This case study examines the Tan family’s 15-year housing journey in Singapore, from their first BTO flat to upgrading to a private condominium, illustrating the complexities of credit assessment, government regulations, and financial planning in Singapore’s unique housing market.
Part 1: The Beginning (2010-2015)
Initial Profile: Marcus & Rachel Tan
Year: 2010
Ages: Marcus (28), Rachel (27)
Financial Snapshot:
- Combined Monthly Income: S$6,500
- Marcus: S$3,500 (Junior Engineer, Local SME)
- Rachel: S$3,000 (Admin Executive, MNC)
- CPF Ordinary Account: S$45,000 combined
- Cash Savings: S$25,000
- Debts: None
- Credit History: Clean, but minimal (only had credit cards for 1 year)
First Property Purchase: 4-Room BTO in Punggol (2010)
Property Details:
- Price: S$280,000
- Location: Non-mature estate
- Estimated Completion: 2014
Financial Analysis:
Down Payment (10% for BTO):
- Required: S$28,000
- Funded by: CPF OA (S$28,000)
- Cash needed: S$0
Stamp Duty:
- Buyer’s Stamp Duty: ~S$2,400
- Funded by: Cash savings
Loan Application:
- Loan Amount: S$252,000 (90% LTV allowed for BTO)
- Loan Tenure: 25 years
- Interest Rate: 2.6% (HDB concessionary rate, 2010)
- Monthly Installment: ~S$1,150
Bank Assessment:
✅ APPROVED – Strong Profile for First-Timers
Positive Factors:
- Young couple with stable employment
- Both in permanent positions
- Clean credit bureau records
- TDSR: 18% (well within limits)
- Conservative loan amount
- Government-backed HDB loan
Areas of Concern:
- Relatively short employment history (Marcus: 1.5 years, Rachel: 2 years)
- Limited cash reserves after stamp duty
- Single income dependency risk if one loses job
Bank Decision:
- Approved HDB loan at concessionary rate
- No additional conditions required
- Standard insurance requirements
Part 2: Building Equity (2014-2020)
Life Changes
2014:
- Moved into completed BTO
- Marcus promoted to Senior Engineer (S$5,000/month)
- Rachel changed jobs to better-paying role (S$4,000/month)
- Combined Income: S$9,000/month
2016:
- First child born
- Rachel took 4 months maternity leave
- Household expenses increased
2018:
- Marcus started MBA part-time (S$45,000 course fee via study loan)
- Rachel returned to full-time work
- Accumulated CPF OA: S$180,000 combined
- Property value: ~S$450,000 (appreciated 61%)
2020:
- Marcus completed MBA, promoted to Engineering Manager (S$8,500/month)
- Rachel now Senior Executive (S$5,500/month)
- Combined Income: S$14,000/month
- Outstanding Study Loan: S$15,000 (S$500/month)
- Cash Savings: S$120,000
- Property Value: ~S$480,000
The Upgrade Decision
Family Discussion Points:
- Son starting primary school, wanted better school district
- Punggol still developing, desired mature estate
- Investment perspective: Could afford upgrade
- Concern: ABSD implications
Part 3: The First Upgrade Attempt (2020)
Target Property: Resale Condo in Bishan
Property Details:
- Price: S$1,300,000
- Type: 3-bedroom resale condo
- Location: Near top primary school
- Age: 15 years old
Financial Planning
Option 1: Buy First, Sell Later
Upfront Costs:
- Down Payment (25%): S$325,000
- Buyer’s Stamp Duty: ~S$38,600
- ABSD (20% for 2nd property): S$260,000
- Total Cash Needed: S$623,600
Challenge: Only have S$120,000 cash!
