Complete Guide to Buying HDB Resale Flat (2020)

Find answers for all your first time HDB Resale buyer questions about eligibility, resale procedures, mortgages, downpayment, and many more.

Do you want to own an HDB flat but have no patience to keep waiting for years until you can purchase a new Build-To-Order (BTO) flat? Here’s a good news, that’s not the only option available – you can always go for an HDB resale flat.

This article will cover the basics of what HDB Resale flat is, the advantages and disadvantages of purchasing one, different schemes you can take advantage of to finance your purchase, eligibility criteria, and other important HDB resale procedures.

Here we go then!

What is an HDB resale flat?

An HDB resale flat is a flat that is currently owned by another individual who bought it either directly first hand from HDB or second hand from another owner. To qualify as a resale flat, the individual must have completed the 5 years Minimum Occupation Period (MOP) residing in the flat.

Buying a resale flat transfers the remaining lease to your name. Once the purchase transaction has been successfully completed, you must occupy the flat and not allowed to let out the whole flat or sell within the 5 years MOP. 

Unlike a brand-new BTO flat, a resale flat doesn’t come with fresh 99-year lease. As a flat gets older, the lease period gets correspondingly shorter. Therefore, it’s important to take the remaining lease period into consideration before you purchase an HDB resale flat.

Do note that renovating an HDB resale flat can be more expensive than renovating a comparative BTO flat as you’ll also need to modify or remove renovations made by the current owner.

We’ll be covering the advantages and disadvantages of HDB BTO flats and HDB resale flats in greater detail down this article. 

 

Eligibility to Buy Resale HDB Flats

To be eligible for an HDB resale flat in the open market, prospective buyers need to fulfil the following criteria:

  • The resale flat application must have at least 2 Singapore Permanent Residents  or 1 Singapore Citizen name listed on it.
  • The applicants must be at least 21 years of age if the application is made as part of a family nucleus. The minimum age limit is 35 years if the applicant is single. For single applicant, he/she must be a Singapore Citizen.
  • The applicants should not own other residential units/houses/land in Singapore or abroad. They shouldn’t have disposed of any such properties in the last 6 months prior to the application as well.

 

Income ceiling

Unlike BTO flats, there is no income ceiling as criteria for purchasing HDB resale flats. However, keep in mind that income ceiling limits apply for HDB Concessionary Home Loan and CPF Housing Grant.

 

Additionally, applicants need fall under any one of the following eight schemes before they’re eligible to purchase an HDB resale flat:

 

Public Scheme

Applicants planning to purchase an HDB resale flat along with their family members (children, siblings, parents, spouse, etc.) are covered by this scheme. 

 

Fiancé/ Fiancée Scheme

Applicants buying a resale HDB flat with their fiancé/ fiancée are covered by this scheme. 

 

Single Singaporean Citizen Scheme:

Single, individual applicants are covered by this scheme. Orphans and widowers/widows must be at least 21 and divorced/unmarried applicants must be at least 35 to qualify.

 

Joint Singles Scheme:

Applicants who are single but looking to buy an HDB resale flat jointly are covered by this scheme. Orphans and widowers/widows must be at least 21 and divorced/unmarried applicants must be at least 35 to qualify.

 

Non-Citizen Spouse Scheme:

Applicants whose spouse is on a Work Pass or a Long-Term Visit Pass are covered by this scheme.

 

Non-Citizen Family Scheme:

Single Singaporean applicants whose family members aren’t Singaporean PRs or citizens are covered by this scheme.

 

Orphans Scheme:

Orphaned siblings who are also single but looking to purchase an HDB resale flat jointly are covered by this scheme. 

 

Conversion Scheme:

Applicants who wish to purchase adjoining 3-bedroom or smaller flats with the intention of combining them into a single unit are covered by this scheme. 

The official HDB portal offers more details about the eligibility criteria for various schemes.

 

Ethnic and PR quota too! 

