First-time home owners: 5 expenses you need to be prepared for

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Buying your first home is an exciting milestone. You’ve saved up for the longest time towards this goal and just thinking about matching the colour of your sofa with that of the walls makes you tingle with anticipation.

As you prepare to purchase your dream home, you probably would have budgeted for the cost of the downpayment, renovation and furniture. But do you know there are other expenses that are equally important? Read on to find out about the 5 lesser-known (and some recurring) expenses of owning a home.

Stamp duty and legal fees upon purchase

When you are making your home purchase, you need to take note of the tax payable on the documents relating to the purchase, which is called stamp duty. This is charged on the property price and has to be paid upfront alongside several other legal fees. In the case of a 4-room HDB flat, this can cost over $1800 (on top of your downpayment). For private home purchases, the stamp duty may be much higher than that of an HDB flat as the property prices are higher.

There are also legal fees, such as Conveyancing Fees and Caveat Registration Fees to be paid.

You can tap on your CPF Ordinary Account (OA) savings to pay the legal fees and stamp duty in full. For stamp duty of a property that is already completed, you can pay in cash first and get reimbursed from your CPF account later. If the property is still under construction, you can pay the stamp duty directly through your CPF.

These are one-time fees that only need to be paid before you collect your keys. There are other costs that you will need to consider and set aside budget for on a monthly or annual basis. Here’s an overview of the recurring costs of owning a HDB flat:

Recurring cost for a 4-room HDB flat

(1) Premium is calculated based on a 35-year-old man taking a $300K HDB loan with a loan term of 25 years at 100% coverage.
(2) Based off average property tax payable in 2017.
(3) Based on Town Councils’ reduced rates for 4-room HDB flats.
(4) Based on National Average Household Consumption (SP Group).
(5) 1% of the purchase value ($253,400) of a 4-room HDB flat as an estimation.

Home Insurance

After purchasing your home, it is important to be prepared for unforeseen loss or damage by certain perils, such as fire or theft.

If you are taking an HDB loan, you will need to buy the HDB Fire Insurance. This basic home insurance policy covers the cost of reinstating the building structure, fixtures and fittings but does not cover the cost of renovations and replacing household content. Premiums for the HDB Fire Insurance can range from $1.50 to $7.50 for a 5-year term, depending on your flat type.

If you would like to cover the cost of renovations and replacement of household content, you will need a more comprehensive plan. The amount of coverage you need depends on the worth of your home content and how much is required to return your home to its original state. A more comprehensive private plan usually starts from around $30 and can go up to a few hundred dollars annually, depending on your type of property and its content.

Choose your coverage wisely and review it whenever there is a major facelift to your home or its content.

Mortgage-reducing insurance

In the event of death, terminal illness or total permanent disability where the homeowner is no longer able to make loan repayments, mortgage-reducing insurance payouts will settle the outstanding housing loan, up to the insured sum.

For HDB flat owners paying their monthly housing loan instalments with their CPF savings, they are required to be insured under the Home Protection Scheme (HPS). The HPS annual premium can be paid with your CPF OA savings.

Based on various factors including age and gender of the insured, outstanding housing loan and loan repayment period, the premium payable is specific to each individual. You can estimate the premium for your new HPS cover here.

For private home owners, consider a private mortgage-reducing insurance policy if your family relies solely on you and/or your spouse for financing the home loan. Should anything unfortunate happen to both of you, it would be ideal for your children to still have a place they can call home.

Property tax

In Singapore, property tax is defined as a wealth tax. This means owning a home makes you liable for property tax, which is counted by multiplying the Annual Value of the property with the prevailing property tax rate. Here, Annual Value refers to an estimate of how much rental income your property can fetch in the year. The higher the value of your home, the more property tax you have to pay.

For owner-occupied properties, there is a lower tax rate than that of non-owner-occupied properties. To find out how much you need to pay exactly, look out for a reminder from the IRAS towards the end of the year.

Lower Property Tax Rates for Owner-Occupied Residential Properties

Recurring cost for a 4-room HDB flat
Source: Inland Revenue Authority of Singapore

Service & Conservancy Charges

To manage costs for pest control, cleaning and upgrading, town councils collect monthly fees from HDB flat owners to keep the estate clean and green. Reduced fees are applicable to Singaporeans who own and occupy the flat without ownership of any private property.

If you fall under this category, you will probably need to pay around $20 to $80, depending on the location and size of your flat.

Private condominium owners can expect maintenance fees ranging from $250 to $350 per month. These are paid to property operators for services within the compound.

While landed property owners have no such charges other than the refuse removal fee, you will have to maintain the condition of the property at your own expense.

Utilities and maintenance

Home owners should also be mindful of the way they use high-energy consumption appliances like air-conditioners and refrigerators. Learn how to manage your energy guzzlers and try to keep your utility bill at the national average – which is around $145 per month for 4-room HDB flats without gas and $161 for those with gas.

Do also set aside a fund for maintenance of your household items. Over time, wear and tear will set in and you might face a list of items that requires repair or replacement. A common piece of advice is to use the 1% rule. Your annual maintenance expenses will cost about 1% of your home purchase value. However, if you bought your home at a deal or when prices were sky high, adjust your budget based on the possible costs you foresee.


Even before counting your monthly mortgage payment, these payments can possibly eat into your living expenses if you do not plan ahead for it. To avoid underestimating your costs, always set aside extra cash and monitor your expenses, even for small-ticket items. When you do, you will find greater peace of mind.