Purchasing your first HDB resale flat in Singapore is a significant milestone, but the process can seem overwhelming for first-time buyers. This comprehensive guide breaks down each step of the HDB resale process, helping you navigate the journey with confidence from eligibility checks to key collection.
Understanding the HDB Resale Market
The Housing and Development Board (HDB) resale market offers several advantages for first-time homebuyers in Singapore:
- Immediate availability - Unlike BTO flats, which have a waiting period of 3-5 years for construction, resale flats are available for immediate occupation after the transaction is completed.
- Location choices - Resale flats are available in mature estates with established amenities and transportation networks.
- No balloting - The purchase process is direct between buyer and seller, eliminating the uncertainty of the BTO ballot system.
- Larger units - Older resale flats often offer larger floor areas compared to newer developments.
However, resale flats typically come at a premium above the BTO pricing, and the units are older with fewer years remaining on the 99-year lease.
Before You Begin
Before diving into the HDB resale process, take time to research different neighborhoods, understand your budget constraints, and clarify your housing needs. Visit multiple properties to get a feel for different layouts, locations, and price points in the market.
Eligibility Requirements for HDB Resale Flats
HDB has specific eligibility criteria that all buyers must meet:
Citizenship Requirements
- Singapore Citizen (SC) - At least one buyer must be a Singapore Citizen.
- Singapore Permanent Resident (SPR) - SPRs can buy resale flats but only with a Singapore Citizen, or as a family unit where all members are SPRs.
- Non-citizens - Foreigners are not eligible to purchase HDB resale flats.
Family Nucleus Requirement
To purchase a resale flat, you must form a family nucleus under one of these schemes:
- Public Scheme - You can apply with:
- Your spouse and children (if any)
- Your parents and siblings (if any)
- Your children under your legal custody (for widowed/divorced)
- Fiancé/Fiancée Scheme - You can apply with your fiancé/fiancée. You must submit your marriage certificate to HDB within 3 months of taking possession of the flat.
- Orphan Scheme - You can apply with your unmarried siblings if both your parents are deceased.
- Single Scheme - If you're a Singapore Citizen aged 35 or above and unmarried, divorced, or widowed, you can purchase a resale flat on your own.
- Joint Singles Scheme - Up to 4 single Singapore Citizens (aged 35 or above) can jointly purchase a resale flat.
Income Ceiling
For resale flats, there is no income ceiling unless you're applying for the CPF Housing Grant, in which case:
- Family Grant - Household income must not exceed $14,000
- Enhanced CPF Housing Grant (EHG) - Household income must not exceed $9,000
- Singles Grant - Monthly income must not exceed $7,000
Property Ownership Restrictions
- You must not own any other property locally or overseas at the time of flat purchase, or dispose of any such properties within 30 days of the resale completion.
- For singles, you must not have owned two or more HDB flats previously.
- If you previously sold a private property, you must wait 15 months before buying a resale flat (unless you qualify for an exemption).
| Buyer Type | Eligibility Requirements | Flat Types Allowed |
|---|---|---|
| Families | SC/PR forming a family nucleus | All flat types |
| Single SC (≥35 years) | Aged 35 or above, unmarried/divorced/widowed | 2-room Flexi and larger flats in non-mature estates; All flat types in mature estates |
| Joint Singles (≥35 years) | Up to 4 SCs, all aged 35 or above | 2-room Flexi and larger flats in non-mature estates; All flat types in mature estates |
| Senior Citizens (≥55 years) | SC aged 55 or above | All flat types |
Step-by-Step HDB Resale Process
The HDB resale process can be completed in about 8 weeks if all goes smoothly. Here's a detailed breakdown of each step:
Check Eligibility and Budget
Before you begin viewing properties, ensure you meet all eligibility requirements and have a clear understanding of your budget.
Key tasks:
- Check eligibility schemes applicable to your situation
- Calculate your financial budget using HDB's Financial Planning Tools
- Get an Approval in Principle (AIP) for a bank loan, or apply for an HDB Loan Eligibility (HLE) letter if opting for an HDB loan
- Research available CPF housing grants
Financial considerations:
- Cash outlay - Option fee, downpayment, stamp duties, legal fees, renovation costs
- CPF usage - Determine how much CPF Ordinary Account (OA) savings you can use
- Loan amount - Calculate maximum loan based on Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR)
Property Search and Viewing
Once you've determined your eligibility and budget, start searching for suitable properties.
Where to search:
- HDB Resale Flat Portal
- Property portals (PropertyGuru, 99.co, SRX)
- Real estate agents
- Newspaper classifieds
What to check during viewings:
- Property condition - Check for cracks, water damage, electrical issues
- Facing and natural light - Consider unit orientation and sunlight exposure
- Noise levels - Visit at different times to assess noise
- Neighborhood amenities - Proximity to MRT stations, schools, markets, etc.
- Remaining lease - Check the remaining years on the 99-year lease
Negotiate and Submit Option to Purchase (OTP)
Once you've found a suitable property, negotiate the price with the seller and secure the Option to Purchase.
Negotiation tips:
- Research recent transacted prices in the area using HDB's resale statistics
- Consider the flat's condition, remaining lease, and market trends
- Be prepared to compromise but know your maximum budget
Option to Purchase process:
- The seller grants you an Option to Purchase (OTP)
- Pay an Option Fee (between $1 to $1,000) to the seller
- The OTP is valid for 21 calendar days
- Use this time to carefully consider your decision and secure financing
Exercise the Option and Submit Resale Application
If you decide to proceed with the purchase, exercise the OTP within the 21-day period and submit your resale application to HDB.
