How to Buy A Sale of Balance Flat in 2024 Or An Open Booking Flat

Getting a BTO flat can be down to luck. You’re lucky if you get a good queue number and call first dibs on the more popular units. But what if the unit you’ve been eyeing has already been snapped up? Time to consider getting a Sale of Balance Flat instead.

How to buy a Sale of Balance Flat in 2024

1. What is a Sale of Balance flat?
2. Sale of Balance Flat vs BTO
3. How and when can I view Sale of Balance Flats?
4. What are Sale of Balance Flat launches like?
5. How do I apply for a Sale of Balance Flat?
6. I don’t have enough money for my BTO or SBF
7. HDB Loan or Bank Loan?

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1. What is a Sale of Balance flat?

Sale of Balance flats are flats that are “leftover”, or “balance”, flats that weren’t sold during previous BTO sales launches, or repurchased flats. They open for application in May and November each year, alongside the May and Nov BTO launches.

The main advantage of buying a Sale of Balance Flat is getting the chance to “jump” the BTO queue. After all, the standard BTO-buying process does have some disadvantages:

1. Fewer options: HDB BTOs are launched typically only 4 times a year, and they may not be located in the estate you want.
   
2. Scarcity: Even if HDB has released a suitable location this time round, there’s no guarantee you’ll get a flat because everyone has to go through the dreaded balloting process. Getting invited to select a flat in a “hot” BTO development like Kallang/Whampoa is like striking 4D.
   
3. Longer waiting period: Finally, after you manage to secure a BTO flat, there’s still a long wait of at least 4 to 6 years for most BTOs. That’s another 1,460 days you have to spend living at your in-laws’ place. ‘Nuff said.

Key advantages of buying a Sale of Balance Flat

1. More locations to choose from: Not limited to the 3 or 4 areas in the current BTO launch.
   
2. Shorter wait: Because the flat is already under construction (in some cases, ready to move into).
   
3. Viewing: More often than not, your SBF project would already be halfway or even done. You can walk up to the estate to view and check out nearby amenities and try taking the MRT or bus to your workplace etc. If the project is already up, you can even go right up to the unit to check our your potential neighbours.
   
4. Easier to gauge chances: You can see how many flats are available for your ethnicity.

Disadvantages of buying a Sale of Balance Flat

1. Slim chances: Because the supply is much smaller than HDB BTOs, the chances of a successful application can be slim.
   
2. Less choice: Want a high-floor corner unit? These might have been snapped up by BTO buyers. If the high-floor units are available, they may be ridiculously expensive (that’s why people are not buying).
   
3. Ethnic quota restrictions: Flats may not be available for certain races, especially Chinese.
   
4. No cost savings: Sadly, HDB doesn’t have a “reduced to clear” policy for their unsold flats. In fact, balance flats may sometimes cost a bit more.

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2. Sale of Balance Flats vs Open Booking Flats

There are 2 ways to get a balance flat: 

First, there are Sale of Balance Flats, comprising leftover units from previous BTO sales launches. These either did not get selected by the BTO ballot winners or were later given up by applicants.

In case there are any flats left over from those leftover flats, they will be offered under HDB’s Open Booking of Flats.

What’s the difference?

Do note that since these are, like I mentioned, the balance flats of the balance flats, they are NOT for fussies.

If you are super particular about being on the top floor or the feng shui of your unit, then it goes without saying that you should probably give this a miss. Instead, these balance flats were meant for those in more pressing need of housing, and don’t mind taking a look at what’s available as long as they can get their keys ASAP.

However, from my personal experience, there are some pretty great units at HDB’s Sale of Balance Flat launches. Many couples default on their super hyped $400k or $500k high floor units after realising they can’t pay for the hefty down payments, can’t get sufficient mortgage to cover their flat’s price, or umm… broke up.

