How To Manage Timeline When Upgrading From HDB Flat To Condo?

Many Singaporeans intend to upgrade from a flat to a condo, after their Minimum Occupation Period (MOP). In my previous article, I explained how this might be driven by stagnant resale HDB flat prices, and the attractiveness of gains in Singapore’s private property market.

However, upgrading is a process that involves careful timing, and administrative detail. Mistakes can be expensive, such as paying the Additional Buyers Stamp Duty unnecessarily, or even lost deposits. So, how to manage the timeline when upgrading from HDB flat to a Condo?

In this article, I’ll explain the timeline considerations to keep in mind when upgrading:

Basic checks to make before upgrading:

These are the earliest steps to take, and it is crucial for you to do these before making your move to upgrade,

• Ensure you’re eligible to sell your flat

• Work out the needed down payment

• Check how much of your CPF you need to refund

• Make early preparations for storage and temporary accommodation

1. Ensure you’re eligible to sell your flat

The five-year MOP must be reached before you can attempt to sell your flat on the open market. If you don’t know the exact date, do contact HDB or login to HDB portal with your SingPass.

As a quick reminder, the MOP is counted from the time of key collection, not from the time you balloted for the flat, secured the OTP, etc.

Likewise, if you’ve spent any period living outside of your flat – such as if you’ve spent a year living overseas – this period will not be count toward fulfilling your MOP.

2. Work out the needed down payment

If you are using a bank loan for the first time, note that it’s different from a HDB loan. A bank loan has a maximum Loan To Value (LTV) ratio of 75 per cent – this means you can borrow up to 75 per cent of your intended condo’s price or valuation*, whichever is lower (e.g. for a $1 million condo, the maximum possible loan is $750,000).

For the down payment, the first five per cent of the condo must be paid in cash. For a $1 million condo, for example, you must prepare $50,000 in cash. The government does not permit banks to lend you this amount. Another 20 per cent of your property (i.e. the rest of the down payment) can be in any combination of cash or CPF. If you don’t want to pay any cash for this portion, do ensure you have sufficient money in your CPF.

Note that there’s no HDB loan for Executive Condominiums (ECs), so the above also applies to ECs, even if they’re still technically HDB properties at the time.

*For new launch condos, the developer’s price is considered to be the same as the valuation.

3. Check how much of your CPF you need to refund

When you sell your flat, you must refund any CPF monies that you used for the flat, along with the 2.5 per cent interest it would have accrued. Many Singaporeans would have used their CPF to pay for the following:

• Your flat down payment

• The Buyers Stamp Duty (BSD) for your flat

• Legal fees for buying the flat

• Servicing your monthly home loan

Do check with the CPF board, on how much of your CPF you’re required to refund alternatively, you can login to CPF website via Singpass to find out. While you can still use your CPF to buy your condo, you must refund the amount first, before you can use it for your next home.

Note that in some cases, the refund may take up the whole sale proceeds, leaving you with no cash in hand. In such a situation, you must look for other ways to pay the first five per cent of your condo in cash (see point 3).

4. Make early preparations for storage and temporary accommodation

Unless you’re buying a resale condo, which you can move into immediately, there will be an interim period where you need to have temporary lodging. Do make plans to store any of your large items (e.g. your bed, television set, antique study desks), as you may not be able to fit this into your temporary home. Alternatively, renting an unfurnished apartment would be ideal.

As a tip, I would suggest you trim down your spending on material goods, if you know you’ll soon be moving to a new home; this will make it much easier to move. Perhaps consider selling unused, bulky items on second-hand sites like Carousell, E-Bay, etc.

Once that’s settled, you have two choices on how to upgrade: