After several years of living in an Housing & Development Board (HDB) flat, you may be thinking about change. Perhaps a fresh new environment? Or a whole different setting? Most people who are serious about a 360-degree change would transition from an HDB flat to a private home, in most cases, condominiums. If you belong to that group, read on and learn more about the process.
You have two options:
- Option A: Sell your HDB flat first, then buy your new launch condo unit later
- Option B: Buy your new launch condo unit first, then sell your HDB flat later
In this article, we will be talking about Option A, including the requirements and restrictions that the government has put in place.
Not sure where to start with your condo buying journey? Ohmyhome’s Private Sales Manager, Louis Tay, describes the steps that you need to follow when buying a new launch condo after selling your HDB flat.
8 Simple Steps for Buying a New Launch Condo After Selling Your HDB Flat
Step 1: Ensure you have met your Minimum Occupation Period
The Minimum Occupation Period (MOP) requires you to physically occupy your HDB flat before you can sell it in the open market and invest in private property, both local and overseas.
The keyword here is to “physically occupy,” which means that it excludes any period that you did not occupy the flat. You can do this by registering your Intent to Sell on the HDB resale portal, which lets the HDB quickly assess your eligibility to sell your HDB flat.
Step 2: Start your financial planning
Check the maximum home loan amount and property purchase price you can comfortably afford based on your income, age, and loan commitments.
- Total Debt Servicing Ratio (TDSR) – The TDSR was introduced as part of the property cooling measures. It aims to prevent borrowers from being over-extended with their loans. The current TDSR is 60%, which means you cannot use more than 60% of your gross monthly income to service your total loans. This includes car loans, home loans, and even credit cards.
- Loan-to-Value (LTV) Ratio – For your first housing loan, you can get up to 75% LTV ratio with a bank loan. However, the LTV is drastically reduced when it comes to the second housing loan.
Take note that if you have outstanding home loans that you haven’t paid off, and you are still looking to buy your second property, the LTV limit is 45%. If you are buying your third property, the LTV limit is 35%.
In this step, you should also get an approval-in-principle (AIP) from a bank.
Ohmyhome has in-house mortgage specialists to assist you with comparing home loan packages across different banks. We’ll find you the best rate tailored to your needs, free of charge!
Step 3: Sell your HDB flat in the open market
Sell your flat on your own using the Ohmyhome app at Play Store or App Store. If you prefer having professional help, engage an Ohmyhome property agent to represent you. Our platform allows you to list your flat in the open market. Once the right buyer makes an offer, you can go through the HDB resale process.
Step 4: Hand over your HDB flat
On the HDB completion appointment date, you need to hand over your HDB flat to the new owners. You should have an alternative place to stay while you look for your new condo – a rental unit or the home of your family or friends.
Remember to budget for your temporary living arrangements while you wait for your new launch condo.
Step 5: Shortlist new launch condos and make appointments to visit show flats
Currently, due to the COVID-19 pandemic, appointments are mandatory as the government has implemented tighter social-distancing measures. The best part of setting an appointment with one of our Real Estate Consultants? We can give you a fruitful tour, with exclusive and unbiased property insights.
When you are buying your new launch condo unit, Ohmyhome Real Estate Consultants can guide you through the purchase process, and also take the burden of researching available developments off your shoulders.
Treasure at Tampines, TOP 2023 | Two-bedroom + study
Step 6: Secure your new launch condo unit with a booking fee
Excited to have finally found your new launch condo? It’s time to secure your new property. How? When buying a new launch condo unit in Singapore, you need to pay 5% (cash only) upon booking and signing the Option to Purchase (OTP).
The OTP will be given to you at this point, and you’ll be deemed to have officially booked a unit. This means you’ll forfeit a portion of your booking fee (usually 25%) if you abort the purchase.
When you have a copy of the OTP, you can then finalise your loan for the new launch condo. The bank which you are taking the loan from will issue you a Letter of Offer, a document containing the terms of the loan.