Applicants need to ensure that the ethnic quota for the neighbourhood/block they’re eyeing has not been exceeded. If the application lists a non-Malaysian permanent resident, it’s crucial to ensure that the local PR quote hasn’t been exceeded as well.

The PR and ethnic quotes are periodically updated every month, which affects all HDB resale applications made during that particular month. Therefore, you might need to keep yourself updated regarding the quota for the neighbourhood/block you’re looking to buy an HDB resale flat in, so as to not face troubles later on. Enquiry on Buyer's Eligibility under the Ethnic Integration Policy and SPR Quota.

 

Minimum Occupation Period for an HDB Resale Flat

Aside from the general eligibility criteria, flat buyers also need to be aware of the five (5) years Minimum Occupation Period, aka MOP, from the date of purchase.

The buyers are legally required to reside in the flat throughout the entire MOP period unless there’s an exception that disables them from doing so. In such cases, HDB approval must be sought and the unit cannot be rented out to anyone else. Room rentals are permitted under condition that the buyer(s) also reside(s) in the flat.

 

Can PRs purchase HDB flats?

Permanent Residents or PRs who wish to purchase an HDB flat are only allowed to purchase HDB resale flats. They are also required to fulfil the following conditions:

  • A minimum age of 21 years.
  • A Permanent Residency period spanning at least three years.
  • After the purchase is completed, they cannot lease or sell the unit before the Minimum Occupation Period of 5 years is complete. They can sell the flat after the 5 years MOP, however current HDB regulation does not allow them to lease out their whole flat. 
  • They cannot own any residential properties, both in Singapore and overseas. Should they own any properties, these need to be sold off within six of the date of purchase. However, PRs are free to acquire other properties once the MOP period is over.

 

HDB resale flats are only available for purchase under the Fiancé/Fiancée Scheme and the Public Scheme, meaning that PRs must be a part of a family nucleus to be approved. 

 

HDB Resale Procedure

How Long Is The HDB Resale Flat Purchase Process?

The latest user-friendly and streamlined HDB Resale Portal has simplified the purchasing process to a great extent. Generally speaking, the entire process shouldn’t take you more than 12 – 15 weeks. It all comes down to how quickly the buyer can select a flat and complete their negotiations to seal the deal.

Now, we’ll move on to a comprehensive discussion of the different steps associated with the HDB resale process. Here are all the steps of the HDB resale checklist, in order:

1. Estimate Your Financial Condition And How To Finance Your Loan

2. Register Your Intent to Buy

3. Gather More Information About Properties in Your Preferred Areas

4. Choose Whether to Hire A Real Estate Agent or Do Everything On Your Own

5. Visit Prospective Homes

6. Get an Option to Purchase Agreement

7. Submit A Request for Valuation

8. Exercise Your Option

9. Submit Your Flat Resale Application

10. Endorse the Resale Documents and Pay Applicable HDB Legal Fees

11. Carry Out A Flat Inspection

12. Attend the Flat Resale Completion Appointment

 

1. Estimate Your Financial Condition And How To Finance Your Loan

In order to understand the type of HDB flats your finances allow you to purchase, do a comprehensive financial health check first. Here are the most important considerations:

  • How much do you have in CPF/savings?
  • How much debt do you currently have (car loans, credit card debt, etc.)?
  • How much do you save every month?
  • How much disposable income can you spare towards your home loan payments?
  • How much are you eligible for in HDB grants?

 

The property’s purchase price isn’t the only payment you’re going to have to make. Other expenses like renovation costs, home insurance, stamp duty, HDB legal fees, etc. need to be accounted for as well. You’re allowed to utilize the savings present in your CPF Ordinary Account (OA) for paying the down payment and monthly mortgage payments of your resale flat. Applicants who are using an HDB Housing loan to finance their purchase has the option to fully drain or retain a maximum of $20,000 in their CPA OA Account. If the flat has a remaining lease period of fewer than 60 years, there is withdrawal limits imposed on the CPA OA account.

