The real cost of breaking up before your BTO flat is ready

Application stage	Financial costs	Non-financial costs
Before flat selection	$10	– One-strike against you; two strikes will result in one year suspension of first-timer priority. – Accumulated application chances reset to zero.
After flat selection but before signing Lease of Agreement	Option Fee ($500 to $2,000, depending on flat size)	– Disbarred from applying for new flat for one year. – Accumulated application chances reset to zero.
After signing Lease of Agreement but before key collection	– 5 per cent of the flat’s purchase price– Stamp duties	– Disbarred from applying for new flat for one year. – Accumulated application chances reset to zero.
After key collection	– Return of flat to HDB in return for compensation, plus other miscellaneous expenses – Renovation and furnishing costs	– Disbarred from applying for new flat for a number of years.

Source: https://www.hdb.gov.sg/residential/buying-a-flat/new/buying-process/changes-and-cancellation

Before flat selection

Financial costs: $10

Non-financial costs: Possible suspension of first-timer priority

Once you’ve chosen a BTO project and registered your interest, you will be able to ballot for a chance to purchase a unit in the BTO project. If your ballot queue number is low enough, you will be invited to select a unit. 

You’ll need to pay an application fee of $10 at this stage, which is strictly non-refundable.

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If you have been invited to select a unit, but decide not to go ahead with your BTO application, your financial costs are limited to just the $10 registration fee. 

In terms of non-financial costs, you may lose your first-timer privileges designed to increase your chances of getting a unit.

This only happens if you fail to select your unit at least twice, so if this is your very first time applying, cancelling at this stage won’t be too much of an issue. 

However, if you persist in not selecting a flat despite being invited to do so, suspension of your first-timer privileges will be extended.

After flat selection but before signing Lease of Agreement

Financial costs: $500 to $2,000, depending on flat type

Non-financial costs: One year disbarment from flat application, loss of accumulated chances

After you’ve selected your BTO unit, you will need to pay the Option fee, which varies according to the size of your flat, as follows:

Size of BTO flat	Option fee
2-room Flexi	$500
3-room	$1,000
4- or 5-room, and Executive flats	$2,000

The Option fee (or more properly, Option-to-Purchase fee) secures your right to exercise your option and purchase the unit you have selected.

As such, if you decide not to exercise your option (i.e., by cancelling your application), you will forfeit the Option fee, which can cost up to $2,000.

Now, in terms of non-financial cost, you will be disbarred for one year from applying for or to be included as an essential occupier of ANY HDB property, even resale flats. 

Which means, if you want to get your own place to stay after your breakup, and can’t wait out the one year disbarment, your only option is to buy a private property, or turn to the rental market.

Also, if you had accumulated any additional ballot chances* stemming from past failed applications, these will be reset to zero.  

(*Note: To help even the odds, repeated unsuccessful attempts to get a BTO in non-mature estates will grant you additional ballot chances for your next application.)

After signing Lease of Agreement but before collecting key

Financial costs: 5 per cent of the flat’s purchase price, stamp duties

Non-financial costs: One year disbarment from flat application, loss of accumulated chances

This stage is when cancelling your BTO application gets expensive, so do your very best to work things out, or get out before you get to this stage.

Cancelling your application after you have signed your Lease of Agreement will cost you to forfeit the 5 per cent of the price of your unit. Assuming the property’s price is $250,000, you will be losing $12,500.

Additionally, you will need to forfeit any stamp duties paid, which is calculated thusly:

Purchase price of BTO flat	Stamp duty
First $180,000	1 per cent
Next $180,000	2 per cent
Next $640,000	3 per cent
Remainder	4 per cent

Again, if your unit costs $250,000, the stamp duty will be $2,500 + $1,400 = $3,900 (or the cost of a two-week holiday to soothe your broken heart).

However, you may apply to IRAS for a refund of the stamp duty paid on your cancelled flat.

As for non-financial costs, you’ll need to put up with a 1-year disbarment, and lose any accumulated ballot chances, as before. 

After key collection 

Financial costs: Return of flat to HDB in exchange of compensation, renovation and furnishings

Non-financial costs: Possible disbarment from new flat application lasting several years

When it comes time to collect your keys, you will need to produce a marriage certificate. However, if you decide to break up and annul your marriage, you will be required to surrender your flat to HDB.

In exchange, you will receive a sum of money as compensation, the amount of which is determined by HDB. 

While it is unclear what the prevailing compensation rate is, it is unlikely to make a meaningful difference in the financial losses you’ve racked up so far. Hence, you shouldn’t look upon the compensation as a “Get out of jail free” card.

Especially since by this stage, you likely would have put down a deposit for renovation works, and purchased some furnishings and household items. All these can add up to a tremendous amount (see below).

On top of that, there’s also a heavy non-financial cost to bear.

Giving up your HDB flat at this stage can cause you to be disbarred from applying or owning HDB properties for up to a few years! (As if getting shut out from the cold barren wasteland that is your ex’s heart wasn’t tragic enough.)

The real cost of breaking up after you get your BTO

Let’s have a look at how much breaking up after applying for a BTO flat could cost you, using a 4-room flat with a purchase price of $250,000 as an example.

Item	Cost
BTO application	$10
Option fee	$2,000
5 per cent of purchase price	$12,500
Stamp duties*	$3,900
Renovation downpayment (20per cent)	$6,000
Furniture and household items	$4,000
Total:	$28,410

*Note: May apply for refund from IRAS.

So breaking up and cancelling your BTO could cost you as much as $28,410 (before any compensation HDB deems fit to provide) – and this is just a bare-bones estimate.

We haven’t even included other potential costs, such as wedding photography, downpayment for a wedding banquet, wedding rings, etc.

So, the lesson is clear, kids. Before you go through with the marriage proposal with the person currently sharing your Netflix account, take a moment and ask yourself whether you are really going through with the marriage.

Your future – and bank account – depends on it in more ways than one.

This article was first published in SingSaver.com.sg.