CPF Usage:
- Existing CPF OA: S$180,000 (but tied to current flat)
- Cannot use for 2nd property down payment while still owning 1st
- Would need to liquidate investments or borrow
TDSR Calculation:
- Existing HDB loan: S$800/month remaining
- New condo loan: S$4,750/month (S$975,000 @ 2.5% over 25 years)
- Study loan: S$500/month
- Total Debt: S$6,050/month = 43% of income
Result: ❌ FINANCIALLY IMPOSSIBLE
- Insufficient cash for ABSD + down payment
- Would need additional S$500,000+ in cash
Option 2: Sell First, Buy Later
Selling HDB:
- Expected sale price: S$480,000
- Outstanding loan: ~S$180,000
- CPF principal + accrued interest to return: ~S$220,000
- Net Cash Proceeds: S$80,000
Combined with existing savings:
- Total available: S$200,000
New Property Purchase:
- Down Payment: S$325,000
- BSD: S$38,600
- Total needed: S$363,600
- Shortfall: S$163,600
Result: ❌ STILL INSUFFICIENT
Decision: Defer Upgrade
Reasons:
- Insufficient cash reserves
- COVID-19 uncertainty (2020)
- Son only Primary 1, not urgent
- Better to accumulate more savings
Action Plan:
- Continue saving aggressively: S$3,000/month
- Pay off study loan by 2021
- Target upgrade in 3-5 years
- Monitor property market
Part 4: The Successful Upgrade (2023)
Updated Profile: Marcus & Rachel Tan (2023)
Ages: Marcus (41), Rachel (40)
Financial Snapshot:
- Combined Monthly Income: S$18,000
- Marcus: S$11,000 (Engineering Director)
- Rachel: S$7,000 (Manager)
- CPF OA Combined: S$280,000
- Cash Savings: S$320,000 (saved aggressively for 3 years)
- Study Loan: Fully paid
- Credit Record: Excellent, no late payments ever
- HDB Value: S$520,000
- Outstanding HDB Loan: S$150,000
New Target: Executive Condo in Serangoon
Why EC Instead of Private Condo:
- More affordable (~S$1,100,000 vs S$1,500,000+)
- Still eligible (income below S$16,000… wait, they exceed!)
- Actually not eligible anymore due to income ceiling
Revised Target: Resale Condo in Serangoon
Property Details:
- Price: S$1,400,000
- Type: 3-bedroom, 1,100 sqft
- Age: 12 years old
- Remaining lease: 87 years
Financial Strategy: Sell First, Then Buy
Phase 1: Selling HDB (March 2023)
Sale Process:
- Listed for S$530,000
- Sold in 3 weeks for S$525,000
- Timeline: 3-month completion
Financial Settlement:
- Sale proceeds: S$525,000
- Outstanding loan: S$150,000
- CPF refund (principal + interest): S$250,000
- Net cash: S$125,000
Post-Sale Position:
- Cash in hand: S$445,000 (S$320,000 + S$125,000)
- CPF OA: S$280,000 (but S$250,000 must be returned, leaving S$30,000 available)
- Temporary housing: Rented 3-room flat (S$2,800/month for 6 months)
Phase 2: Purchasing New Condo (June 2023)
Mortgage Application to DBS Bank
Loan Request:
- Property price: S$1,400,000
- Down payment: 25% (S$350,000)
- From CPF OA: S$30,000
- From Cash: S$320,000
- Loan amount: S$1,050,000 (75% LTV)
- Loan tenure: 25 years
- Age consideration: Marcus 41, can borrow until age 65 (24 years max)
Interest Rate Options Offered:
- 3-Month SORA + 1.0% (floating)
- Prevailing rate: ~3.8%
- Monthly: ~S$5,200
- 2-Year Fixed at 3.5%, then SORA + 1.0%
- Monthly: ~S$5,150 (first 2 years)
- Board Rate (legacy option)
- Current: 4.25%
- Monthly: ~S$5,600
- Not recommended
