Step-by-Step Guide On Buying A Resale HDB Flat in Singapore
Aside from Build-To-Order (BTO) flats, resale flats are another option for public housing in Singapore. According Q1 2021 HDB resale statistics, there has been an increase in HDB resale purchases – a total of 7,581 resale applications were made which is almost 29% higher than Q1 2020.
While buying a BTO is a relatively straightforward process (check out our step-by-step guide to buying a BTO flat), a resale flat transaction can be more complicated. The process can take about 2 to 3 months, or more depending on the buyer(s), seller(s), and any potential delays on submissions and coordination of the process.
Here is a guide on the process of buying a resale flat.
#1 Eligibility To Purchase
First, we need to check that we are eligible for the HDB resale purchase. This includes fulfilling both HDB criteria and the financial capability to take on the purchase or mortgage.
For HDB requirements, we can check our eligibility here. Similar to the eligibility for BTO flats, we would need to form an eligible family unit to purchase a HDB flat or be 35 years old and above to purchase as a single. Apart from fulfilling age and citizenship requirements, there are other requirements to take note of. For example, buyers are not supposed to have other properties and would have to dispose of them within 6 months of purchase.
For finances, it would depend on the kind of financing we are using. Apart from our cash and Central Provident Fund (CPF) Ordinary Account savings, we may also be eligible for HDB housing grants and apply for housing loans to afford the purchase.
The use of our CPF funds is limited by the remaining lease of the flat we purchase. If the resale flat we intend to purchase has a lease of 20 years or less, or it doesn’t cover the youngest buyer until 95 years old, the amount of CPF savings you can use will be prorated. Similarly, the lease also affects the loan amount for HDB housing loans. For flats with less than 20 years, HDB will not provide a housing loan for the purchase.
For HDB loan financing, we can check on our loan potential limits here. For financial institutions, we can check with the individual banks or consult a mortgage broker such as Redbrick. To better budget our finances, HDB has a calculator for us to make better estimations here.
#2 Register Intent To Buy
Upon confirming our eligibility to purchase HDB resale, we should register online with HDB for our Intent to Buy. We would need to ready our particulars including those of any essential occupiers. The process would take about 10 minutes to fill up. Successful registration of intent would show that we are eligible and ready to accept any Option to Purchase from potential sellers.
The validity of our Intent To Buy lasts for about a year.
#3 Scout For Flat With Or Without Property Agent And Take Note Of Remaining Lease
At this point, we can start to scout for the ideal home. This can be done by sourcing online through housing portals such as 99.co or PropertyGuru. We can also start engaging a property agent to help us source and manage our HDB resale purchase process. Do note that engaging a property agent will mean paying for agent commissions which could add another 1% or more of our eventual transaction cost.
While sourcing for homes, we can look at previously transacted prices of HDB in the same area as a reference. Apart from pricing and location, as resale buyers, we would have to take note of the remaining lease of the flat (see our abovementioned point #1 regarding CPF usage and lease).
In addition, we also have to check that the resale flat unit we intend to buy is within the Ethnic Integration Policy (EIP) and Singapore Permanent Resident (SPR) quota for both the block and neighbourhood. Eligibility for EIP and SPR can be checked online here.
#4 Ensure Housing Loans Eligibility Approval Before Confirming For Option To Purchase
Once we found our ideal flat, we need to check that our housing loans are approved by the respective institutions before requesting the Intent to Purchase.
For the HDB housing loan, we would have to apply online here. The maximum loan term is 30 years. Upon approval, we will get our HDB Loan Eligibility letter which will be valid for a period of 6 months.
For banks, we would have to apply with the respective banks. The maximum loan term is 25 years. Upon approval, we will get a Letter of Offer for the housing loan.
#5 Get Option To Purchase From Seller (And Get A Conveyancer Lawyer If Required)
At this juncture, the process of purchasing the resale flat is no longer solely dependent on our pace, but also on our seller(s).
