is incorrect. Singapore's banking regulators impose strict rules on how much banks can lend, regardless of your income.

The two key rules are:

Total Debt Servicing Ratio (TDSR): Your total monthly debt repayments (mortgage, car loan, credit cards, personal loans) cannot exceed 55% of your gross monthly income
Mortgage Servicing Ratio (MSR): For HDB loans, your mortgage payment alone cannot exceed 30% of your gross monthly income

If you have existing debts—a car loan, personal loan, or high credit card balances—these reduce the amount you can borrow for your home. Many buyers don't realize this until they apply for a loan and get rejected or approved for far less than expected.

How to avoid it: Get an Approval-in-Principle (AIP) from your bank or an HDB Loan Eligibility (HLE) letter before placing any option fee on a property. This confirms your maximum loan amount and prevents nasty surprises. On Homejourney's bank rates page, you can compare AIP offers from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks in one place.

If you have existing debts, pay them down before applying for a home loan. Even reducing a car loan or credit card balance can significantly increase your borrowing power.

Mistake #3: Stretching Too Far on Monthly Instalments

Just because a bank approves you for a $600,000 loan doesn't mean you should borrow it. Many first-time buyers stretch to the maximum loan amount to buy their "dream home," only to discover they have no financial cushion for life's unexpected costs.

When you max out your borrowing, you leave yourself vulnerable to:

Interest rate increases (if you have a floating-rate mortgage)
Job loss or income reduction
Medical emergencies or family expenses
Home repairs or maintenance costs
Children's education fees

Living month-to-month with minimal savings creates chronic stress and can force you into poor financial decisions.

How to avoid it: Aim to keep your total housing costs (loan repayment, conservancy fees, property tax, home insurance) at a comfortable level—not the maximum the bank is willing to lend. A good rule of thumb is to keep your housing costs below 30% of your gross monthly income, even though banks allow up to 30-55%.

Also factor in future interest rate increases. If you're taking a floating-rate mortgage linked to SORA (Singapore Overnight Rate Average), rates could rise. Calculate your monthly payment at a higher interest rate (e.g., 4-5%) to see if you can still afford it comfortably.

Mistake #4: Underestimating Renovation and Furnishing Costs

First-time buyers often focus entirely on the property purchase price and overlook the hidden costs of making a home livable. Renovation, furniture, appliances, and fittings can easily add $30,000–$80,000 or more to your total cost, depending on the unit's condition and your preferences.

If you buy a resale HDB flat that hasn't been renovated in 20 years, you might need:

Electrical rewiring
Plumbing upgrades
New kitchen and bathroom fittings
Flooring and wall repairs
Air-conditioning installation
Furniture and appliances

Many buyers drain their savings on the down payment and then realize they don't have cash left for renovations. This forces them to take personal loans or max out credit cards—adding to their debt burden.

How to avoid it: Get a few rough renovation quotes early in your search, before you commit to a property. Ask contractors for ballpark figures based on the unit's age and condition. Factor these costs into your overall budget, not as an afterthought.

If renovation costs are a concern, consider move-in ready units or newer properties that require minimal work. The slightly higher purchase price might be worth the peace of mind and lower upfront cash outlay.

Mistake #5: Wiping Out Your Savings for the Down Payment

Singapore's down payment requirements are substantial. For HDB flats, you need 25% of the property value. For private properties and condominiums, you need 25% as well, with at least 5% in cash (not CPF).

Many young buyers, eager to own a home, drain their entire bank account to meet the down payment requirement. They're left with zero emergency savings—a dangerous position that often leads to debt and financial stress.

When you have no savings buffer, unexpected expenses become crises. A medical emergency, car repair, or job loss can force you to borrow at high interest rates or miss mortgage payments.

How to avoid it: Aim to preserve at least 3–6 months of living expenses in cash savings after your down payment. This emergency fund is just as important as your mortgage approval.

If meeting the down payment while preserving emergency savings is impossible, delay your purchase until you've saved more. Buying a home is a marathon, not a sprint. Waiting an extra year or two to build a stronger financial foundation is far better than buying prematurely and living in constant financial stress.