Chose Option 2: 2-year fixed for budget certainty
Bank’s Credit Assessment Process
Documents Required:
- Last 6 months payslips (both applicants)
- Latest CPF contribution history
- Last 2 years’ NOA (Notice of Assessment)
- Credit Bureau report authorization
- Bank statements (3 months)
- Property valuation report
- Option to Purchase
- Employment letters
Credit Bureau Check:
- Marcus: Clean record, no defaults, 3 credit cards (all paid on time), previous HDB loan fully settled
- Rachel: Clean record, 2 credit cards, no other loans
- Joint Assessment: No adverse records
Income Assessment:
- Marcus: S$11,000 fixed + S$15,000 annual bonus (averaged)
- Rachel: S$7,000 fixed + S$8,000 annual bonus (averaged)
- Assessed Monthly Income: S$19,900 (including averaged bonuses)
TDSR Calculation:
- New mortgage: S$5,150/month
- No other loans
- TDSR: 25.9% (well within 55% limit)
Loan-to-Value Assessment:
- Property age: 12 years
- Remaining lease: 87 years
- Borrowers’ age: 41 (youngest)
- Maximum LTV: 75% ✓ (standard)
Credit Risk Profile:
✅ EXCELLENT BORROWER PROFILE
Strengths:
- High stable income from established employers
- Long employment history (13+ years each)
- Clean credit bureau records
- Successfully managed previous property loan
- Low TDSR (25.9%)
- Substantial cash reserves remaining (S$125,000 after purchase)
- Strong CPF balances
- Both in professional/management roles
- No history of late payments or defaults
- Conservative loan amount relative to income
Risk Factors:
- Moderate (age 41, but not a concern)
- Industry risk: Acceptable (engineering/corporate)
Internal Credit Score (Bank’s Proprietary Model):
- Estimated: A+ Rating
- Similar to US credit score of 760+
Loan Approval Decision
Approved Amount: S$1,050,000
Interest Rate: 2-year fixed at 3.5%, then SORA + 1.0%
Tenure: 24 years (to age 65)
Lock-in Period: 3 years
Legal Subsidy: S$2,500
Fire Insurance: Required (annual ~S$150)
Mortgage Insurance: Recommended (declined by borrowers)
Additional Benefits Offered:
- Wealth management relationship privileges
- Priority banking access
- Free safe deposit box (1 year)
- Preferential rates for renovation loan if needed
Conditions:
- Maintain salary crediting to DBS
- Annual income review
- Property insurance must be maintained
Part 5: Post-Purchase Reality (2023-2025)
Monthly Financial Snapshot (Late 2023)
Income:
- Combined gross: S$18,000
- CPF contributions: S$3,240 (18%)
- Net take-home: S$14,760
Expenses:
- Mortgage: S$5,150 (35% of net income)
- Maintenance fee: S$380
- Property tax: S$200
- Utilities: S$180
- Insurance (life, property): S$250
- Groceries: S$800
- Transport: S$600
- Son’s enrichment: S$600
- Dining/entertainment: S$500
- Parents’ allowance: S$800
- Emergency savings: S$1,500
- Investments: S$1,000
- Miscellaneous: S$800
- Total: S$12,760
Buffer: S$2,000/month (comfortable but less than before)
The Interest Rate Shock (2025)
September 2025: Fixed Period Ends
New Rate: 3-Month SORA + 1.0% = 4.3%
New Monthly Payment: S$5,650
Increase: S$500/month (9.7% jump)
Family Discussion:
Marcus: “Should we refinance? UOB is offering 3.8%.”
Rachel: “We’re still within the 3-year lock-in period. Early redemption penalty is 1.5% of outstanding loan… that’s about S$15,000!”