Next, you’ll also need to appoint a solicitor to act for you in the purchase and take care of conveyancing matters.
Step 7: Pay the full down payment of your new launch condo
- Within two weeks after receiving the OTP, the developer will deliver the Sales & Purchase Agreement (S&P).
- Within three weeks after receiving the S&P, you’ll have to sign the S&P and exercise the OTP.
- Within eight weeks from signing OTP, you’ll have to pay the rest of the 15% (cash or CPF) down payment (aka exercise fee).
- Within two weeks from signing S&P, you’ll also have to pay the Buyer’s Stamp Duty (BSD).
The BSD is a tax that every home buyer has to pay when they purchase property. The BSD amount depends on the property price. The more expensive the property, the higher the tax.
For residential properties, you will be charged with the following:
- 1% for the first $180,000
- 2% for the next $180,000
- 3% for the next $640,000
- 4% for the remaining amount
Step 8: Collect the keys to your new home
During the Temporary Occupation Permit (TOP), you will be informed by the developer and will be assigned for a date to collect the keys of your new property. This successfully ends the process of buying your new launch condo after selling your HDB flat.
Payment Schedule for Building Under Construction (BUC)
If you’re planning to buy a new launch condo, here’s the payment schedule if you purchase a BUC or uncompleted property:
| Stage | Percentage of Payment | |
|---|---|---|
| Booking Fee (cash only) | 5% | |
| Within 8 weeks from date of option to purchase (Cash or CPF) | 15% | |
| BSD (Within 2 weeks from signing the S&P Agreement) (On or after 20 Feb 2018) *Buyer’s Stamp Duty is computed based on the purchase price or market value of the property, whichever is higher. | First $180,000: 1% Next $180,000: 2% Next $640,000: 3% Remaining Amount: 4% | |
| ABSD (Within 2 weeks from signing the S&P Agreement) (ABSD rates from 6 July 2018) | Singapore Citizen 1st residential property: N.A 2nd residential property: 12% 3rd residential property: 15% Singapore PR | |
| Foundation work (Est. 6-9 months) | 10% (5% Cash or CPF) (5% from Bank loan) | |
| Reinforced concrete framework (Est. 6-9 months) | 10% | |
| Partition walls (Est. 3-6 months) | 5% | |
| Roofing (Est. 3-6 months) | 5% | |
| Door, window frames, electrical wiring (without fittings), Piping (Est. 3-6 months) | 5% | |
| Car park, roads and drains serving the housing project (Est. 3-6 months) | 5% | |
| Building, roads and drainage and sewerage works in the housing estate, connection of water, electricity and gas supplies (At this stage the TOP is typically released, meaning you can pick up your keys and move in) (Est. 3-6months) | 25% | |
| Final Payment Date and/or Completion (might be staggered further depending on when the Certificate of Statutory Completion is issued) (Est. 1-12 months) | 15% | |
*You can use your CPF Ordinary Account money to pay stamp duty and legal fees. Please note that due to the short timeline to have to pay BSD/ABSD, you will have to pay in cash first and get reimbursed later via CPF as CPF board is unable to disburse within the stipulated time frame.
Now that you have an overview of the steps to buying a new launch condo after selling your HDB flat, you’re all set to buy that dream home.
Bear in mind the factors to consider when buying a new condo – the location (accessibility and amenities), unit size, facilities, interior of the condo, capital appreciation (based on upcoming developments), current market situation, rentability, environment (i.e. noise level), and developer track record.
Do you have a particular new launch condo in mind? Are you thinking about selling your flat soon? We have mortgage specialists and property agents who can help you with both procedures.
VIP Service for Buyers at $0 Agent Fees
Our real estate consultants will provide you with a thorough financial calculation, assist you with everything you need to know from BSD, ABSD, exercising the OTP to choosing the right property and unit to buy.
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