I got a 23rd floor leftover BTO unit near Clementi MRT in an SBF exercise years ago. And you can actually spend a weekend going around to “view” the units available on the SBF list and create a top 5 or top 10 list, before going to HDB on your appointment day to choose. 

The greatest advantage is that the waiting time for Open Booking flats is way shorter than both SBF and BTO. If successful, you can get invited to HDB to select your flat as early as the next working day of your application! That’s crazy efficient.

Plus, since they are farther along in the BTO construction timeline, you can expect a much shorter wait for these balance flats to be built. Some might even be available to move into already.

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3. How and when can I view Sale of Balance Flats?

Sale of Balance Flat exercises happen every May and November, and applications are typically open for about a week. During the SBF periods, you can view the SBF flats available by going to the HDB website, clicking on SBF, and going to the “Finding a Flat” webpage. You will be shown a map, and individual estates’ details will show up. Go to the estate you’re interested in to view available units there.

Here’s an example from a previous SBF exercise in May 2022. If I’m looking for a Sale of Balance Flat near Hougang MRT, this is what I will see on the map:

If you were to click into the SBF Hougang Ave 5 bubble, a dedicated webpage will pop up to show you more details of the available SBF units in this estate:

You will then be able to select your flat size of choice, your ethnicity, and the blocks that are available to you. Then, you’ll be able to see the exact unit number:

4. What are Sale of Balance Flats launches like?

Sale of Balance Flat launches occur twice a year, typically in May and November, and coincide with HDB BTO launches. You have to choose either the BTO or SBF route for each round of applications—applying for both during the same launch is not allowed.

You can take a look at the previous HDB Sale of Balance Flats launch in May 2023 for an idea of the number of units and flat mix. The May 2023 exercise saw 1,500 balance flats, of which around 61% were already completed.

One thing that makes Sale of Balance Flats very different from applying for a BTO is the sheer variety and depth of information provided.

With HDB BTOs, it’s a leap of faith. All you really need to do is to choose your preferred location and flat size. HDB provides just the generic map, so you just have to hope that it’ll live up to your expectations.

But with Sale of Balance Flats, HDB provides a ton of information, right down to the block number (so you know exactly where it is), unit number (so you know which floor it’s on), and the ethnic quota (so you know your chances of getting a unit).

Plus, each batch has over 1,000 units across all flat types and locations.

Fortunately, each SBF launch is about a week long, so you and your partner/family can take a few days to carefully review the information available and make your choice. You can only choose one location and one flat type, so please weigh all the factors (especially flat supply) carefully.

As for the flat itself? Well, it’s the same as the other BTO flats in your block, although possibly on a low floor or facing the West sun or some other factor deemed as a “dealbreaker” by a picky buyer. To take a case study, my colleague bought a low floor flat in Punggol through an SBF exercise, and the wait was only one year.

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5. How do I apply for a Sale of Balance Flat?

We’ve talked about how the time frame for Sale of Balance Flats is the same as that of BTOs—and guess what? It turns out that the application procedure is similar as well.

Step 1: Check eligibility

The eligibility criteria, income ceiling, and housing schemes that apply to BTOs also apply to Sale of Balance Flats. For a recap of the criteria, see our step-by-step guide to applying for a BTO or HDB’s official eligibility page.

Step 2: Apply for your flat

Hopefully you have digested all the information available on HDB’s SBF page and made your decision. If so, you may submit a simple online application on the sales launch page, and pay a $10 admin fee. This needs to be done within the 1-week window that HDB usually gives for their BTO/SBF launches.

Step 3: Wait for results

After application closes, prepare to spend the next few weeks in an insomniac state as HDB conducts the balloting process. This is basically a lottery, but HDB has set it up in such a way that your chances are better if you are a first-time applicant, applying as a couple or family. If eligible for one of the HDB priority schemes (e.g. for living near your parents), you can improve your chances.