There are two ways to finance a resale flat: a bank loan or an HDB loan. People with cash flow issues prefer HDB loans since the Loan-to-Value ratio here is 90%. The down-payment can be as low as 10%.

Applicants with more CPF Savings/Cash are better off with a bank loan. Although these loans require a 25% minimum down-payment due to their 75% LTV, banks offer lower interest rates compared to HDB loans. While the latter is more fuss-free and predictable with lower fees, bank loans enjoy lower mortgage interest rates. However, you’ll need to stay on top of things constantly with a bank loan.

Prospective buyers must have an HDB Loan Eligibility Letter (HLE) before they can pay the Option Fees and obtain the Option to Purchase from HDB resale flat seller. The HLE letter is only issued to applicants who have cleared the HLE eligibility requirements. Though not required by HDB, we still advise buyers to apply for an Approval-in-Principle letter from the bank before paying the option fees as well. This helps them avoid a common buyer mistake – paying the non-refundable Option Fee to the seller, only to realize later on that their bank won’t extend the amount of loan they were initially hoping for. 

Both the AIP and HLE Letters contain information about the maximum amount of loan you’re allowed to borrow and your monthly repayment schedule. These letters are non-binding and free, meaning you can always approach another financier or send in another application if the document expires before you’ve found an HDB flat you like.

 

Payment breakdown for an HDB loan

Let’s take a regular Singaporean couple John and Rose. This couple is looking to purchase an HDB resale flat as their first-ever residential property.

Both of them have a combined monthly income of S$6,500. They’re planning to purchase an HDB 4R resale flat, estimated to cost around S$450K. Their CPF savings account has around $35,000 in it. The new CPF Enhanced Housing Grant (EHG) allows the couple to access a grant of S$30,000. The CPF Family Grant also gives them access to another S$50,000. 

The purchase will be funded by a 25-year HDB loan, which will be around S$350K. The mortgage payments will be made using their CPF accounts. 

Here’s a comprehensive breakdown of the payments they’ll need to make, assuming they’re applying for an HDB home loan. 

 

Costs and Fees

Amount Payable (S$)

Payment Method

Deposit (includes booking fee)

5,000

Cash

Valuation fee

199.25

Credit card

Resale application administrative fee

80

Credit card

HDB Stamp duty on option (based on S$450,000 flat price)

8,100

Cash/CPF

HDB Stamp duty on mortgage

500

Cash/CPF

Conveyancing fee for OTP (based on S$450,000 flat price)

423.9

Cash/CPF

Conveyancing fee for Loan (based on S$390,000 loan amount)

369.9

Cash/CPF

Registration and microfilming for transfer of ownership

38.3

Cash/CPF

Registration and microfilming for housing loan

64.45

Cash/CPF

Buyer’s caveat

64.45

Cash

Mortgagee’s caveat

64.45

Cash

Title search fees

10.4

Cash

CPF Home Protection Scheme (HPS) mortgage insurance

238.29

CPF

Fire insurance

4.5

Cheque

Flat selling price (to be paid by HDB Loan; 90% LTV)

350,000

loan

Flat selling price (to be paid by CPF savings)

20,000

CPF

Flat selling price (to be paid by CPF grants)

80,000

CPF

Total

465,131.74

 

 

As can be seen from the above breakdown, the couple will have to pay around S$5,434.06 in cash out of their own pocket and the remaining items will be paid by the grants, HDB loan amount, and the CPF savings. 

 

Payment breakdown for a bank loan

If the couple chooses to obtain a private bank mortgage loan to finance their purchase, here’s a breakdown of how that scenario would spin out:

Assuming the exact same conditions as above and a 75% LTV ratio, the couple is only eligible to obtain a loan of S$337,500 to purchase their S$450K flat. A lawyer will also be required to facilitate the deal, who charges S$2800 for her services. The following breakdown explains other expenses in greater detail:

Costs and Fees

Amount Payable (S$)

Payment Method

Deposit (includes booking fee)

5,000

Cash

Valuation fee

199.25

Credit card

Resale application administrative fee

80

Credit card

HDB Stamp duty on option (based on S$450,000 flat price)

8,100

Cash/CPF

HDB Stamp duty on mortgage

500

Cash/CPF

Legal fees

2,800

Cash/CPF

CPF Home Protection Scheme (HPS) mortgage insurance

238.29

CPF

Fire insurance

4.5

Cheque

Flat selling price (to be paid by Bank Loan; 75% LTV)

337,500

loan

Flat selling price (to be paid by CPF savings)

10,000

CPF

Flat selling price (to be paid by CPF grants)

80,000

CPF

Flat selling price (to be paid by in cash)

22,500

Cash

Total

466,922.04

 

 

2. Register Your Intent to Buy

Doing this accomplishes several objectives. For one, it lets you know whether you’re qualified to purchase an HDB resale flat. Secondly, it also informs you which HDB grants you’re eligible for. Depending on eligibility and income level, you could receive up to $160,000 in HDB resale flat subsidies, which can reduce your liability by a significant margin. However, this Intent to Buy will only be valid for 12 months. But that’s ample time to visit and find yourself a splendid flat. You’re also free to reapply in case you’re unable to make up your mind. This whole process is instant, free, and can be done via the official HDB Resale Portal  

 

3. Gather More Information About Properties in Your Preferred Areas

Maybe you’ve already selected the area you’d like to purchase your house in. In such a case, we advise you to check out property prices in these preferred areas to stay on top of the game:

  • Search for prices of recently sold HDB flats – It’ll help you know the prevailing prices of units in your preferred estate. You can use the official HDB website or the HDB map service to assist your search.  
  • Search for active listings on real estate portals like 99.co or PropertyGuru.com.sg – Do note that the prices here are marked up considerably since the sellers expect interested buyers to negotiate them down.
  • Consult a real estate agent to obtain a Comparative Market Analysis (CMA) – A CMA offers you a highly accurate and free price estimate after a thorough analysis of current listings, past transactions, removed listings, and other important information.
  • Use the Free Property Valuation tool from our website to obtain accurate estimates of property values – Similar to the CMA, using these tools allows you to get an accurate property value estimate, thus ensuring that the property you’re eyeing isn’t overpriced.

 

Don’t forget to check the SPR and ethnic quotas of the housing blocks as well. HDB website has a useful tool that allows you to check this information.

If the resale flat is within 4 kilometers of your children/parents, you can also apply for the Proximity Housing Grant. The Distance Enquiry Tool is a great resource to help you determine whether you can take advantage of this subsidy. 

 

4. Choose Whether to Hire A Real Estate Agent or Do Everything On Your Own

While it’s not mandatory to hire a real estate agent, they are pretty helpful with certain things like:

  • Negotiating with sellers to bring down the price
  • Checking the property unit condition potentially expensive defects
  • Conducting comprehensive background checks on the seller/property
  • Obtaining a CMA on your shortlisted properties, ensuring you don’t overpay for the units
  • Evaluating your financial condition to understand how much you can afford to spend on your house
  • Uncovering any hidden real estate gems 

 

But if you’re completely confident of your ability to handle any hidden surprises and other legal formalities, you can do everything on your own. The market rate for HDB Resale Buyer’s agent is 1% of the purchase price. To put things into perspective, that’s S$5,000 on a $500K flat.

 

5. Visit Prospective Homes

It’s important to pay close attention to every detail during this phase. During your house viewings, check out the amount of space the house has. Do look into nearby amenities and facilities as well. Your goal is to understand how liveable the units are and which home is the best for your needs. Ensure that the home faces the right direction (a Southeast-facing home unit receives refreshing sunlight in the morning while also being shielded from the afternoon heat). Make sure that it’s a well-maintained flat that doesn’t have any loan sharks after it. Don’t forget to schedule your house viewing in the afternoons as well. This allows you to check overall noise levels in the area and ensure that the heat isn’t too high during the day.

