7 Common Mortgage Mistakes First-Time Buyers Make in Singapore | 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 financial stress. Homejourney helps you avoid these pitfalls with transparent tools like our bank rates comparison, ensuring a safe path to homeownership.

This cluster article dives into mortgage-specific errors, building on our pillar guide 7 Common Mortgage Mistakes First-Time Buyers Make in Singapore | Homejourney ">7 Common Mortgage Mistakes First-Time Buyers Make in Singapore. With Singapore's strict rules from MAS and HDB, understanding these mistakes is crucial for first home savings and long-term stability.

Mistake 1: Ignoring TDSR and MSR Limits

The Total Debt Servicing Ratio (TDSR) caps your total debt payments at 55% of gross monthly income, while HDB's Mortgage Servicing Ratio (MSR) limits housing costs to 30% for public flats. Many first-time buyers overlook existing debts like car loans, leading to loan rejections.[1][2]

Real Singapore example: A couple earning $8,000 monthly assumes they can afford a $1.2M BTO flat in Tengah, but their $1,200 car loan pushes TDSR over 55%, slashing borrowing power by $200,000.

Actionable fix: Use Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator to pre-check limits. Get an Approval-in-Principle (AIP) from banks like DBS or OCBC before viewing properties.[1]

Mistake 2: Not Understanding HDB vs Bank Loans

HDB loans offer stability at 2.6% pegged to CPF Ordinary Account rates, but bank loans (often SORA-based at ~3%) provide flexibility for private properties. Buyers pick without comparing, missing better rates or eligibility.[2]

SORA (Singapore Overnight Rate Average) is the key benchmark for floating bank loans. The chart below shows recent interest rate trends in Singapore:

As shown, 3-month SORA has fluctuated around 3% in 2026, making fixed-rate options from HSBC or UOB attractive for risk-averse buyers.[2]

Insider tip: First-timers qualify for HDB loans if income is under $14,000; otherwise, compare bank packages on Homejourney's bank rates page covering DBS, OCBC, UOB, Standard Chartered, and more.

Mistake 3: Wiping Out Savings on Down Payment

First-time buyers must pay 25% down for HDB (first 5% cash), 25% for private properties. Exhausting savings leaves no buffer for stamp duties ($5,000+ for $500K flat), legal fees ($2,000-$3,000), or renovations ($30K-$80K).[1][2]

Down payment tips: Aim for save for down payment with 6 months' emergency fund extra. Use CPF for most, but keep cash for the mandatory 5%.

Track property deposit savings via monthly goals: $2,000/month for 12 months hits $24K.
Explore grants like Proximity Housing Grant ($20K) for HDB near parents.
Avoid loans for cash portion – MAS bans it.[2]

Read our guide on Saving for First Home Down Payment: Homejourney Complete Guide ">Saving for First Home Down Payment for more home buying savings strategies.

Mistake 4: Overstretching Monthly Instalments

Banks approve max loans, but aim for payments under 25-30% of income for comfort. With SORA rises, a $800K loan at 3% means ~$3,500/month – tight for $10K household income.[1]

Decision framework:

Calculate total costs: Loan + conservancy ($50-$100/month) + utilities ($200+).
Stress-test for +1% rate hike using Homejourney calculator.
Choose tenure wisely: 25 years maximizes borrowing but hikes interest paid.

Link to HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney ">HDB Loan vs Bank Loan Guide for details.

Mistake 5: Forgetting Hidden Costs and MOP Rules

Buyer's Stamp Duty (BSD) is 1% on first $180K, 2% on next, up to 4% over $1M. All HDB/BTO have 5-year Minimum Occupation Period (MOP), blocking resale/rental.[2]

Pro tip: Budget $10K-$20K extra for new flats. For resale HDB in mature estates like Toa Payoh, factor higher BSD if over $600K valuation.

Apply via Singpass on Homejourney for multi-bank offers from CIMB, RHB, Maybank – one form, verified income/CPF data instantly.

Mistake 6: Rushing Without AIP or Rate Comparison

FOMO from rising prices leads to option fees ($1K-$5K HDB, 5% private) without pre-approval. Rates vary: DBS at 3.0%, Maybank possibly 2.9%.[1]

Steps to avoid:

Secure AIP from 2-3 banks via Homejourney bank-rates.
Compare packages: Lock-in periods, fees, cashback.
Time application post-CPF top-up for better Ordinary Account rates.

See How to Improve Your Loan Approval Chances | Homejourney ">How to Improve Loan Approval Chances.

Mistake 7: Skipping Professional Guidance

Navigating MAS TDSR, ABSD exemptions, and refinancing alone risks errors. Homejourney's mortgage brokers offer free, personalized advice with partner banks like Public Bank and Citibank.[1]

Disclaimer: This is educational; consult professionals for advice. Homejourney verifies data for trust and safety.

FAQ: Common Mortgage Questions for First-Time Buyers

Q1: How much down payment for first HDB flat?
A: 25% total (5% cash min), using CPF Ordinary Account. Down payment tips: Save extra via Saving for First Home Down Payment: Homejourney Complete Guide ">first home savings guide.

Q2: HDB or bank loan better?
A: HDB for stability (2.6%), banks for private/lower rates. Compare on Homejourney.

Q3: What if TDSR exceeded?
A: Pay down debts or buy cheaper. Use our calculator for scenarios.

Q4: Can singles buy?
A: Yes, under $14K income for HDB. Details in Single Buyer Home Loan Singapore: Complete Guide | Homejourney ">Single Buyer Guide.

Q5: Refinancing possible?
A: After 2-3 years if rates drop. Homejourney simplifies multi-bank comparison.

Avoid common mortgage mistakes first time buyers make with Homejourney's verified tools. Start at bank-rates, search properties via property search, and build home buying savings safely. Your trusted partner for transparent Singapore home buying.