Mistake #6: Not Comparing Loan Options Across Banks

Many first-time buyers accept the first mortgage offer they receive—from their employer's bank, a family friend's recommendation, or their property agent's suggestion. They don't realize that mortgage rates and terms vary significantly across Singapore's banks.

The difference between a 3.0% interest rate and a 3.5% rate might seem small, but over a 25-year mortgage, it translates to tens of thousands of dollars in extra interest payments.

Additionally, different banks offer different perks:

Cashback or rebates on the loan amount
Waived legal fees or valuation fees
Flexible prepayment terms with no penalties
Interest rate discounts for salary crediting or insurance bundling

How to avoid it: Always compare mortgage rates and terms from multiple banks before committing. On Homejourney's bank rates page, you can view current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major lenders in one place. You can also submit a single application to multiple banks and compare their offers side-by-side.

Use Homejourney's Singpass/MyInfo integration to auto-fill your application in seconds. Your income, employment, and CPF data are verified instantly, speeding up the approval process across all banks.

Mistake #7: Choosing Between HDB and Bank Loans Without Understanding the Differences

Singapore offers two main mortgage options: HDB loans and bank loans. Most first-time buyers don't understand the key differences, and many choose the wrong option for their situation.

HDB Loans:

Interest rate: 2.6% per annum (fixed, set by HDB)
Maximum loan: 75% of property value or $500,000, whichever is lower
Loan tenure: Up to 25 years
Available only for HDB flats (not condos or private properties)
Lower interest rate makes it cheaper overall

Bank Loans:

Interest rate: Varies by bank and market conditions (currently 3.0–3.5% for most major banks)
Maximum loan: 75% of property value for HDB; 75% for private properties
Loan tenure: Up to 25–30 years
Available for HDB, condos, ECs, and private properties
More flexibility but higher interest rates

For first-time buyers purchasing an HDB flat, the HDB loan is almost always the better choice due to the lower fixed interest rate. However, if you're buying a condo or private property, or if you plan to refinance later, a bank loan might offer more flexibility.

How to avoid it: Understand which loan type applies to your property and situation. For a detailed comparison, read Homejourney's guide: HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney

If you're buying an HDB flat, get an HDB Loan Eligibility (HLE) letter first. If you're buying a private property or considering a bank loan, get an Approval-in-Principle (AIP) from your preferred bank. Homejourney's bank rates page makes it easy to compare and apply for bank loans from multiple lenders.

How Homejourney Helps You Avoid These Mistakes

Homejourney is built on a foundation of user safety and trust. We help first-time buyers avoid costly mortgage mistakes by providing transparent, verified information and tools that simplify the home-buying process.

Our key features include:

Bank Rates Comparison: View current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks in one place. No hidden fees, no surprises.
Mortgage Eligibility Calculator: Calculate your maximum borrowing power instantly based on your income, CPF, and existing debts. Understand your budget before you start house hunting.
Multi-Bank Application: Submit one application and receive offers from multiple banks. Compare terms, rates, and perks side-by-side.
Singpass/MyInfo Integration: Auto-fill your application in seconds. Your income and employment data are verified instantly, speeding up approvals.
Mortgage Broker Guidance: Connect with Homejourney's experienced mortgage brokers who provide personalized advice tailored to your situation.
Property Search: Find properties within your budget and loan eligibility on Homejourney's property search platform.

We prioritize transparency, verification, and customer safety at every step. When you use Homejourney, you're working with a platform that puts your interests first.

Frequently Asked Questions

Q: Should I get an AIP before viewing properties?

Yes, absolutely. An Approval-in-Principle (AIP) confirms your maximum loan amount and prevents you from falling in love with a property you can't afford. It also strengthens your position when negotiating with sellers, as they know you're a serious buyer with financing secured. Get your AIP on Homejourney's bank rates page before placing any option fee.

Q: What's the difference between TDSR and MSR?

TDSR (Total Debt Servicing Ratio) applies to all borrowers and limits your total monthly debt payments to 55% of your gross income. MSR (Mortgage Servicing Ratio) applies specifically to HDB loans and limits your mortgage payment to 30% of your gross income. Both rules are designed to protect you from over-borrowing.