Buying HDB Resale Flat
Are you thinking of buying an HDB resale flat?
The purchase of an HDB resale flat is the most expensive investment of a lifetime for most people and would need a long-term financial commitment. To help you obtain an ideal HDB resale flat within your affordability and budget, we list down the following key points for you to consider before you commit to buying a home.
There are various eligibility schemes under which you can buy an HDB resale flat:
- HDB Public Scheme – Buy an HDB resale flat with your family.
- HDB Fiancé or Fiancée Scheme – Buy an HDB resale flat with your fiancé or fiancée.
- Single Singapore Citizen Scheme – Buy an HDB resale flat as a single.
- Joint Singles Scheme – 2 to 4 singles buy an HDB resale flat jointly.
- Non-Citizen Spouse Scheme – Buy an HDB resale flat with your spouse (not an SC or SPR).
- Non-Citizen Family Scheme – Buy an HDB resale flat with your family members who is not an SC or SPR.
- HDB Orphan Scheme – Buy an HDB resale flat with your sibling(s) who are orphans and single.
- HDB Conversion Scheme – Buy adjoining HDB resale flats with your family. The HDB flats are 3-room or smaller and convert them into 1 unit. (Subject to approval).
You need to check if you are eligible for an HDB resale flat.
Eligibility Conditions That Apply To All Schemes
- There must be at least one Singapore Citizen or two Singapore PRs listed in the application for buying an HDB resale flat.
- For SPR household, there’s a requirement for all SPR essential occupiers and owners to wait for three years from the date of obtaining their SPR status before they can buy an HDB resale flat.
- HDB buyers need to fulfil the SPR quota and the EIP proportion requirements for the neighbourhood and block.
- Unlike buying a BTO from HDB Board, if you were to buy an HDB resale flat from the resale market, there is no limitation for the income ceiling.
- If you were to apply for CPF Housing Grants or HDB housing loans for your HDB resale flat purchase, you have to note the income ceilings.
- If you or any person listed in the HDB resale flat application owns an HDB flat, the HDB flat must be disposed of within six months of the HDB resale flat purchase.
- Suppose you or any person listed in the HDB resale flat application owns the private property, either overseas or locally; all private properties must be disposed of before or within six months of the HDB resale flat purchase. Also, you are not eligible for the CPF Housing Grant or HDB housing loan.
- Divorcees are required to produce the following for verification:
- Interim Judgment (previously known as Decree Nisi)
- Order of Court
- Final Judgment (previously known as Decree Nisi Absolute)
The Housing & Development Board will determine the actual approval upon buyers’ submission of the application and necessary supporting documents.
Buying a flat is a big financial commitment. You will need to carefully manage your cash and CPF savings and secure financing through either an HDB housing loan or a housing loan from a bank, if necessary.
Before committing to a flat, think through the following:
- What is your budget to purchase a flat?
- What are the other costs associated with the flat purchase?
- What other financial commitments would you have?
- How do you keep the cost of your purchase low?
There are several financial considerations you need to take note of that helps to work out a comprehensive financial plan:
- Costs and Fees for Buying HDB Resale Flat
- Cash Payment for Buying HDB Resale Flat
- HDB Resale Flat Down Payment
- Using CPF Savings
- Housing Loan
- CPF Housing Grant Scheme
- Enhanced Contra Facility
Better managing the financial planning for your resale flat purchase will help you determine the best suitable home choices.
How to go about buying your HDB resale flat? To purchase an HDB resale flat, you can either engage a salesperson to assist you or manage the transaction by yourself.
From planning your finances, start looking for an HDB flat, negotiation, application submission, attend HDB appointment, the extension of stay, until you move into your flat. Many unexpected factors will impact the ultimate buying experience. Therefore, it is crucial to understand the entire process.
Before you commit to buying an HDB resale flat, make sure you have enough time to make the necessary preparations.
It is essential to work out a comfortable housing loan plan within your affordability and budget. Do not overstretch yourself financially.
You can choose to get a housing loan from a bank or a housing loan from HDB to help you finance your HDB resale flat purchase. How much loan you can obtain depends on your age, income and financial standing.
Following are some of the considerations you need to take note of:
- HDB Loan for Resale Flat
- If you intend to get an HDB concessionary housing loan for your flat purchase, you must first apply for an HLE letter.
- You should request an HDB Loan Eligibility (HLE) letter before you start searching for a flat.
