For many HDB upgraders, buying a resale condo before (or without) selling their HDB seems like the ideal scenario.

For one, the timeline is a lot easier to plan. You also won’t have to worry about possibly being homeless in between selling your flat and getting the new place.

Best case scenario, the rental income from your flat can help to service the mortgage for your condo.

But that’s assuming you can afford it.

If that’s still a question, we can help. Today, we’ll go through a checklist of three criteria you need to pass to even think about buying a condo before selling your HDB:

 

Criteria 1: You Have the Cash for the Upfront Payments.

There are three large cash payments you’ll need to note:

1. 25% Down Payment
2. Buyer Stamp Duty
3. Additional Buyer Stamp Duty

A. Down Payment

Unlike the $5,000 deposit you paid for your HDB, you’ll need 25% of the purchase price in cash for a resale condo. (Source: MAS) You can’t even use CPF for any of it if you’re still paying off the home loan for your flat.

For a $1.3 million dollar condo, that’s a $325,000 down payment when you exercise the option.

(It’s a different story entirely if you no longer have a mortgage to service. You’ll only pay 5% in cash as a down payment then.)

B. Buyer’s Stamp Duty (BSD)

What many people forget when buying a condo is that the BSD payable is much larger. And for a resale condo, you’ll need to pay stamp duties in cash first before applying for reimbursement from CPF later on. Your lawyer will collect the stamp duty when you exercise the option.

Here’s the latest table of rates from IRAS:

Purchase Price or Market Value, whichever is greater	BSD Rate (Residential)
First $180,000	1%
Next $180,000	2%
Next $640,000	3%
Remaining Amount	4%

That means on a resale condo that costs $1,300,000, you’ll pay:

(1% x $180,000) + (2% x $180,000) + (3% x $640,000) + (4% x $300,000) = $36,600 in Buyer Stamp Duty.

Read also: 7 Spacious 3-Bedroom Condos Near MRT Under $1.5K PSF

C. Additional Buyer’s Stamp Duty (ABSD)

ABSD is due at the same time as BSD. You can apply for an ABSD remission later on if you fulfil certain criteria, but you’ll pay it in cash first. (More on the remission in a bit.)

Assuming you and your spouse (or whomever you’re buying the resale condo with) are both Singaporean, you’ll pay 17% ABSD on either the purchase price or market value of the resale condo, whichever is higher. If one of you is a PR, you’ll pay 25% instead.

With the average resale condo, the downpayment + BSD + ABSD can easily be upwards of half a million dollars.

 

Criteria 2: You Can Afford to Forfeit the ABSD Remission.

Some HDB upgraders assume that the ABSD remission is easy enough to secure. All they need to do is sell their flats soon after buying the resale condo, right?

The truth is, you need to prepare yourself financially in case you don’t get the ABSD refund. There are a number of risks that may cause you to lose it.

If you don’t have a healthy buffer without it, buying the resale condo before selling the HDB might not work for you.

Example #1: Buyer Disqualifies Themselves

In hopes of buying another condo later on, some buyers choose to decouple for the purchase of the first resale condo. Unfortunately, this disqualifies them for the refund.

One of IRAS’s conditions is that the married couple must purchase the second property under both their names only. Sadly, there are agents who forget this clause and continue to promote decoupling.

(IRAS is very strict about not giving extensions, even if you got misleading information from your agents or lawyers.)

Example #2: You Can’t Sell Your Flat In Time.

Since you only have 6 months to sell your HDB after buying the resale condo, it makes your timeline rather tight. This is especially so if you intend to do extensive renovations and move into the condo before you sell the flat.

What if there are renovation delays?

And what if you’re holding out for the best possible offer for your flat?

In some cases, you might be forced to sell below market rate just to secure your ABSD refund. But there’s no guarantee you’ll find a buyer even if you lower your price.

Other Requirements

For married couples, other conditions for the ABSD refund include:

1. The married couple must include at least one Singapore Citizen. 
2. You apply for the refund within 6 months after selling the flat (starting from when the buyer exercises the OTP). No putting off the paperwork, folks.
3. You haven’t purchased or acquired any other residential property since buying the resale condo. This is relevant particularly to those likely to inherit properties.
4. The couple remains married and there is no change of ownership for the resale condo at the time of HDB flat sale. 

As with any investment, know the risks and budget accordingly.

 

Criteria 3: You Can Afford a Smaller Loan.

This only applies if you’re still paying off the home loan for your HDB. If you’re taking out a second loan, your loan-to-value (LTV) ratio is capped at 45% for a 30-year tenure.

