Written by: Benjienen Toledo
How do you sell an existing HDB flat and buy a new one?
Should buying a new home come first before selling the old one so that you have a place to stay after selling?
Good news! The Central Provident Fund (CPF) Board and Housing & Development Board (HDB) has it figured out for you through the Enhanced Contra Facility (ECF).
What is Enhanced Contra Facility (ECF)?
ECF is jointly implemented by the CPF Board and HDB, you can now sell your existing HDB flat and at the same time, buy another resale HDB flat using the sale proceeds and your refunded CPF monies.
Who are Involved in ECF and Who May Apply?
- Seller (You)– who is selling an existing HDB flat
- Buyer A– who is buying your existing HDB flat
- Buyer B (You)– who is buying another resale flat
You (Buyer B) may apply for ECF to finance the purchase of another resale flat, including the insurance premiums for the CPF Home Protection Scheme; Buyer A may also apply.
However, you and the buyer of your existing flat must not have applied for similar contra facilities.
This means, that Buyers A & B cannot apply for ECF at the same time.
How to Apply for ECF?
Before we discuss the process of applying for ECF, let’s have an overview of the streamlined HDB resale process:
- Seller registers an Intent to Sell in the HDB Resale Portal
- Seller starts marketing for his/ her HDB either through DIY or by engaging an estate agent
- Once the Seller has found a Buyer, the Buyer, you register an Intent to Buy in the HDB Resale Portal
- Seller Grants Option to Purchase (OTP) to the Buyer
- Buyer gives the option fee on the Option Date
- The Option Period is 21 days; the Buyer exercises the OTP within that period
- Both Seller and Buyer will submit a Resale Application within the timeframe they have agreed
- The Buyer and Seller will be notified via SMS or E-mail when the HDB’s Approval Letter is posted in the portal
- HDB Appointment happens after 8 weeks from the date of HDB’s Acceptance of the resale application if the necessary documents are submitted accurately. This appointment is considered the Completion Date and the resale process is considered to be complete.
As the Buyer B, on Step 7, you must indicate in the Resale Application form that you are opting for ECF. The resale application and ECF opt-in can be made via either of these methods:
Alternatively, if you have completed Step 7 without indicating that you are opting for ECF, you may download the ‘Application for Enhanced Contra Facility’ form, fill it up, and submit it to the HDB by fax, post, or in person at their Resale Office. The contact details can be found in the form.
Related: What the New HDB Changes Mean to You
What are the ECF Conditions?
As a seller, you must not be an undischarged bankrupt or have any bankruptcy proceedings commenced against you
HDB may not approve the ECF application if any of the following applies:
- There is a mortgage in favour of a financial institution
- There is a CPF mortgage/ charge on your existing flat and/or the resale flat that you are buying
- Private solicitors must be engaged
The ECF is not available for the following types of resale applications:
- Conversion Scheme
- Sale of part-share of an existing flat
- Contra party buys another resale flat using a housing loan from a bank
The resale of your existing flat must be completed before or on the same day as the completion of the resale of your new flat
How is the Cash Proceeds Calculated?
‘Cash proceeds’ refers to the net amount payable to you after deducting the following from the sale price of your existing flat:
- Deposit paid
- Outstanding mortgage loan to HDB
- Resale/ upgrading levy
- All CPF refunds plus interest
- Other sums due and payable to HDB
You can only use the cash proceeds from the sale of your existing flat to pay part of or the full amount of the resale price of another flat after having used:
- All your existing balance in the CPF Ordinary Account
- All your CPF monies refunded to the CPF Ordinary Account from the sale of Flat A that are available for use under the ECF
You must take note that if CPF monies are used in the purchase of your new resale flat, the withdrawal of such CPF monies is subject to CPF Board’s rules and regulations.
So, does ECF Benefit HDB Buyers?
Yes, using the cash proceeds and refunded CPF monies, it will:
- Reduce the cash outlay needed for buying another HDB resale flat
- Reduce the mortgage loan amount needed and the subsequent monthly repayments
However, the refunded CPF monies cannot be used for the payment of stamp duty and conveyancing fees.
HDB reserves the right to withhold consent, revoke approval, vary, or cancel the ECF at any time. Learn more about HDB’s ECF approval conditions.