 

Watching out for these tiny details can help you save a fortune later on in renovation costs:

  • Oddly shaped rooms/corners where your furniture might not fit properly
  • ‘Bloodstained’ or rust-colored stains on the wall could imply the presence of bedbugs.
  • Poor toilet flushing could indicate clogging in the drains.
  • Termite-ridden or rotten wood could be a sign of future damage to doorframes, flooring, and furniture.
  • Wet flooring patches indicate leaky pipes
  • Peeling paint indicates water seepage
  • Damaged flooring or tiles could cost you a fortune to repair later on – stay away as far as possible
  • Built-in furniture, which needs to be replaced.

 

Don’t hesitate to look around the house around every corner. It’s always better to be safe than sorry. A single mistake here could wind up with you shelling out thousands in repairs, something you could have easily avoided with some extra diligence.

 

6. Get an Option to Purchase Agreement

Have you found something that finally speaks to your mind? Excellent! Armed with your AIP or HLE letter, obtain an Option to Purchase from the flat’s seller as soon as possible. Do note that an AIP’s validity only lasts for 2 – 4 weeks whereas an HLE letter lasts for six months.The OTP will require Option fee, which will be set by the flat’s seller. It typically ranges between $1 - $1000, and typically the market practice is S$1,000. Do note that it’s fine to back out of the sale after the OTP is obtained. If you’re looking to lock down on the house but wish to make a final, thorough examination, an OTP will help you get extra time.

 

7. Submit A Request for Valuation

At this point, you’ve got 21 days for confirming your purchase. This period is meant to be used for arranging your finances and obtaining the loan required for funding the purchase. An HLE letter is sufficient if you’re financing the purchase with an HDB loan. A Letter of Offer is sufficient if you’re financing the purchase with a bank home loan. Whether it’s an HDB loan or a bank loan, you’ll have to request the loan institution for property valuation so that they can get started on their internal processes. This request needs to be filed on the working day right after the OTP’s Option Date – you cannot afford to lose any time here! The Request for valuation also requires you to pay a $120 non-refundable processing fee.

If you’ve already followed the steps mentioned above and researched property valuations in the area, you’re unlikely to be caught off-guard by the official valuation. It’s important for the actual price to be either below or equal to the property valuation – if the former is more than the latter, you’ll need to settle the difference in cash.

 

8. Exercise Your Option

After you’ve obtained your LO or HLE letter, you can now exercise the OTP. You’ll be required to pay the Option Exercise Fee upon doing so. This amount is usually S$4,000 and the total amount of Option Exercise Fee + Option Fee HDB shouldn’t exceed S$5,000 in all cases. This amount will be treated as your official flat deposit.

 

9. Submit Your Flat Resale Application

The next step involving filing the paperwork with the HDB. Log in with your credentials on the HDB Resale Portal. Proceed to submit your Resale Application online. The seller of the HDB flat will also be required to submit the Resale Application via their own accounts. These resale submissions need to be completed within seven days, else you risk cancellation of the application and forfeiture of the admin HDB fees, which typically ranges between $40 - $80.

 

The following details need to be submitted:

  • The address of the flat
  • Information regarding the OTP
  • Particulars of the seller
  • Your particulars and the particulars of your co-applicants
  • Manner of holding (whether tenancy-in-common or joint tenancy, etc.) Click here to learn the difference between the joint tenancy and tenancy-in-common
  • Information regarding the housing grants you’ve applied for
  • Whether you’ve engaged any private lawyers or HDB solicitors
  • The institution that approved your home loan.