If the loan tenure is over 30 years or the loan period extends past your 65th birthday, it’s capped at 25%.

Following our earlier example, you can borrow a maximum of $325,000 if you’re purchasing a $1,300,000 condo. That leaves you having to come up with almost a million dollars in cash or CPF.

Don’t forget the Total Debt Servicing Ratio (TDSR). If you have a car loan or any other form of debt, the new home loan + existing loans are all capped at 55% of your income.

(To recap: TDSR is calculated based on Total Monthly Debt Obligations as a percentage of Gross Monthly Income. If your Gross Monthly Income is $10,000, you’ll be capped at $5,500 for your total monthly debt payments.)

 

For Most, Selling HDB First and Buying Condo After is the Way to Go

For most HDB upgraders, the less risky and stressful route is to sell their HDB flat before they buy a condo unit. You can take advantage of HDB’s Extension of Stay facility (Read more: Extension of Stay HDB: Traps to Avoid to Protect Both Sides) to create a buffer in your timeline.

Even if you do have to arrange for some short-term accommodation, it will probably end up costing you less than trying to buy a condo unit before selling your HDB flat.

 

Still need property advice? Get in touch with us.

If you’re selling and buying a resale HDB at the same time, managing your cashflow is tricky. Given the number of steps, it’s hard to know what you need to set aside during the HDB resale payment timeline.

When do you get the sale proceeds so you can make an offer for the new flat? And how much cash do you need to set aside for things like buyer stamp duty?

Read also: Selling and Buying HDB At the Same Time (How to Plan Your Timeline)

This article will cover all the payments that come up – and when – that you need to prepare for as both a seller and buyer.

We’ll answer questions like:

• How much deposit to pay for HDB resale
• The cash you’ll need to have on hand
• What to pay when buying a resale HDB

and more.

 

A Summary Overview of the Costs to Expect

We covered the key phases of simultaneous selling and buying HDB in How to Plan Your Timeline, highlighting points like when to start looking for your new flat while completing the sale of your old one.

We’ll use the same four phases to break down the incoming and outgoing cashflow:

 

Phase 1 & 2: Checking Eligibility, Registering Intent, and Issuing the Option to Purchase

The first phase of this process has fewer transactions. You’ll be focused on styling and staging your flat for viewings while waiting for potential buyers.

Once a buyer requests an OTP, things start to really progress. You’ll need to keep track of your cashflow as more fees are just up ahead.

Read also: How to Sell HDB – 5 Lessons We Learned From Record-Breaking Flat Sales

Incoming Payments

Deposit from Buyer: <= $5,000. Once you’ve found a buyer, you’ll receive a deposit of no more than $5,000. This comprises the Option Fee ($1 – 1,000) and Exercise Fee ($1 – $4,000) and is up to you to set. Save this to pay for the deposit for your next flat.

Outgoing Payments

As a seller, you won’t have anything to pay at this point. 

But you’ll need a private conveyancing lawyer for the sale of your HDB if you want to expedite the timeline, so start getting quotes here. Expect them to be in the ballpark of $1,300 to $2,000.

(Going with HDB conveyancing officers may add another 15 to 19 weeks to the entire selling and buying process, since they can usually only process the HDB Resale Application after your CPF has been refunded.)

 

Phase 3: Resale Application Submission + Shopping for a New Home

Phase 3 is when you start sorting out your home loan, shortlisting possible new homes, and getting the necessary cash ready:

Incoming Payments

None!

Outgoing Payments

Deposit for New Flat: <= $5,000. Once you’ve found a flat you like, you’ll need to pay a cash deposit for the flat. Same as your buyer, you’ll make this payment in two stages within a span of 21 days. First is the Option Fee (S$1-1,000) and then the Exercise Fee (S$1-4,000). Combined, this amount will not exceed S$5,000.

Request for Valuation Fee: $120. This is assuming you need a home loan. If you’re paying for the next flat all in cash, you can skip this. By the next working day after getting the OTP from the seller, you’ll submit a Request for Valuation to HDB. You’ll pay $120 (inclusive of GST) to HDB.

Resale Application Fee: $40 – 80. You’ll also need to pay a non-refundable Resale Application Fee for the sale of your current flat. The market practice is to submit the Resale Application 30 days after the buyer exercises the OTP, but this is negotiable if you need more time. HDB determines the application fee based on the size of your flat:

1- and 2-room flats	3-room and bigger
$40	$80

 

Admin Fee for Extension of Stay (If Applicable): $20. If you’re selling and buying a flat at the same time, you’ll likely need to request a Temporary Extension of Stay. Technically the buyer pays this admin fee when submitting the Resale Application, but be prepared to compensate them for all the costs associated with the extension.

