Buying a Resale HDB flat

HDB Resale Flat - Where to start

HDB Resale Flat Prices are coming down. Want to buy one but no idea where to start? 

With HDB prices slowly coming down and COV (Cash Over Valuation) almost non-existent in a number of HDB estates, it's no secret that buyers have more choices when looking for a flat. Although not all of the 1 million HDB flats in Singapore are up for sale, sales listings on property portals like Propertyguru and 99.co show that there is still a substantial number for you to choose from. 

But unlike a BTO, where the process is more straightforward and you deal directly with HDB, many buyers, especially first time ones find it confusing to purchase a resale HDB flat. Not only do you have to deal with sellers who obviously have their own agenda, you are not sure if the seller's agents have your best interests at heart.

So what's a buyer to do? Preparation and research helps of course.

Based on the questions that first time buyers normally ask, we've written the article below. If you have any questions that's not answered, feel free to send us an email or to drop us an sms or whatsapp msg.

Low COV does not mean $0 COV. Check out our article here.

Resale HDB Flat with no COV $0

This article is meant for first time buyers who are not sure of the processes of buying a resale HDB and the cost involved. If this is not your first time and you are intending to upgrade or downgrade, you will need to take note of things like the sales proceeds, CPF refund as well as the loan needed for your second flat. ( We'll write about that soon!)

HDB Resale: Where do I start?

Step 1) Determine your Eligibility to Purchase a HDB Flat.

You will need to check if you are eligible to purchase a HDB Flat. This is separate from the eligibility to get a HDB Loan. There are instances where you can buy a HDB flat but you are not eligible for a HDB Loan. ( Reasons can include income level, previous ownership in private property etc.  If this is the situation you are in, you can opt for a bank loan to finance your hdb flat)

You can check your eligibility here. 

You can purchase a HDB flat if you fall under any of these schemes

  • Family scheme
  • Fiancee/Fiance Scheme
  • Single Singaporean Citizen Scheme
  • Joint Singles Scheme
  • Non-citizen Spouse scheme
  • Non citizen family scheme
  • Orphan Scheme

You can get more details about each scheme here. 

Step 2)  Find out how much downpayment do you need.

The amount of downpayment you need depends on the type of loan that you are eligible for.

i) HDB Loan

If you are eligible for a HDB Loan – you need to pay a downpayment of 10%, which you can pay entirely from your CPF.  [If you don’t have enough cpf and you qualify for grants you should be able to pay for it from the grants]

i) Bank Loan

If you are not eligible for a HDB loan, you will need to take a bank loan.

If you take a bank loan, you will need to pay a 20% downpayment for the HDB flat, of which 5% MUST be in cash, and the other 15% in CPF and/or cash.

Step 3 ) Find out if you are eligible for grants

There is an income ceiling to receiving grants from the Government. Typically if you are a first timer and you are not able to receive a HDB loan because your combined income is too high, you probably wont be able to receive the grants to buy a HDB flat as well. (If that is the situation you are facing, you might still be able to get a first timer grant when you purchase an executive condo)

These are the main grants that Singaporeans typically get when purchasing a HDB resale for the first time.

You can read more about the HDB Resale grants on the HDB website.

Grant Type

Amount

First Timer Grant

$40 000 - $50 000

[$40 000 for 5-room or larger flats,

$50 000 for 4 room or smaller flats]​

Proximity Grant

$20 000

Additional Housing Grant (AHG)

$5000 - $40 000 
(depending on your income)

Singles Grant

$25 000

First Timer grant

From our course of work, this is the most common grant taken or requested by young married couples or those about to get married ( Fiancée / Fiance Scheme).

This is a $40 000 - $50 000 grant which can be used for the downpayment or to offset your loan (i.e. you take a smaller loan amount).

If your partner has already previously enjoyed a grant, you will be eligible for half of the grant (i.e. $25 000)

Proximity grant 

Previously, those who qualify for the first timer grant and choose to live close to their parents, (within 2 km or in the same town) will be able to get an additional $10 000, making it a total of $40 000 in grants. This scheme has been changed to the proximity grant.

The proximity grant is $20 000 which increases the total grant to $70 000 (i.e. $50k first timer and $20k proximity grant).

The terms of this grant was also improved. It is not only restricted to first timers; everyone who wants to move closer to their parents are able to take this grant once in their lifetime.

Note that Singles are eligible to half of this grant if they buy a house WITH (not near) their parents.

Additional Housing Grant (AHG)

The AHG is meant to assist lower income families (i.e. total monthly income must be lesser than $5k) and the amount you receive will depend on your total monthly income.

The higher your salary, the less AHG you will receive. For e.g. a household earning $4999 will receive a grant of $5000, and a household earning $1500 or less will get a $40 000 grant.

Single Grant

Singles are able to obtain half the first timer grants i.e. $25 000 when they buy a 4-room resale flat or  $25 000 if they buy a 5 room one. This amount is also the same for Singaporeans with Non-citizen spouses.

Step 4 ) Determine your monthly repayment amount

Another question which we often get is, “ Is my CPF enough to pay for my monthly flat mortgage payment?”. The answer to this question depends on the amount of loan you take and the monthly payment associated with that loan.

When you receive your HLE ( Housing loan eligibility) letter from HDB, there would be 2 details that you need to take note of :  

1) Maximum Loan amount  

(This is the loan amount, not the maximum price of the flat that you are eligible to buy)

2) The monthly repayment amount.

These 2 items are highlighted in the picture below. 

The monthly repayment amount (i.e. no 2) shows how much you will need to pay if you take the full loan amount as indicated in Number 1. To determine if you need to top up cash monthly, you need to check your monthly CPF contribution to your CPF OA ( Ordinary Account).

If your monthly repayment amount is more than your monthly CPF contribution, you will need to top up the cash difference. If this monthly repayment amount is lesser than your CPF OA contribution, you wont need to top up cash monthly.

However, please take note that there is a limit as to how much CPF you can use to pay for the resale flat over the entire 25 years. You can read more about the valuation limit on the HDB website.

Step 5 ) Other things to take note of

i) Stamp Duty + legal fees.

Everyone purchasing a property, whether it is private or HDB will have to pay stamp duty and legal fees. You can calculate stamp duty by going to this page on the IRAS website. This can be paid using your CPF funds.

You will also need to pay legal fees for your transaction. If you are using a HDB loan, you can opt to use a HDB lawyer and your legal fees will be a few hundred dollars. You can use CPF for this as well. 

If you use a bank loan, you will need to hire a lawyer and the legal fees will cost you a few thousand dollars. You can use CPF for this as well. 

ii) Do I need any cash to purchase a resale HDB Flat? 

You might want to read more in our article " HDB Resale : Does $0 COV mean no cash upfront?"

Resale HDB Prices : $0 COV

 

 

 

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Siti Zubeidah is a Marketing Director with ERA Realty Network Pte Ltd. (CEA No.: R050625J) She has a Bachelors Degree in Informations Communications and Sociology from the National University of Singapore (NUS) and a Masters of Mass Communications from Nanyang Technological University (NTU). With vast experience in the HDB market, Private and Landed Properties in Singapore, she is confident that she can assist you to make the correct decision regarding the purchase of your dream home as well as to get you the best price on the sale of your property. She can be contacted at 96918885 or at askus@propertyrocking.com.