To finalise our decision to purchase the resale flat, we can request our seller to provide us with the Option to Purchase. The option fee would cost $1,000 or less and it will expire after 21 calendar days. On top of the option fee, we have to pay the deposit which is not more than $5,000. In the Option to Purchase, the price of the flat would have to be declared by both buyer and seller. If we do change our minds after signing the option, we can choose not to exercise the option and let it lapse after 21 days.
If we intend to proceed on with the purchase, we might want to engage a conveyancer lawyer. The conveyancer lawyer would help you vet through the Option to Purchase agreement and handle subsequent resale procedure paperwork. If you applied for a bank loan, your bank may have a panel of recommended lawyers. If we are using HDB loan, we can check to see if we are eligible to use HDB conveyancing lawyers instead.
You can expect to pay upwards of $2,000 on fees for a private conveyancing lawyer fees. For HDB conveyancing fees, the rates can be found here.
#6 Request Value Of Flat From HDB Resale Portal
Upon receiving Option to Purchase, we can apply and submit for a Request for Value (ROV). HDB will assign an approved external valuer to conduct the assessment within three working days. The processing fee for ROV is $120. HDB will email us once the valuation is ready. The valuation would be valid for a period of three months and we would have to submit our resale application within the valuation validity.
If the HDB flat price is above valuation, the buyer needs to pay for Cash Over Valuation (COV) with cash. This is true even if our In-Principle Approval (IPA) was larger. This is because, for housing loans, the limits are usually the lower of either the valuation or the price of HDB flat. COV has to be paid in cash, we cannot use our CPF Ordinary Savings (OA) for this payment.
To minimise the discrepancy between valuation and price, we can refer to HDB’s Resale Flat Prices e-service for indicative values.
#7 Exercise Option To Purchase, Submit Resale Application, Pay Resale Application Fee & Endorse
Once we are ready, we can exercise the Option to Purchase (OTP) and prepare the resale application documents for submission to HDB. Submission of documents would require coordination of both parties as both buyers and sellers have to submit their resale application within 7 calendar days from each other.
Do note that if the seller wishes to apply for the temporary extension of stay, they will have to submit their application here. The temporary extension of stay duration is up to a maximum of 3 months from the resale date. More details on the temporary extension of stay process can be found here.
Resale documentations to be included are the OTP contract, personal particulars, loan, and grant details. More details can be found here. After submitting the documents, we would have to pay a resale application administrative fee via the HDB Resale Portal. The fees are $40 for 1- and 2-room and $80 for 3-room and larger flats. After submission, HDB will notify both buyer and seller of the document acceptance via SMS or email within 10 working days.
The average processing is 8 weeks from the date of document acceptance. During this time frame, HDB will assess the eligibility of buyers and sellers, process our CPF withdrawals (if any), amount of HDB housing loan, stamp fees, registration fees, conveyancing fees, and more. We can check the progress on the HDB resale portal and endorse the documents if necessary. If we are taking an HDB loan, a total of $128.90 is payable on the Resale portal. If there is no HDB loan, we would still need to pay $64.45.
#8 Attend Resale Completion Meeting And Receive Our Keys
Finally, when we can confirm that our resale application submission is successful, HDB would notify us of the date and time to carry out the Resale Completion Appointment.
Before completing the resale, we have to pay off the balance of the purchase price (if any) and inspect the resale flat.
On the day of the appointment, both sellers and buyers or their representative lawyer(s) will need to physically attend to complete the resale transaction.
During the appointment, the original Option to Purchase and the receipt for final cash payment (if any) must be submitted. If we used an HDB housing loan, we have to bring a valid Certificate of Insurance for a Mortgage Fire Insurance Policy on the resale flat issued by HDB’s appointed Insurer.
With all the necessary documents in place, we would sign the contracts to confirm the transfer of ownership, mortgage, and other relevant forms. If the seller did not ask for a temporary extension of stay, we would then receive the keys and become the official owners of the HDB resale flat.
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