Also read: Extension of Stay HDB: Traps to Avoid to Protect Both Sides

 

Phase 4: Buying Your New Home + Completing the Sale of Your Old Home

The last two months of the process are when the bulk of the payments take place:

Incoming Payments

Cash Proceeds for Sale of Flat, If Any: On or before the Resale Completion Appointment, you’ll get the cash proceeds as a cashier’s cheque after the deduction of loan repayments and CPF refunds. (If the deductions are more than the sale proceeds, you’ll need to top up in cash.)

CPF Refunds: If you used CPF to buy your old flat, this will be refunded to your account two weeks after the Resale Completion Appointment. You can only use the refunded CPF to pay for your new flat a week after that, so plan your timeline accordingly.

Outgoing Payments

As the Seller

Property Tax: If you haven’t already, you’ll need to pay property tax for your HDB flat up until the end of the year.

Service and Conservancy Charges (S&CC): ~$20 – 110. You’ll continue paying this for your old flat until the day of completion.

Service Termination/Moving Costs (If Applicable): In some cases, you may have to pay an early termination or relocation cost if you’re still under contract for utilities, internet, or other services. The amount payable depends on the contract you signed, but the costs are usually no more than a couple hundred.

Moving Costs: ~$300 – 1,000. The Resale Completion Appointment is usually about 8 to 12 weeks after you submit the Resale Application. You’ll need to move out of your old flat by then so the buyers can take vacant possession of the flat after the appointment.

Private Conveyancing Lawyer Fees: $1,300 – 2,000. This could include a number of items such as title searches, caveats, registration and microfilming, and the discharge of mortgage (if any). Payable at the law firm prior to the Resale Completion Appointment using cash or CPF.

Property Agent Commission: 1 – 2% of the Sale Price, payable at the Resale Completion Appointment. (The standard market rate is 2%, but Bluenest charges just 1%.)

 

As the Buyer

Resale Application Fee: $40 – 80. You’ll need to submit another Resale Application as the buyer along with the application fee.

Initial Payment: 15 – 25% of Resale Price or Value of the Flat, whichever is lower. Payable using cash, CPF, or a mixture of both after endorsing the resale documents about four to five weeks after submitting the Resale Application.

This is only applicable if you’re using HDB’s conveyancing officers instead of a private lawyer. If you’re using the latter, they’ll release the CPF funds before the Resale Completion and you won’t need to worry about having the funds long before the CPF refunds come in.

Mortgage Stamp Duty (If Applicable): Also known as Mortgage Duty, you’ll pay a maximum duty of $500 on the loan for the new place. (Read more from IRAS here.)

Buyer’s Stamp Duty: You’ll get approval for your Resale Application about a month before the completion of the sale. You’ll have to pay Buyer Stamp Duty within 14 days of the approval letter, either in CPF (if you have enough) or in cash. If you don’t have enough CPF at the time, you can pay in cash first and apply for a reimbursement from CPF later. 

Here’s how to calculate BSD:

Purchase Price or Market Value of Property	Buyer Stamp Duty Rate
First $180,000	1%
Next $180,000	2%
Next $640,000	3%
Remaining Amount	4%

 

For example, if you’re buying a resale flat for S$620,000. You would pay:

$1,800 (1% x $180,000) + $3,600 (2% x $180,000) + $7,800 (3% x $260,000) = $13,200 total.  

You can use IRAS’ Stamp Duty Calculator here.

Private Conveyancing Lawyer Fees: $1,800 – 2,500. Settled either in CPF or cash with a trip down to the lawyer’s office before the completion of the purchase.

Conveyancing Fees (HDB): If you chose to use HDB’s conveyancing instead of private lawyers, you’ll need to pay legal fees to HDB. You can use HDB’s Legal Fee Calculator to find out how much you need to pay. (Bear in mind that HDB conveyancing officers can usually only process your Resale Application after your CPF funds are back in your account, so this will extend your home purchasing journey considerably.)

Cash Balance of Purchase Price: If any part of the purchase is not covered by the home loan or CPF, you’ll need to top up the balance in cash. Take out a cashier’s order at least a week before the Resale Completion Appointment and bring it with you on the day of.

Renovation Costs (If Applicable): Congrats on your new place! Now you’ll have to do it up nicely…

Fire Insurance: Max of $8.10 for a 5-year Premium. This is mandatory if you’re taking a loan from HDB.

