A Guide To Buying A Resale Flat In Singapore
When purchasing an HDB (Housing and Development Board) flat in Singapore, getting a resale flat in the open market is more advantageous than getting an HDB BTO flat . Unlike a BTO, a resale flat has more space and has no waiting period.
The purchasing process can seem intimidating. And getting help from a property agent means paying about one percent of the consideration. But you can go the DIY way with this step by step guide.
Resale Flat Pre-Purchase Check
Before purchasing the resale flat, check if you qualify for one of HDB’s eligibility schemes.
- Public scheme – Applies to buyers buying resale HDB flat with family members.
- Fiance/Fiancee scheme – Applies to anyone purchasing the resale flat with their fiancé or fiancée
- Single Singapore citizen scheme – Applies to Singapore citizens buying HDB resale flat individually. An unmarried or divorced single buyer should be 35 years and above, and 21 years for those widowed or orphaned.
- Joint singles scheme – Allows 2-4 single buyers to buy HDB resale flat. The buyers must be Singapore citizens aged at least 35 if unmarried or divorced, or 21 years if widowed or orphaned.
- Non-citizen spouse scheme – Applies where a marriage partner is not a Singapore national or Singapore permanent resident
- Orphans scheme – Applies to unmarried, divorced, or single orphans.
- Conversion scheme – Applies to home owners purchasing resales HDB flats adjoined to the currently owned flat to convert into one unit. The resale HDB flats should be three-room or smaller. It is subject to approval before buying.
Resale HDB eligibility under all schemes will depend on the following criteria:
- Citizenship status
- Family nucleus
- Compliance with the Ethnic Integration Policy (EIP) quota when submitting the Resale Application
- Special conditions that differ under every scheme
Registering your Intent to Buy in the HDB resale portal will provide an instant assessment on whether you are eligible to buy an HDB resale flat.
Here are some factors to take note of and a step by step guide to the journey of buying a HDB resale flat.
7 Steps To Buying A Resale Flat In Singapore:
1. Check Your Eligibility
Step 1, check if you qualify to purchase a resale HDB flat using HDB resale eligibility check e-service.
Here are the eligibility conditions under all schemes:
- At least one Singapore national or two Singapore permanent residents should be in the flat application
- There is no income ceiling. But when taking CPF Housing Loan, CPF Housing Grants or HDB loans, some requirements need to be met.
- An HDB flat owned by you or any other persons listed in the application must be disposed of within six months of purchasing the resale flat.
- If anyone listed in the application owns private property locally or overseas, it should be disposed within six months of the resale flat purchase. They are also disqualified for a Housing Grant or an HDB housing loan.
2. Plan Your Finances
Next, check and plan for the costs that come with purchasing the flat.
Step 1: Research how much the resale flat will cost. Calculate and gauge the costs that accompany buying resale flat, such as the HDB resale downpayment. Note, a bank loan for HDB requires that you pay a portion of the downpayment in cash.
When getting a loan from HDB, the Resale Financial Plan on the HDB website provides estimates figures of most of these amounts, such as the home loan amount, monthly installments, and fees incurred during resale appointments, like cash payments, stamp fees, title search fees, and conveyancing fees.
Step 2: Plan on your sources of funds:
- Check your OA CPF savings.
- If you have insufficient cash, decide on the home loan you will take. Bank loans offer lower interest rates than HDB loans. But HDB financing is predictable and has a lower legal cost.
- Check your qualification for a CPF grant and amount. Here is a tip – you can get an HDB proximity housing grant if you stay within 4 km of your parents or children.
3. Register Your Intent To Buy
This is the step in the HDB resale procedure that confirms your qualification to buy a resale HDB flat, how much HDB grant you can get, and your qualification for an HDB concessionary housing loan.
Login into the HDB resale portal to register HDB Intent to Buy. The e-service streamlines the flat purchase steps and services. The resale portal automatically retrieves your details from the Government’s MyInfo service. In case you are buying a resale flat with someone, only one of you needs to register the purchase intent.