Options Analysis:
Option 1: Absorb the Increase
- Continue with DBS
- Reduce savings/investments temporarily
- Wait for SORA to potentially decrease
- Action: Monitor for 6 months
Option 2: Negotiate with DBS
- Request rate matching (relationship pricing)
- Threaten to refinance after lock-in
- Possible outcome: DBS offers SORA + 0.85%
Option 3: Refinance After Lock-in (2026)
- Wait until lock-in ends
- Shop around for best rates
- Potential savings: 0.3-0.5% = S$150-250/month
Decision: Option 2 – Negotiate
Result: DBS agreed to SORA + 0.85% (effective rate: 4.15%)
- New monthly payment: S$5,550
- Savings: S$100/month
- Maintains banking relationship
Part 6: Lessons Learned & Future Planning
Key Insights from the Journey
1. Timing is Critical
- Attempting upgrade in 2020 would have failed (insufficient cash)
- Waiting 3 years allowed for proper preparation
- ABSD considerations significantly impact timing decisions
2. Cash is King in Singapore
- CPF alone is insufficient for upgrades
- Stamp duties and ABSD require substantial liquid assets
- Rule of thumb: Need 30-35% of property price in cash/CPF
3. Credit Profile Management
- Consistent payment history over 15 years paid off
- Banks reward long-term responsible borrowers
- Clean CBS record = better rates and terms
4. Income Growth Matters
- 177% income increase (S$6,500 → S$18,000) over 13 years
- Career progression enabled upgrade possibilities
- Dual-income households have advantages but also risks
5. TDSR is Manageable with Planning
- Keeping TDSR low (25.9%) provided flexibility
- Avoided overleveraging despite ability to borrow more
- Buffer crucial for interest rate changes
Current Position (October 2025)
Property Portfolio:
- Serangoon condo: Current value ~S$1,500,000 (7% appreciation in 2 years)
- Outstanding loan: ~S$1,020,000
- Net equity: ~S$480,000
Financial Position:
- Combined income: S$18,000/month
- CPF OA: S$150,000 (rebuilding)
- Cash savings: S$180,000
- Investments: S$100,000
- Net worth: ~S$910,000
Credit Profile:
- Excellent standing with all banks
- Multiple bank relationships
- Could easily qualify for investment property if desired
Future Considerations (2030 Vision)
Scenario A: Investment Property
By 2030 (Marcus 48, Rachel 47):
- Projected income: S$25,000/month
- Current property paid down to: S$900,000
- Estimated property value: S$1,650,000
- Cash accumulated: S$400,000
Could purchase:
- 2nd property (~S$1,000,000)
- ABSD: S$200,000 (20%)
- Would need S$450,000 upfront
- Feasible: Yes, but tight
TDSR Challenge:
- First property: S$4,800/month
- Second property: S$3,500/month
- Total: S$8,300/month = 33% of S$25,000
- Within limits, but significant commitment
Scenario B: Upgrade Again
Target: Larger condo or landed property (~S$2,500,000)
Strategy:
- Sell Serangoon condo (~S$1,650,000 by 2030)
- Outstanding loan: ~S$900,000
- CPF refund: ~S$350,000
- Net proceeds: ~S$400,000
Purchase Calculation:
- Down payment: S$625,000 (25%)
- BSD: ~S$73,600
- Total needed: ~S$700,000
- From sale: S$400,000
- Additional needed: S$300,000
- Feasible: With 5 years of aggressive saving
Scenario C: Maintain & Diversify
Conservative approach:
- Keep current property
- Pay down mortgage faster
- Build investment portfolio (stocks, bonds, REITs)
- Prepare for son’s university education (~2032)
- Build retirement fund
Most likely choice given:
- One child (comfortable space)
- Good location
- Desire for financial flexibility
- Retirement planning (Marcus 65 in 2048)
Critical Success Factors: A Banking Perspective
What Made the Tans’ Application Strong
From a Loan Officer’s View:
Quantitative Factors (70% weight):
- TDSR: 25.9% (Excellent – banks love <30%)
- Income stability: 13+ years employment each
- Income growth: Demonstrated upward trajectory
- LTV: 75% (Standard, not over-leveraged)
- Age: 41 (Peak earning years, 24 years to retirement)
- Cash reserves: S$125,000 post-purchase (9 months of expenses)
Qualitative Factors (30% weight):
- Credit history: 15 years, perfect record
- Previous loan: HDB loan fully repaid, no issues
- Employer quality: Established companies
- Industry sector: Stable (engineering, corporate)
- Educational background: Marcus has MBA