Home Protection Scheme: Amount Varies. You’ll need this if you’re using CPF to pay off your home loan, but it’s optional if you have private life insurance or mortgage-reducing insurance that can cover the oustanding home loan. Premiums are automatically deducted from your CPF OA.

Service and Conservancy Charges (S&CC): ~$20 – $110. You won’t have to pay this at the Resale Completion Appointment, but you do need to state how you’ll pay the first month’s fees.

Apportioned Property Tax: At the Resale Appointment, you’ll pay the seller an apportioned amount of property tax (pro-rated based on when during the year you’re buying the property).

 

Still need help figuring out your cashflow with the HDB selling and buying timeline? Get in touch with us.

Bridging loans can be a fast way to get cash for a new property, especially if you’ve got your eye on something specific.

But they come with their own terms – some of which aren’t obvious from the limited information available on official bank websites.

So what do you have to watch out for with bridging loans? Today, I’ll cover 7 misconceptions about them:

1. I can apply for a bridging loan from any bank with the best rates.
2. I can use the bridging loan to cover any costs while selling and buying my new property.
3. I can use CPF to repay my bridging loan.
4. I can apply for the bridging loan without selling my existing property.
5. I don’t need income to apply for a bridging loan.
6. It makes sense to maximise the amount I can borrow through the bridging loan.
7. Bridging loans from different banks are all the same. Since they’re all regulated by MAS, I don’t need to compare them.

1. I can apply for a bridging loan from any bank with the best rates.

Not quite. Think of bridging loans like an add-on to a home loan package: in most cases, banks won’t give you a bridging loan unless you’re also getting a home loan with them.

That means you’re stuck with whichever bank you’re getting the housing loan from. Most banks also won’t post their bridging loan rates online, so it’s hard to compare without talking to them. If you think you’ll need both, be sure to ask about their bridging loan rates when you’re applying for the housing loan.

2. I can use the bridging loan to cover any costs while selling and buying my new property.

This depends on the bank. OCBC explicitly states, for example, that “you must only use the bridging loan for payment towards the deposit or downpayment for the property or the legal and stamp duty fees connected with buying the property.”

That means you can’t use it for things like renovation costs or emergencies.

The DBS bridging loan has no such stipulation in their terms and conditions, though technically you’re still only supposed to use the funds for the downpayment.

That said, bridging loans are more expensive with their higher interest rates (usually between 4-6%). It’s also got a short tenure with little to no flexibility in the repayment window, so you don’t want to jeopardise your ability to repay by using the funds for something else.

Your best course of action is to make a list of all the costs you’ll incur with the new property and make sure you have enough cash on hand to cover everything. If you don’t have a comfortable buffer, you might be better off lowering your budget for the new place.

 

3. I can use CPF to repay my bridging loan.

Sure, you can use CPF to pay off the principal loan amount. However, you’ll have to make any interest payments in cash on a monthly basis.

 

4. I can apply for the bridging loan without selling my existing property.

Nope. Bridging loans are contingent on a few things:

• You have an existing property to put up as collateral
• You’ve sold your existing property and can provide proof (in the form of a signed OTP or S&PA)
• A legally-binding letter saying that your sale proceeds will go toward paying off the loan before they return to your CPF or bank account

 

5. I don’t need income to apply for a bridging loan.

Technically true: most banks require just an exercised Option to Purchase or signed and dated Sale & Purchase Agreement showing that you’ve sold your existing property.

But in practice, you can only get a bridging loan on top of a housing loan – and the housing loan requires proof of income (or ability to repay).

 

6. It makes sense to maximise the amount I can borrow through the bridging loan.

Financially, it makes the most sense to borrow as little as possible via the bridging loan.

Compared to housing loans, bridging loans have higher interest rates – sometimes double or triple. The much shorter tenure of 6 months or less also means there isn’t much flexibility on repayment, so it’s best to only borrow what you’re sure you can repay.

 

7. Bridging loans from different banks are all the same. Since they’re all regulated by MAS, I don’t need to compare them.

Although bridging loans are regulated products, banks still offer them at different price points while still complying with MAS requirements.

For example, the POSB bridging loan has an interest rate of 4.25% per annum. There’s also a late payment fee of “5% above DBS Prime Rate on the overdue amount.”

On the other hand, the Standard Chartered HDB Bridging Loan has an interest rate of 4.475% per annum. (Both figures are accurate as of 5 Aug 2022.)