HDB Resale
What are the general eligibilities and conditions governing the purchase of a HDB resale flat?
The applicant for the HDB resale flat must:
- Be a Singapore citizen or permanent resident and be at least 21 years old; – Apply with a family nucleus; – Be purchasing a resale flat in an area where his approved ethnic ratio in the neighbourhood/ block is not exceeded. The term “family” is defined to include only persons who are in direct marital or blood relationship with the applicant and who can be accepted as forming a proper family nucleus. A single above 35 years old can apply for a resale 3-room HDB flat in designated areas.
What are the financing options available?
If you are a citizen applicant who is a non-private property owner, the HDB mortgage loan interest rate is pegged at 0.1% point above the prevailing CPF Ordinary Account interest rate computed on a half yearly rest basis. This interest rate is revised quarterly in January, April, July and October each year, in line with the revision in CPF interest rate. From 1st January 2003, HDB no longer grants market interest rate loans to flat buyers, and those not eligible for the concessionary loans will have to obtain market rate loans from the commercial banks. They include permanent residents; private property owners; owners of two or more owner-operated market/hawker stalls or commercial/industrial property; those who own a market/hawker stall or commercial/industrial property but are not the operators; those whose combined household income exceeds $8,000 a month; home buyers who have already taken two concessionary loans; and second-time buyers who have enjoyed one concessionary loan but are buying a similar-sized or smaller HDB flat. Current HDB lessees, if eligible, can also apply to re-finance their mortgages with the banks.
How much financing would I need?
Before purchasing a HDB resale flat, check how much is available in your CPF Ordinary Account for the purchase of a flat. If it is insufficient, you would most likely require a loan from HDB. The housing loan offered to buyers is 80% of the market value or declared resale price of the flat, whichever is lower. However, before a mortgage loan is granted by HDB, buyers are required to use all the available savings in the CPF Ordinary Account to buy the flat. The mortgage loan together with the CPF savings withdrawn to buy the flat should not exceed the lower of 100% of the market value of the flat or the declared resale price. The following examples illustrate the use of CPF, HDB loan and cash in purchasing a HDB flat.
Assume the resale price of the flat is $200,000 and the market value of the flat is $180,000.
|
Scenario |
Saving in CPF Ordinary Account |
CPF Withdrawal HDB Mortgage Loan |
Balance to be paid in cash |
| 1 | $210,000 | $180,000
No Loan |
$20,000 |
| 2 | $60,000 | $60,000
$120,000 |
$20,000 |
| 3 | $10,000 | $10,000
$144,000 |
$46,000 |
| 4 | No Balance | Nil
$144,000 |
$56,000 |
If the maximum loan provided together with the CPF savings is still insufficient to meet the resale price, the balance will have to be paid in cash.
From 1st January 2004, those financing their mortgages through bank loans will be required to pay 2% of the 20% downpayment in cash. The quantum of the cash portion will increase by 2% each year, while the CPF portion for the downpayment will decrease by 2% each year, until 1st January 2008 when both portions of the downpayment are equal at 10%. The cash downpayment is in addition to the cash-over-valuation for cases where the transacted resale price is above market valuation. Buyers must pay this difference in cash.
Do I have to pay stamp duty, legal fees and/or other costs for purchasing a HDB resale flat?
Yes. You should set aside funds for stamp duty and legal fees which will take up approximately 3% of the selling price. If your CPF savings is less than 20% of the valuation price, you will have to top up with cash. Other cash involved would be the difference between the purchase price and the valuation price, and if you are taking a loan from HDB, you are required to buy Fire Insurance from the Insurance Agent appointed by HDB.
Last but not least, it is compulsory for buyers who are using their CPF funds to service your monthly instalments, you have to purchase a Home Protection Insurance. HPS is a mortgage reducing insurance scheme administered by the CPF Board. The CPF Board will pay the outstanding housing loan base on the amount insured under HPS should members become permanently incapacitated or die prematurely before age 65. HPS is compulsory if you intend to use your CPF savings to pay your monthly housing loan instalments. Otherwise, the scheme is optional. The premium payable depends on your declared percentage of coverage, loan amount, age, sex, etc. This premium can be paid using your CPF savings or cash. For more information on HPS, you may obtain a HPS booklet on your appointment day at HDB Centre or call CPF Board at tel. no.: 1800-2271188 or access the computation of the HPS premium at CPF WebPage at http://www.cpf.gov.sg.
What would be the total costs involved in purchasing a HDB resale flat?
The total cash required can be determined after deducting the CPF balance, stamp duty, legal fees, the HPP premium and HDB mortgage loan from the selling price of the flat. However, buyers must bear in mind there are extra costs such as 1% commission for your real estate salesperson, a non-refundable administrative fee of $50 and a caveat lodging fee which ranges from $56 to $110.
Can I, a private property owner, purchase a HDB resale flat without selling the existing property?
Yes. This is allowed provided that you actually reside in the HDB resale flat and not in the private property. In other words, you can only rent out the private property for additional income and not the HDB resale flat.
What are the main points I should take note of when buying a HDB resale flat?There are four main points to consider, namely:
a. External features: Make careful observation of any extension made to the recess area by the present owner. It is advisable to ask him for the permit or the approval by HDB.
b. Internal features: Check for leaks or holes in the ceiling and walls. Identify any evidence of termite infection or wasp nests. Start by inspecting the most crucial area often overlooked by most people – the toilet. Take note of common problems such as uneven tiles or accumulation of water in between the tiles.
c. Neighbourhood: it is always advisable to check out your neighbours-to-be. You need to feel comfortable with the families you will eventually meet day in, day out, when you shift in.
d. Location: This is a subjective condition. Simply ask yourself – would I value proximity to my work place or to amenities and public transportation? For parents, they would definitely appreciate the presence of schools and childcare centres in the vicinity.
When can a person sell his HDB flat in the open market and when will a HDB resale levy be imposed?
A person is eligible to sell his HDB flat if: a. He has owned and physically occupied the flat purchased direct from HDB for at least 5 years; or b. He has owned and physically occupied the flat purchased from the open market for 2t/z years. If the flat is the seller’s first flat and he purchased the second flat direct from HDB, he is required to pay either: a. A resale levy equivalent to 10 – 25% * of the declared resale price or 10 – 25% * of 90% of the market value of the flat, whichever is higher; or b. A premium equivalent to 20% of the selling price of any second HDB flat that he purchases direct from HDB. If the flat is the seller’s second or subsequent flat, he can opt to: a. Resell the flat to a buyer of his choice and be debarred permanently from purchasing a HDB flat direct from HDB; or b. Resell the flat to HDB at a price to be determined by HDB. *The percentage applicable depends on the type of the flat as set out below: 3-room flat 15%4-room flat 20%5-room flat 22.5%Executive flat 25%
How long does a HDB resale transaction take to complete?
A HDB resale transaction usually takes about 15 – 16 weeks (from the date of first registration with HDB) to complete. Both the seller and buyer are to complete the resale transaction on an appointed date at the HDB Centre when due.
Visit http://www.hdb.gov.sg for more details