To exercise the OTP:
- Complete the portion of the OTP meant for the buyer
- Pay the Exercise Fee (balance of the Option Fee, up to a total of $5,000)
- Submit a copy of the exercised OTP to the seller
Resale Application submission:
- Both buyer and seller must submit their respective portions of the resale application via the HDB Resale Portal
- Submission must be done within 7 calendar days of each other
- You'll need to declare the resale price, payment method, and whether you're applying for CPF grants
Important Note
Since 2018, HDB has streamlined the resale process with the HDB Resale Portal. The portal will retrieve required information from government agencies where possible, reducing the need for document submissions.
HDB Appointment and Flat Inspection
After submitting your application, HDB will process it and schedule appointments.
Application processing:
- HDB processes your application within 3 weeks
- You may be asked to provide additional documents
Flat inspection:
- It's highly recommended to conduct a thorough inspection of the flat
- You can hire a professional inspector or do it yourself
- Check for unauthorized renovations, structural issues, electrical problems, plumbing issues, etc.
- Ensure all items to be included in the sale are in working condition
HDB appointments:
- First appointment: HDB will verify the documents and discuss the use of CPF funds and loans
- Second appointment: For the completion of the transaction
Financing and Payment
Ensure your financing is in order and prepare for the various payments required.
Financing options:
- HDB loan:
- Up to 80% of the purchase price or valuation, whichever is lower
- Current interest rate: 2.6%
- Requires HLE letter before OTP is granted
- Bank loan:
- Up to 75% of the purchase price or valuation, whichever is lower
- Interest rates vary between banks (currently 3.5% - 4.0%)
- Requires AIP before OTP is granted
Payments required:
- Downpayment: 20% (HDB loan) or 25% (bank loan) of the purchase price
- Buyer's Stamp Duty (BSD): Progressive rates based on property price
- Legal fees: Approximately $500-$800
- Property agent's commission: If you're using an agent
- Miscellaneous fees: Administrative fees, insurance, etc.
CPF housing grants available:
- Family Grant: Up to $50,000 for families buying 4-room or smaller flats, $40,000 for 5-room or larger flats
- Enhanced CPF Housing Grant (EHG): Up to $80,000 depending on household income
- Proximity Housing Grant (PHG): $20,000 for families buying a flat to live near parents/children, $10,000 for singles
Completion and Key Collection
The final step involves completing the transaction and collecting the keys to your new home.
At the HDB completion appointment:
- Both buyer and seller must be present
- Final documents will be signed
- Payment to the seller will be made
- You'll receive the keys to your new flat
After key collection:
- Update your address with relevant authorities
- Apply for utilities and services
- Plan for renovation (if needed)
- Set up fire insurance and home content insurance
Common Pitfalls and How to Avoid Them
Not Checking the Remaining Lease
Flats with short remaining leases (less than 60 years) may face issues with financing, CPF usage, and future resale value. Carefully consider the remaining lease and its impact on your long-term plans.
Overlooking Estate Maintenance
Some older estates may have pending maintenance or upgrading works that could affect your living experience or require additional payments. Check with the Town Council about any upcoming works or issues.
Ignoring Unauthorized Renovations
Unauthorized renovations may need to be rectified at your expense. Check if all renovations have been approved by HDB and that they comply with current regulations.
Miscalculating Total Costs
Besides the purchase price, factor in renovation costs, furniture, appliances, and monthly expenses like conservancy charges, property tax, and loan repayments.
Neglecting the Mortgage Servicing Ratio (MSR)
The MSR limits your monthly mortgage payment to 30% of your gross monthly income. Ensure your planned purchase allows you to stay within this limit to avoid financial strain.
"First-time buyers often focus too much on the purchase price without considering the total cost of ownership. Remember that renovation, furnishing, and ongoing maintenance can add significantly to your initial budget."
Pro Tips for First-time Buyers
- Visit multiple properties before making a decision to get a better sense of the market.
- Check the surroundings at different times of day to assess noise levels, traffic, and neighbor activity.
- Consider future developments in the area that might affect property value (both positively and negatively).
- Factor in renovation costs when budgeting, especially for older flats that may require more extensive work.
- Engage a reliable agent who specializes in the areas you're interested in.
Recent Policy Changes Affecting HDB Resale Buyers
September 2022 Cooling Measures
The government introduced measures including a 15-month wait-out period for private property owners looking to buy HDB resale flats. This has reduced competition from downsizers in the resale market.
Enhanced CPF Housing Grant (EHG)
The EHG replaced the Additional CPF Housing Grant (AHG) and Special CPF Housing Grant (SHG), providing up to $80,000 in grants based on income and employment status.
Higher Loan-to-Value (LTV) Limits
HDB loan LTV was reduced from 85% to 80% in September 2022, requiring a larger downpayment from buyers.
Revised MSR and TDSR Calculations
The Mortgage Servicing Ratio (MSR) for HDB loans and the Total Debt Servicing Ratio (TDSR) calculations have been updated to account for higher interest rates.
Conclusion
Purchasing an HDB resale flat is a significant milestone that involves multiple steps and considerations. By understanding the process thoroughly and preparing adequately, first-time buyers can navigate the journey with confidence.
Remember that buying a home is both a financial and lifestyle decision. Take the time to research thoroughly, plan your finances carefully, and consider your long-term needs. With proper preparation and guidance, you'll be well-equipped to find a resale flat that meets your needs and budget.
If you have specific questions about your HDB resale purchase journey, our team at Crotisnebb is always ready to provide personalized advice and assistance.