Buying a Resale HDB Flat: A Step-by-Step Guide

Resale HDB flats remain a popular choice for homebuyers in Singapore, offering a blend of affordability and established communities. However, navigating the resale market requires careful planning and understanding of the process. This guide provides a step-by-step walkthrough of buying a resale HDB flat, covering essential aspects like eligibility, financing, and legal procedures.

Assessing Your Eligibility

Before diving into your resale HDB flat hunt, it’s crucial to check whether you meet the eligibility criteria set by HDB. These criteria help ensure a fair and equitable allocation of public housing resources.

Citizenship: At least one buyer must be a Singapore Citizen.
Age: Applicants must be at least 21 years old if applying as a family nucleus or 35 years old if applying as a single.
Income Ceiling: While there’s no income ceiling for buying resale flats, it applies if you’re considering an HDB loan or applying for CPF Housing Grants.
Property Ownership: You generally shouldn’t own any other property locally or overseas.

It’s advisable to use the HDB Flat Eligibility (HFE) letter application to check your eligibility before proceeding with your flat search.

Financial Planning and Budgeting

Buying a resale flat involves significant financial commitments beyond the purchase price. Careful planning and budgeting are crucial to ensure a smooth and stress-free homeownership journey.

Down Payment: The minimum down payment for a resale flat is typically 20% of the purchase price if you’re taking an HDB loan and 25% if you’re opting for a bank loan with a Loan-To-Value Limit of 75%. For a Loan-To-Value Limit of 55%, the amount will be 45%. Consider using your CPF Ordinary Account (OA) savings to offset this amount.
Stamp Duty: This tax is calculated based on the purchase price or market value of the flat, whichever is higher. You can use the IRAS website or our website calculator to calculate the applicable stamp duty.
Legal Fees: Engaging a lawyer is essential for conveyancing and legal documentation. Legal fees can vary, so it’s advisable to obtain quotes from different law firms.
Valuation Fee: A valuation fee of $120 is charged by HDB for all resale flat purchases, regardless of whether you take an HDB loan or a bank loan.
Renovation Costs: If you plan to renovate your new flat, factor in these costs, which can vary significantly depending on the scope of work.
Other Costs: Include potential expenses like home insurance, fire insurance, and moving costs in your budget.

For those facing financial constraints, consider exploring options like the HDB bridging loan, which can help you bridge the gap between selling your existing property and buying a new one.

Searching for a Suitable Flat

Finding the perfect resale flat that aligns with your needs and preferences requires careful consideration and research. Here are some key factors to keep in mind during your search:

Location
Size and layout
Flat condition
Remaining lease
Amenities and facilities

Utilise online property portals, attend open houses, and engage a trusted property agent to help you find suitable resale flats that meet your criteria.

Making an Offer and Negotiating the Price

Once you’ve found a resale flat that ticks all the boxes, it’s time to make an offer and negotiate the price with the seller. This stage requires careful consideration and a strategic approach.

Valuation: Before making an offer, it’s crucial to have a realistic understanding of the flat’s valuation. You can research recent transacted prices of similar flats in the vicinity, use online valuation tools, or consult a property agent for a professional opinion.
Offer Price: Based on your research and assessment, make a reasonable offer to the seller. Consider factors like the flat’s condition, remaining lease, and prevailing market conditions.
Negotiation: Be prepared to negotiate with the seller for a mutually agreeable price. This may involve several rounds of offers and counter-offers.
Option to Purchase (OTP): Once you and the seller agree on a price, you’ll need to pay an option fee to secure the Option to Purchase (OTP). The OTP grants you the exclusive right to purchase the flat within a specified timeframe.
Exercise the OTP: If you decide to proceed with the purchase, you’ll need to exercise the OTP within the option period and pay the remaining option fee.

Applying for an HDB Loan or Bank Loan

Once you’ve exercised the OTP, it’s time to secure the necessary financing for your flat purchase. You have two primary options: an HDB loan or a bank loan. Each has its own set of features, eligibility criteria, and considerations.

HDB Loans

HDB loans offer a fixed interest rate, currently at 2.6% per annum. They also allow you to use your CPF Ordinary Account (OA) savings to pay for your down payment and monthly instalments.

To qualify for an HDB loan, you must meet the HDB’s eligibility criteria, including citizenship, income ceiling, and property ownership requirements. HDB loans offer stability with interest rates pegged at 0.1% above the CPF Ordinary Account (OA) rate. HDB loans and bank loans for HDB properties offer the same maximum loan tenure of up to 25 years or until the borrower turns 65, whichever comes first. However, bank loans for HDB properties provide an alternative option to extend the tenure to 30 years or until the borrower turns 75, whichever comes first. This extension, however, requires a minimum cash down payment of 10%.

Bank Loans

Bank loans offer a wider variety of loan packages, including fixed-rate and floating-rate loans. They may also offer longer loan tenures and more flexible repayment options.

Like HDB loans, banks have their own eligibility criteria, typically focusing on credit score, income stability, and debt-to-income ratio. Although bank loans can offer more flexibility and potentially lower interest rates, they may require a larger down payment and involve a more stringent credit assessment process.

Carefully compare the features and eligibility criteria of both HDB and bank loans to determine which option best suits your financial situation and preferences. You can also use online resources like a home loan eligibility calculator in Singapore to assess your borrowing capacity and compare different loan scenarios.

Completing the Transaction and Moving In

With your loan secured, you’re in the final stretch of your resale HDB buying process. Here’s a brief overview of the remaining steps:

Legal Documentation: Your lawyer will prepare the necessary legal documents, including the Sale and Purchase Agreement (S&P). Review these documents carefully before signing.
HDB Approval: Submit the resale application to HDB for approval. This process typically takes about 6-8 weeks.
Completion Appointment: Once HDB approves the resale, you’ll attend a completion appointment at HDB Hub to finalise the transaction.
Key Collection: After the completion appointment, you can collect the keys to your new flat from the seller.
Moving In: Congratulations! You’re now the proud owner of a resale HDB flat. Start planning your move and enjoy your new home.

Remember, this is a simplified overview. The process may involve additional steps or specific requirements depending on your circumstances. It’s always advisable to consult with your lawyer or HDB officer for personalised guidance.

Embark on Your Resale HDB Journey with Confidence

Buying a resale HDB flat is a significant step towards achieving your homeownership dreams. By understanding the process, planning your finances carefully, and seeking professional guidance from The Loan Connection when needed, you can navigate the resale market with confidence and make informed decisions that align with your needs and aspirations.