- You must obtain a valid HLE letter before signing the Option to Purchase.
- You will have to purchase the following insurance policies when you take an HDB loan:
- HDB Fire Insurance Policy
- Home Protection Scheme (if you are using your CPF savings to pay your monthly loan instalments)
- The validity period of the HDB Loan Eligibility (HLE) is six months from the approval date. It gives information on:
- Eligibility for an HDB housing loan
- Maximum loan amount
- Maximum loan repayment period
- Monthly loan instalments
- Amount of cash proceeds that you can use to pay for the next flat (if applying for a second HDB housing loan)
- HDB pegs the concessionary housing loan interest rate at 0.1% above the CPF Ordinary Account interest rate.
- If you are taking an HDB housing loan, you can later refinance the HDB resale flat with a bank loan.
- You and your essential occupiers need to meet all HDB Housing Loan Eligibility conditions:
- At least one buyer is a Singapore Citizen.
- You have not previously taken two or more housing loans from HDB.
- You have taken one housing loan from HDB, and the last owned property is not private residential property.
- Average gross monthly household income does not exceed:
- $14,000 for families.
- $21,000 for extended families.
- $7,000 for singles
- Buying a 5-room or smaller resale flat, or 2-room new flat in a non-mature estate
- Must not own or have disposed of any private residential property in the 30 months before the date of application for the HLE letter.
- Do not own more than one market/ hawker stall or commercial/ industrial property.
- Bank Loan for HDB Resale Flat
- You can consider financing your HDB resale flat with a housing loan from a bank regulated by the Monetary Authority of Singapore (MAS).
- If you choose to finance your HDB resale flat with a bank loan, a Letter of Offer must be obtained from the bank before exercising the Option to Purchase.
- If you take a housing loan from a bank, you will not be allowed to refinance your HDB flat with a housing loan from HDB.
- Please spend some time studying and reviewing the different loan packages. Weigh your options carefully before deciding on one that suits you the best.
- Interest rates differ across banks/financial institutions.
- Approach any bank to determine the loan amount you can get based on your current income and age.
- Mortgage Servicing Ratio
- All HDB-issued loans, and bank-issued loans for both HDB flats and ECs, have an MSR of 30%.
- MSR = Monthly Mortgage Obligation / Gross Monthly Income x 100% ≤ 30%
- If your monthly home loan repayment and your other mortgage obligations surpass the 30% MSR, you’ve got several options:
- You can try to extend the loan tenure so that you can lower the monthly home loan repayment.
- You can lower the property price quantum so that you can reduce the amount you borrow.
- You can increase the cash down-payment so that you can lower the amount you borrow.
- You can sell or reduce the repayments on any other properties so that you can free up the monthly income to use towards your new home loan repayment.
Equip yourself with enough housing loan information and options before committing to buying your home.
Singapore Government provides housing subsidies in the form of CPF grants to help you secure your HDB resale flat with a lesser financial burden.
You can use the CPF housing grant for the initial payment for the HDB resale flat purchase. It can help you with your cash flow, reduce your initial cash outlay, reduce the mortgage loan amount.
Following are the various CPF Housing Grant Schemes offered by the Government:
- CPF Housing Grant for Family – Eligible first-timer applicants (married/engaged couples or families), who want to buy an HDB resale flat, can apply for the Family Grant.
- CPF Housing Grant for Singles – Eligible first-timer applicants (single, aged 35 or above), who are buying an HDB resale flat, can apply for the Single Grant.
- Half-Housing Grant – Eligible first-timer applicants whose spouse / spouse-to-be had previously received a housing subsidy can apply for the Half-Housing Grant.
- Proximity Housing Grant (PHG) – Eligible HDB buyers who buy an HDB resale flat to live near or together with their parents can apply for the Proximity Housing Grant.
- Additional CPF Housing Grant (AHG) – Eligible lower to middle-income first-timer applicants (married/engaged couples or families), who are buying an HDB resale flat, can apply for the Additional CPF Housing Grant.
- Citizen Top-up – An SC/SPR household will qualify for the Citizen Top-Up when a qualifying household member becomes a Singapore Citizen.
- Top-up Grant – Recipients of a Singles Grant previously are now eligible for the Family Grant, will qualify for the Top-up Grant.
Please refer to the individual CPF Housing Grant Schemes for more information.
CPF Board will determine the actual approval and the amount only after the HDB buyers have submitted the application and necessary supporting documents.