The Intent to Buy is valid for 12 months. Use this time to find a resale HDB flat to buy. Resale HDB procedure demands you reapply when this time expires.
4. Select Your Flat
The best thing about resales is the wide selection of property units in the open market and the freedom to choose any location in your price range. This is not possible with a Build To Order (BTO) flat. An estate agent could be beneficial in this step. But with research, you can find a good place and honest sellers.
Shop while having an idea of the price to expect. The HDB website provides an e-service for checking the transacted prices of similar HDB resale flats in the last two years. These prices are updated daily. Assess the type of resale HDB flat you can afford based on how much money is in your account, household income, and available financing.
You can also use current property listings on websites, such as Carousell, PropertyGuru, SRX, and 99.co to get a price estimate. Keep in mind that prices in these sites are marked up to create room for negotiations. If you are using a property agent, request a CMA report based on recently sold flats in the area.
Getting an estimate of the purchase price will help in keeping you from buying a resale HDB flat whose price is inflated.
Check the lease period of the flat you choose and shortlist the flat you want that is within your budget. Other things to consider is the repair costs needed and proximity of the unit to community amenities.
5. Obtain The Option To Purchase (OTP)
Once you have made a decision on the flat to buy, request an OTP from the seller. The Option to Purchase is a legal agreement between you and the resale HDB flat seller. It grants you exclusive rights to purchase the property.
Note that if you will be using a loan, the flat seller will need to see a valid HDB Loan Eligibility (HLE) letter or Approval in Principle (AIP) letter from the bank first before issuing an OTP.
An option fee is needed to get the OTP. It can range from $1 to a maximum of $1,000. You should confirm the purchase and exercise the OTP within 21 days. During this time, the seller cannot issue an OTP to any other buyer. Make sure that you use this time to inspect the condition and block resale flat you intend to buy. You can back out, but you will not get your money back.
If you will be financing the purchase with a bank HDB loan, you will need to submit a Request for Value of the home in the HDB resale portal. A valuation will help the financial institution know the amount to approve. It will also guide you when negotiating the price of the flat. The Request for Value should be done by the next working day after the option date indicated in the Option to Purchase (OTP). The valuation process can take five to seven days.
Once you are satisfied with the house and the valuation is done, exercise the OTP. You will have to pay an option exercise fee. The amount will depend on the seller, but both the option fee and option exercise fee combined, should not get to more than $5,000 and it will be the flat deposit.
Getting an interior designer at this point will give them enough time to provide details on the cost and duration it will take to work on the house.
6. Submit Application To HDB
The next step in the buying process of your home will involve you and the seller. Visit the portal of HDB for resale application submission of your respective portions. Note that once either of you submits their resale application, the other party has to submit their part within seven calendar days.
It takes about eight weeks for HDB to process resale applications from the date it receives the resale flat application from both parties. HDB will require you to endorse some documents through the resale portal. You will get a notification through SMS and e-mail. Have your credit card ready as you will need to pay the HDB resale fees in this step.
With the documents endorsed, HDB will inspect the flat to ensure that no illegal alterations have been made. You also need to check that everything indicated in the valuation report is intact. Note, a fire insurance policy is mandatory. You will be notified of the final HDB appointment date through an SMS and email.
7. Wait For Your Keys
This is the final step of the buying process. The sale completion appointment is when you confirm the paperwork and get keys to your new home from the seller. It is done at the HDB hub. Both you and the seller will need to be physically present. If you are using a private solicitor representative, they can attend the appointment on your behalf with your consent.
Print a copy of the payment advice from the HDB Resale Portal and use it to pay off the remaining balance of the transaction. Once you fill some paperwork, the seller will hand over all the keys to the flat.
You can now take ownership of the flat and begin the house renovations. For an old flat, you may consider taking a renovation loan. In addition, get a comprehensive home insurance cover that will insure your flat against damage to your assets and provides third-party coverage.
The HDB resale process is easy. There is no need to involve property agents in the resale transaction unless you have to. With the right information on the things to be on the lookout for during the transaction process, you can find a way to find types of genuine sellers and follow the steps we have provided until you are the owner of the new home of your dream.
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