Selling Your HDB to Buy a Condo in Singapore: A Step-by-Step Guide

Selling Your HDB to Buy a Condo in Singapore: A Step-by-Step Guide

Upgrading from an HDB flat to a condominium is a significant milestone for many Singaporeans. Whether you’re seeking better amenities, a more central location, or a potential investment, the process requires careful planning to ensure a smooth transition. Here’s a detailed guide to help you navigate selling your HDB flat and buying a condo in Singapore.

Step 1: Check Your HDB Eligibility

1. Minimum Occupation Period (MOP)
   • You must fulfill the 5-year MOP for your HDB flat before selling it.
   • The MOP applies to Build-to-Order (BTO) flats, resale flats purchased with CPF grants, and HDB flats acquired through en bloc redevelopment.
2. Ownership of Private Property
   • During the MOP, you are not allowed to own or purchase private residential properties, including condos.
3. Clear Outstanding Loans
   • If you have an outstanding HDB loan, it must be settled upon selling your flat. The proceeds can go toward paying off the loan.

Step 2: Financial Assessment

1. Evaluate Your HDB Sale Proceeds
   • Calculate your flat’s current market value and deduct outstanding loans, CPF refunds (with accrued interest), and selling costs like agent fees (1-2% of selling price).
2. Estimate Condo Costs
   • Purchase Price: Private condos typically range from S$1 million to S$2.5 million for mid-tier units.
   • Stamp Duties:
     • Buyer’s Stamp Duty (BSD): Up to 4%.
     • Additional Buyer’s Stamp Duty (ABSD): 20% for Singapore Citizens if it’s your second property. However, you can avoid ABSD by selling your HDB flat before purchasing the condo.
3. Downpayment Requirements
   • For a condo, the minimum downpayment is 25% (5% in cash, 20% in cash/CPF).
4. Loan Eligibility
   • Your mortgage is subject to the Total Debt Servicing Ratio (TDSR), which caps total monthly debt repayments at 55% of your gross monthly income.

Step 3: Plan the Timeline

1. Sell First or Buy First?
   • Sell First:
     • Avoid paying ABSD.
     • Have clearer funds for the condo purchase.
     • May require interim housing while searching for a condo.
   • Buy First:
     • Offers flexibility in finding the ideal condo.
     • ABSD is applicable but refundable if you sell your HDB within 6 months of purchasing the condo (only applicable for Singapore Citizens buying one residential property).
2. Bridge Loan for Cash Flow
   • If selling first isn’t feasible, consider a bridge loan to fund the downpayment while waiting for your HDB sale proceeds.

Step 4: Choose the Right Condo

1. Consider Your Needs
   • Location, amenities, and size should align with your lifestyle and long-term goals.
   • Look at nearby MRT stations, schools, and amenities.
2. Freehold vs. Leasehold
   • Freehold properties offer long-term ownership but come at a premium.
   • Leasehold properties (99 years) are more affordable and still retain value in prime areas.
3. Engage a Real Estate Agent
   • An experienced agent can help identify suitable condos and negotiate the best deal.

Step 5: Complete the Sale of Your HDB Flat

1. List Your Flat for Sale
   • Engage an HDB-approved agent or DIY via the HDB resale portal.
   • Ensure the valuation report and necessary documents are in place.
2. Accept an Offer
   • Review offers and sign the Option to Purchase (OTP) when you find a suitable buyer.
3. Settle CPF Refunds
   • CPF funds used for the HDB purchase must be returned to your CPF Ordinary Account with accrued interest.

Step 6: Finalize the Condo Purchase

1. Secure Financing
   • Obtain in-principle approval for a home loan before proceeding with the purchase.
   • Use CPF and cash for the downpayment.
2. Complete the Purchase
   • Sign the Sales and Purchase Agreement (S&P) and pay the necessary stamp duties.
3. Handover and Move
   • Plan the move carefully, especially if there’s an overlap between selling your HDB and moving into the condo.

Benefits of Upgrading to a Condo

1. Improved Amenities
   • Access to pools, gyms, security, and recreational facilities.
2. Potential Capital Appreciation
   • Condos in prime locations may appreciate faster, making them a valuable investment.
3. Prestige and Lifestyle
   • Enjoy the privacy and exclusivity of condo living.

Conclusion

Selling your HDB flat to buy a condo in Singapore is a significant financial and lifestyle decision. By understanding the timeline, financial requirements, and eligibility conditions, you can make the transition smoothly. Work closely with a good real estate agent can help to ensure every step of the process is handled efficiently.

With proper planning, upgrading to a condo can be a rewarding move that aligns with your aspirations and financial goals.

Contact me if you like to engage me to be your property agent to sell your HDB and help you find your next new home a Condo.