The Seller may require more time to vacate the flat beyond the completion date, so-called Temporary Extension of Stay in HDB terms, and this will be discussed together with you before you pay for the option fee. Both parties will work on details such as who pay for the Town Council fee, Property Tax, utility bills, etc. Generally the Seller will pay for all up to the date of vacating the flat. This arrangement is done privately, and real estate agents should prepare an agreement to prevent future dispute and misunderstanding. Both parties must indicate on HDB Resale Submission if there is Temporary Extension of Stay.

 

10. Endorse the Resale Documents and Pay Applicable HDB Legal Fees

After the HDB has accepted your resale application, the paperwork will be reviewed thoroughly to ensure everything’s in order. You’ll be sent an SMS from HDB within six days, requesting you to open the Resale Portal for endorsing the documents. You will also need to book an appointment with the institution that approved your home loan (your bank or HDB). During this appointment, you can formalize the loan terms and gather more details regarding any grants you’re applying for to finance the purchase.

 

11. Carry out A Flat Inspection

You’re almost done by this point. All that’s left is for the seller and HDB to sign off on the deal. Next, HDB will get some of their technical execs to carry out a thorough inspection of your resale flat, in order to ensure that no illegal alterations have been made to the flat by the seller. However, that’s the extent of their inspection duties. It is your responsibility to inspect the flat for damages or structural troubles. HDB is not responsible for certifying the flat’s condition at any stage – that’s on you. Once the seller has moved out, carry out another flat inspection to ensure that it is vacant. You can consult the valuation report and make sure that everything is still intact without any damage.

 

12. Attend the Flat Resale Completion Appointment

We’re almost done! The last step is to attend the Flat Resale Completion Appointment, which will be held at the HDB hub if you’ve engaged the HDB’s solicitor. You’ll need to have printed copies of the payment advice, which can be obtained from the official HDB resale portal – these documents will help you pay the remaining balance on your flat. We advise you to get there early and visit the Payment Office (located on Level 3 of the Hub) for settling the bill. You should also buy HDB Fire Insurance if you’re financing the purchase with an HDB loan. You can meet up with the Customer Relations Manager after that to complete signing the appropriate documents, after which you’ll be issued a letter of confirmation as proof of the lease agreement transfer and given the keys to the flat. In case you have a private lawyer to represent you at this appointment, your solicitor’s presence and action on your behalf is equally valid. That’s it!

 

At Pinnacle Estate Agency, we strongly believe in sharing our real estate knowledge to the public.⁠ For more content like this article, check out our Singapore Property Guides.

Have any further questions on purchasing an HDB resale flat in Singapore?

About Pinnacle Estate Agency

Pinnacle Estate Agency (CEA Licence No.: L3010718G) is the leading real estate agency in Singapore providing unparalleled personalised services, effective real estate marketing strategies, and Singapore property guides to everyone. Our real estate services include sale and leasing of HDB resale flats, private residential properties i.e. apartments & condominiums, and commercial properties e.g. HDB shophouses, private shophouses, retail shops, offices, and industrial properties.

Every client is served personally by our Key Executive Officer (KEO), Mr. Sumitro Ong who holds BSc. (Real Estate) (Hons.) from the National University of Singapore (NUS) and has more than 10 years of experience in the real estate industry.

Our effective real estate marketing strategies begin with pricing our clients’ properties right and make them shine online. Our in-house media team then captures 3D virtual tour, professional photos, and home tour video for all our sale and rental listings. We ensure premium placement on all real estate listing websites. 

We also tap on our co-broking networks of more than 30,000 real estate agents in Singapore. With maximum eyeballs reached, it significantly increases probability that our clients’ properties will be sold fast and at higher price than those of their neighbours’

At Pinnacle, we strongly believe in imparting all our real estate knowledge to everyone. Everyone can explore guides on buying, selling, renting, and investing properties, mortgages, and legal issues in our Singapore Property Guides section of our website https://pinnacle.sg/singapore-property-guides at no cost. Every guide is meticulously written by our KEO, Mr. Sumitro Ong himself.

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