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    buying-resale-hdb-flat-procedure-singapore

    Resale HDB flats have several advantages over BTO flats.

    You won’t have to wait 3-5 years, for one. Plus, older flats tend to be a lot more spacious.

    And with the generous HDB grants subsidizing the higher costs, buying a resale HDB flat is a very appealing option for the eligible homeowner.

    But before you start looking up listings, you want to make sure you’re well-prepared for every trick in the book.

    I mean, you don’t want to fork out the downpayment on your dream home only to find out it’s waay overpriced and you can’t afford the cash over valuation.

    So we’ll walk you through exactly how to buy an HDB resale flat – and all the traps to watch out for along the way.

    HDB Resale Procedure

     

    Step 1: Calculate Your Finances

    To figure out what kind of HDB flat you can afford, begin by doing a financial health check.

    Specifically, you’ll want to know things like:

    • How much you currently have in savings / CPF
    • How much of your take-home pay you currently save per month
    • How much of your income you can reasonably give up to pay off a home loan
    • How much debt you currently have (credit card bills, car loans, etc.)
    • How much in HDB grants you're entitled to

    You probably already know that it’s not just about covering the purchase price of the property. You also need to account for costs like legal fees, stamp duty, home insurance, renovation costs, and so on. (Read also: The REAL Costs of Buying Property in Singapore)

    For example, HDB homeowners spend an average of $44,000 - $67,000 renovating a resale flat – definitely not a small sum if you’re already cash-strapped from the purchase.

    Once you know all of the necessary figures, look into how much money you can borrow.

    HDB has a free tool to help you estimate the maximum home loan amount, but this is only a guide – the actual number may be much lower depending on your other financial obligations.

    Many banks like DBS and OCBC also have online loan calculators so you can estimate how much you’d get. Just bear in mind that with bank loans, you’ll need to pay a lot more in cash upfront.

     

    Step 2: Register Your Intent to Buy

    Registering your Intent to Buy with HDB serves a few purposes.

    One, it tells you whether you’re eligible to buy a resale flat in the first place.

    Two – and more importantly – it tells you the HDB grants you qualify for. You could potentially get up to $160,000 in subsidies for a resale flat, which shaves a good chunk off the purchase price.

    The Intent to Buy is valid for up to 12 months, which should give you more than enough time to find a suitable flat. (You can always reapply if you need more time though!)

    It’s free, instant, and available via the HDB Resale Portal here.

     

    Step 3: Source for Home Loans

    Here’s where a bit of research goes a loooong way.

    We have another resource on how to decide between an HDB vs bank loan, but in short:

    • HDB loans are more predictable, fuss-free, and have lower legal fees
    • Bank loans typically offer lower interest rates, but require you to be a lot more involved

    But there’s one other important note: make sure you get the HDB Loan Eligibility Letter (HLE) or the bank’s Approval In-Principle (AIP) before you put down any money for the flat.

    Why? Because you don’t want to be kiasu and end up making one of the most common buyer mistakes: paying the seller the non-refundable Option Fee and then realizing afterwards that you can’t get a big enough loan to cover the purchase price.

    The HLE and AIP both tell you the max loan you can take out and the monthly instalments you’ll have to make. They’re also free and non-binding, so you can always switch to a different financier or reapply if the documents expire before you find the right HDB.

    (Related Reading: Freelancers - Here's How to Secure a Larger Housing Loan.)

     

    Step 4: Check Out Your Preferred Areas

    You probably already have familiar haunts you’d prefer to live in, or perhaps certain preferences (e.g., staying near your aging parents, getting a flat with a long-enough lease). So this is where you start checking out the prices for your preferred areas:

    • Check on the prices for recently transacted flats in the area. This helps you get an idea of the real prices at which the units changed hands.
    • Look up current listings on marketplaces such as SRX or 99.co. Just note that unlike the recently transacted units above, these are usually marked up as sellers expect you to negotiate on the price.
    • Get a Comparative Market Analysis (CMA) from a real estate agent. This gives you a free and highly accurate price estimate based on a detailed analysis of past transactions, current listings, removed listings, and the unique characteristics of the unit(s) being sold.
    • Get property value estimates using free tools such as MyHomeValue. Like the CMA above, this gives you an accurate price estimate on the property you’re looking at, so you’ll know whether or not it’s overpriced.

    You’ll also want to check up on the ethnic and SPR quotas of the block(s) you’re looking at. HDB has a handy tool for this.

    Bonus Tip: Resale flats are also eligible for the Proximity Housing Grant if you’re staying within 4km of your parents/children. You can use this Distance Enquiry tool to check if your desired area is eligible for the extra subsidy. (Read also: The Complete Guide to CPF Housing Grants)

     

    Step 5: Decide Whether to DIY or Hire an Agent

    Getting an agent for the purchase isn’t a must, but it does help with things like:

    • Going through your finances to calculate exactly what you can afford
    • Uncovering “hidden gems” based on your criteria
    • Getting a CMA on shortlisted properties so you won’t be taken for a ride
    • Conducting background checks on the property/seller
    • Checking for potentially costly defects in units you’re interested in
    • Negotiating with the seller to structure a winning offer

    If you’re confident and willing to put in the time to handle everything on your own, then you can save quite a bit: the typical agent commissions for resale HDBs is 2% of the purchase price (i.e., $10,000 on a 500k flat!)

     

    Step 6: Go for House Viewings

    This is the fun part, but it also requires a fair bit of attention to detail.

    You’re not just looking at the amount of space you’ll have or the various amenities in the area. Rather, you’re checking out how livable the unit is.