Step 4: Get your home loan in order

Meanwhile, you’ll want to prepare for a home loan since you’ll need one to secure your flat. If you’re planning to get an HDB loan, you need to apply for an HDB Flat Eligibility (HFE) letter. For a bank loan, you’ll have to ask for an IPA (In Principle Approval) letter from the bank.

Step 5: Hear from HDB

At the end of about 3 weeks, you’ll get a letter from HDB with your ballot queue number. If it’s something ridiculous like #1,735 then GG, better luck next time. But if your queue number is reasonably small, you get an appointment with HDB for the event of the year: Your SBF flat selection. *pops champagne*

Step 6: Go to HDB and book your flat

At HDB Hub, you’ll be shown what’s available to you, and, if you like what you see, you can book it on the spot (must pay an option fee of $500, $1,000 or $2,000, depending on the size of your flat). Once you have your finances in order, you can come back and sign the official lease agreement and make the downpayment of 20% (HDB loan) or 25% (bank loan) of the flat price.

While you’re at HDB Hub, do head upstairs to the “MyNiceHome Gallery” to check out the 2-room, 3-room, 4-room, and 5-room new BTO flat layouts and mentally prepare yourself to stay in a teeny weeny house.

Step 7: Collect your keys

Assuming all goes well, the next time you’ll hear from HDB is when your key is ready. Hurray! Depending on how far along your flat is in the construction process, key collection day can be as early as within 3 months (if it’s already complete) to 2+ years (if it’s a previously-unsold BTO).

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7. I don’t have enough money for my BTO or SBF

When applying for a BTO, you have what seems like all the time in the world to save up for your downpayment and sort out your finances. However, due to the chop-chop nature of Sale of Balance Flat launches, some applicants may run into cashflow issues. To help with that, HDB has a few concessions.

1. Deferment of Income Assessment

If you and your partner are fresh out of school or NS (within 12 months), you can defer your income assessment until 3 months before key collection for an uncompleted flat or at the time of flat booking for a completed one. HDB will notify you to submit your income documents then.

2. Staggered Downpayment Scheme

First-timer couple applicants under 30 years old, or current homeowners looking to downsize to a smaller flat, can request for the downpayment to be paid in 2 parts. Assuming you go for an HDB loan, this means you only need to pay 5% when you sign the lease agreement, and the other 15% at key collection.

(The total HDB loan downpayment used to be 10%, then it was increased to 15% in Dec 2021, and subsequently 20% from 30 Sep 2022 onwards).

3. Deferred Downpayment Scheme

For elderly (age 55 and up) homeowners looking to downsize their current flat to a new, smaller home (3-room or smaller), your downpayment due date will be automatically extended until the key collection date. When signing the lease agreement, you will only need to pay the stamp duty and legal fees (1% to 3% of flat).

4. Temporary Loan Scheme 

If you’re in the midst of selling your current flat and want to use the proceeds to pay for your new flat, this scheme allows you to get a short-term loan from HDB to help with the cashflow while you wait for the sale proceeds to come in.

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8. HDB Loan or Bank Loan for my BTO or SBF?

No matter how long you put off financing your HDB flat, you’ll have to deal with the painful money bit of buying your flat at some point.

Like every other home buyer, you’ll need to decide on where you get your home loan from—HDB or bank loan?

Requiring no cash downpayment, the HDB loan is the default choice for many new homeowners. However, if you have enough cash for the downpayment, bank loans typically have lower interest rates. You should always compare the current bank loan interest rates with the HDB loan interest rate.

As of July 2023, HDB loan interest rates (currently 2.60% p.a.) are much lower than other home loan interest rates. For example, DBS is currently offering a 2-Year Fixed 3.75% p.a., with the rates from the 3rd year onwards at 3M SORA + 1.00% p.a.

Should you sell your current home now to get a Sale of Balance flat?

Everyone’s situation is different, so the answer to this varies. To find out whether it IS a good time for you to start a property journey, drop us a message on WhatsApp to reach any of our Super Agents.

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This post was originally published on MoneySmart.