- Property choice: Reasonable (not overleveraged)
Risk Rating: Low Risk
Probability of Default: <0.5% (internal model)
Recommended: Approve at preferential rates
Red Flags That Were Absent
Banks would have been concerned if:
- ❌ TDSR >45% (theirs: 25.9%)
- ❌ Job changes in last 6 months (stable employment)
- ❌ Cash reserves <3 months expenses (they had 9 months)
- ❌ Credit card debts >50% limit (none)
- ❌ Recent credit inquiries >5 (normal activity)
- ❌ Declining income trend (growing income)
- ❌ Industry in decline (stable sectors)
- ❌ Multiple concurrent loan applications (single property)
- ❌ Renovation loans during application (none)
- ❌ Erratic bank account activity (stable patterns)
Comparative Analysis: What If Scenarios
Scenario X: If They Had Poor Credit Management
Changes:
- 3 credit card late payments in last 2 years
- Current credit card utilization: 80%
- One loan default in 2019 (paid off since)
Bank Assessment:
- Credit grade: B+ (instead of A+)
- Interest rate: SORA + 1.3% (instead of 1.0%)
- Additional requirements: More documentation
- Possible: Request for larger down payment (30% instead of 25%)
- Monthly payment difference: +S$200/month over 25 years = S$60,000 extra cost
Lesson: Clean credit saves tens of thousands
Scenario Y: If Marcus Was Self-Employed
Changes:
- Marcus runs own engineering consultancy (4 years)
- Income: S$12,000/month average (variable S$8,000-15,000)
- Rachel: Same (employed)
Bank Assessment:
- Income verification: Last 2 years NOA required
- Assessed income: Conservative 80% of stated (S$9,600)
- Combined assessed: S$16,600 instead of S$19,900
- TDSR: 31% (instead of 25.9%) – still acceptable
- Interest rate: SORA + 1.15% (0.15% premium for self-employed risk)
- Documentation: Extensive (business accounts, client contracts, tax returns)
- Approval: Yes, but more scrutiny
Lesson: Self-employed face higher hurdles
Scenario Z: If They Rushed in 2020
What would have happened:
- Forced to use Option 1 (buy first, sell later)
- Needed to borrow S$500,000 from family or take bridging loan
- ABSD: S$260,000 (non-recoverable stress)
- Financial strain during COVID-19
- Possible: Unable to sell HDB at expected price
- Risk: Default on one of the mortgages
- Credit damage: Would affect future borrowing
Lesson: Patience and timing prevent disasters
Conclusion: The Singapore Housing Finance Reality
Key Takeaways
1. Credit isn’t a score—it’s a track record
- 15 years of responsible financial behavior
- Every on-time payment builds invisible equity
- One late payment can cost thousands in higher rates
2. The Singapore system rewards planning
- ABSD creates forced discipline
- CPF provides foundation but not sufficient alone
- Cash accumulation is critical
3. Income stability > income level
- Banks prefer steady S$15k over variable S$20k
- Employment longevity matters immensely
- Career progression shows reliability
4. The upgrade journey takes time
- 13 years from BTO to upgrade (typical timeframe)
- Rushing leads to financial strain
- Market timing less important than financial readiness
5. Relationships with banks matter
- Long-term banking history provides leverage
- Negotiating power comes from being a quality borrower
- Best rates aren’t advertised—they’re negotiated
Final Reflection: Marcus & Rachel’s Success Formula
Financial Discipline:
- Lived below means (saved 15-20% of income)
- Avoided lifestyle inflation despite income growth
- Emergency fund always maintained
Credit Hygiene:
- Every single payment on time for 15 years
- Credit cards paid in full monthly
- No unnecessary loans
Career Investment:
- Marcus’s MBA (short-term debt for long-term gain)
- Both progressed in careers steadily
- Income grew 177% over 13 years
Strategic Patience:
- Didn’t rush into upgrade
- Waited for right financial position
- Avoided ABSD trap
Risk Management:
- Dual income (diversification)
- Insurance coverage maintained
- Never over-leveraged
The Tan family’s journey illustrates that in Singapore’s housing market, success isn’t about credit scores—it’s about building a comprehensive profile of financial responsibility, career stability, and strategic planning over many years.
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