    That means making sure the facing is right (tip: Southeast-facing units get the morning sun, but are shielded from the heat of the afternoon), that there are no signs of loan sharks hounding the unit, and that the flat is well-maintained.

    You might even want to schedule the house viewing sometime in the afternoon. That way, you can check on the noise level during the day and make sure that the unit isn’t a giant oven in the midday heat.

    You’ll also want to check for the following, since these will cost you a small fortune in renovation expenses:

    • Built-in furniture that may need to be torn out
    • Damaged tiles or flooring that will cost a ton to replace
    • Peeling paint (may indicate water seepage)
    • Wet patches of flooring (may indicate leaky pipes)
    • Rotten or termite-ridden wood (furniture, flooring, doorframes, etc.)
    • Poor toilet flushing power (may indicate clogged drains)
    • Rust-colored or “bloodstained” streaks on the walls (may indicate bedbugs)
    • Oddly shaped corners/rooms where standard furniture may not fit

    Don’t feel paiseh to poke around and look beneath the surface. Better safe than sorry – you don’t want to end up paying hundreds of thousands for a bug-infested nightmare of a home!

     

    Step 7: Get Option to Purchase (OTP)

    Found your diamond in the rough? Great! With your HLE or AIP in hand, it’s time to get the OTP from the seller. (Note: HLE’s are valid for 6 months, while AIP’s are typically only valid for 2-4 weeks.)

    You’ll have to pay an Option Fee in exchange for the OTP. The exact amount is determined by the seller, but it can be anywhere from $1 to $1,000.

    You can still back out after getting the OTP (but before exercising it), so if you want to do a thorough inspection of the flat, this is the time.

     

    Step 8: Request for Valuation

    You now have 21 days to confirm the purchase. But it isn’t just idle time: this is when you sort out exactly how you’ll be financing the purchase.

    If you’re getting an HDB loan, the HLE will suffice.

    If you’re getting a bank loan, you’ll need a Letter of Offer (LO).

    But whether you’re going for a bank or an HDB loan, you’ll still need to submit a Request for Value so that the loan institutions have a number to work with. You’ll have to do this by the next working day after the Option Date in the OTP, so don’t dilly dally!

    There’s a non-refundable $120 processing fee for the Request for Value. You can submit it at the HDB Resale Portal here.

    Hopefully, you’ve done your homework and looked up past transactions in the area, so the valuation figure won’t come as a shock. You want the price to be either at or below the property valuation: anything above, and you’ll have to pay the difference in cash.

    (That is, unless you’re looking for a move-in ready home. Expect to pay a premium if so!)

     

    Step 9: Exercise Option

    Once you’ve got the HLE or LO, you can go ahead and exercise the OTP. This time, you’ll have to pay an Option Exercise Fee.

    The amount depends on the seller, but the Option Fee + Option Exercise Fee shouldn’t go beyond $5,000. These make up your official deposit for the flat.

     

    Step 10: Submit Resale Application

    After that, it’s time to put in the paperwork to HDB. Hop on to the HDB Resale Portal and submit the buyer’s Resale Application.

    The seller will also have to submit a Resale Application on their end. Make sure you both submit it within 7 days of each other – otherwise, the application will be cancelled and you’ll lose the $40-80 admin fee!

    You’ll need the following details:

    • Address of the flat you’re buying
    • OTP details
    • Particulars of sellers
    • Your own particulars + those of any occupiers
    • Manner of holding (e.g., joint tenancy, tenancy-in-common)
    • Any housing grants you’re applying for
    • Where you’re getting your home loan, if at all
    • Whether you’re engaging HDB solicitors or private lawyers

    Now, if the seller needs more than 2 months to move out completely, they may ask you for a Temporary Extension of Stay here. It’s completely up to you whether you want to give it to them though, and they should reimburse you for the extra costs incurred.

     

    Step 11: Endorse Resale Documents & Pay Fees

    Once HDB accepts your application, they’ll review the paperwork to make sure everything is OK.

    Within 6 days, you’ll get an SMS from HDB telling you to log on to the Resale Portal and endorse the documents. You’ll have to pay the HDB resale Fees at the same time, so have your credit card ready.

    During this time, you’ll also have to book appointments with HDB or your bank of choice (whichever one you got the loan from). These appointments are to formalize the terms of the loan and check on the grant money you’re entitled to.

     

    Step 12: Inspect the Flat

    Now it’s mostly a waiting game – for HDB and for the seller to move out.

    At some point, HDB will arrange for technical executives to head over and inspect your newly-purchased flat. Their only job is to make sure that the seller hasn’t made any illegal alterations to the structure.

    But that also means that you’re on your own when it comes to the rest of the inspection. HDB won’t help you with the condition of the flat, so ideally you’d have done a thorough inspection waaaay before this point.

    After the seller moves out, you’ll need to inspect the flat and confirm that it’s vacant. This is also when you can check that everything listed in the valuation report is intact (built-in wardrobes and such).

     

    Step 13: Wait for HDB’s Confirm-Chop-Stamp

    From the time HDB confirms receipt of your Resale Application, it takes about 8 weeks for the application to be processed.

    Meanwhile, you’ll need to buy the mandatory fire insurance policy and bring the Certificate of Insurance to the final appointment.

    They’ll send you an SMS to arrange for this final appointment, at which point you…

     

    Step 14: Attend the Resale Completion Appointment

    Almost there!

    Print out a copy of the payment advice from the HDB Resale Portal: you’ll need this to pay off the remaining balance for the flat.

    It’s best to head over earlier and settle the bill at the Payment Office (level 3 of the HDB Hub). Afterwards, you’ll meet the Customer Relations Manager to sign a few documents and collect the keys from the seller.

    Aaand you've successfully purchased your very own resale flat! Well done!

     

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