Introduction:
If you’re considering buying an HDB resale flat in Singapore, one of the most important things you need to know is the downpayment. The downpayment is the amount of money you need to pay upfront to secure your flat purchase. It’s a significant financial commitment that you need to be prepared for, so it’s essential to understand how much you need to pay and when you need to pay it.
When you purchase an HDB resale flat, you’ll need to pay a downpayment of 20% of the purchase price. You can use your CPF Ordinary Account (OA) savings to pay for the downpayment, but you’ll need to have enough funds in your account to cover the amount. If you don’t have enough CPF savings, you’ll need to pay the remaining amount in cash. The downpayment is an important part of the financial planning process for your resale flat purchase, so it’s crucial to understand how it works and how it fits into your overall budget.
Key Takeaways:
- The downpayment for an HDB resale flat is 20% of the purchase price, and you can use your CPF OA savings to pay for it.
- If you don’t have enough CPF savings, you’ll need to pay the remaining amount in cash.
- Understanding the downpayment is an essential part of the financial planning process for your resale flat purchase.
Understanding HDB Resale Flats and Eligibility
HDB Flat Eligibility
Before you can purchase an HDB resale flat, you need to be eligible. The eligibility criteria for purchasing an HDB resale flat in Singapore are not as strict as those for buying a new Build-To-Order (BTO) flat. However, you still need to meet certain requirements to be eligible.
To check your eligibility, you need to obtain an HDB Flat Eligibility (HFE) letter from the HDB. This letter will inform you of your eligibility to buy an HDB flat and the type of flat you are eligible to buy. You can apply for the HFE letter online through the HDB website.
Resale Flat Overview
HDB resale flats are previously owned flats that are sold in the open market. They are usually cheaper than new BTO flats and are a good option for those who want to move into a new home quickly.
When purchasing an HDB resale flat, you will need to pay a downpayment. The downpayment is a percentage of the purchase price of the flat and can be paid in cash or CPF savings. The downpayment amount depends on various factors, such as whether you are a Singapore citizen or permanent resident, the type of flat you are buying, and whether you are taking an HDB loan or a bank loan.
If you are a first-time buyer, you may be eligible for various grants that can help you with the downpayment. For example, the Enhanced CPF Housing Grant (EHG) provides up to $80,000 for first-time BTO flat buyers. Additionally, resale flat buyers can apply for the Family Grant ($50,000) and the Proximity Housing Grant ($30,000).
It is important to note that not everyone is eligible to purchase an HDB resale flat. You need to verify your eligibility by checking which scheme applies to you. For example, the Fiancé/Fiancée Scheme allows Singapore citizens and permanent residents to purchase an HDB resale flat if they are engaged to be married.
Overall, HDB resale flats are a great option for those who want to move into a new home quickly and save money. However, it is important to understand the eligibility criteria and downpayment requirements before making a purchase.
Financial Planning for Your Resale Flat Purchase
When buying an HDB resale flat, it is important to have a financial plan in place. This includes budgeting for the purchase price, estimating the Cash Over Valuation (COV), and creating a financial plan to ensure that you are able to afford the flat.
Budgeting for Purchase Price
The purchase price of an HDB resale flat varies depending on its location, size, and age. It is important to research the market and determine a realistic budget for your purchase. You can use online resources and property agents to get an idea of the current prices of flats in your desired location.
Estimating the Cash Over Valuation (COV)
The Cash Over Valuation (COV) is the difference between the purchase price of the flat and its market value. It is important to estimate the COV before making an offer on a flat, as it can significantly affect the amount of cash you need to pay upfront. You can use online resources and property agents to get an idea of the current COV for flats in your desired location.
Creating a Financial Plan
Once you have determined a budget and estimated the COV, it is important to create a financial plan to ensure that you are able to afford the flat. This includes determining how much cash you need to pay upfront, how much you can borrow from HDB or a financial institution, and how much you can use from your CPF savings.
To finance your flat purchase, you may choose to get a housing loan from HDB or a financial institution regulated by the Monetary Authority of Singapore. You may also be eligible to receive a housing subsidy to help with the purchase of your resale flat.
When creating your financial plan, it is important to consider all of your expenses, including the down payment, legal fees, stamp duty, and renovation costs. You should also consider your income and savings, and determine a realistic repayment plan for your housing loan.
By creating a financial plan, you can ensure that you are able to afford your HDB resale flat and avoid any financial difficulties in the future.
CPF Usage and Housing Loans
When it comes to buying an HDB resale flat in Singapore, you have two main options for financing: CPF Ordinary Account savings and Housing Loans. Here’s what you need to know about both options.
Utilising CPF Ordinary Account Savings
Your CPF Ordinary Account savings can be used to pay for the downpayment on your HDB resale flat. The amount you can use depends on your age and the remaining lease of the flat. You can use up to 100% of your CPF Ordinary Account savings to pay for the downpayment, provided that the remaining lease of the flat covers you up to the age of 95.
Understanding HDB Loans vs Bank Loans
HDB offers two types of loans: the HDB Concessionary Loan and the HDB Loan. The former is available only to Singapore citizens, while the latter is available to both Singapore citizens and Permanent Residents. In contrast, bank loans are available to all buyers.
HDB loans have a few advantages over bank loans. Firstly, they offer lower interest rates. Secondly, they have a longer repayment period of up to 25 years, compared to the 20-year maximum for bank loans. However, bank loans may offer more flexibility in repayment terms, such as the ability to switch between fixed and floating interest rates.
Loan-to-Value (LTV) Limitations
The Loan-to-Value (LTV) ratio is the amount of money you can borrow as a percentage of the value of the property. The LTV ratio for HDB loans is up to 90% of the lower of the flat’s purchase price or value. For bank loans, the LTV ratio is typically up to 75% of the purchase price or value.
It’s important to note that the LTV ratio is subject to limitations. For example, if the remaining lease of the flat is less than 60 years, the LTV ratio for HDB loans is reduced to 65%. Additionally, if you already have an existing housing loan, the LTV ratio may be reduced further.
Overall, understanding the options available to you for financing your HDB resale flat is crucial. By utilising your CPF Ordinary Account savings and choosing the right loan option, you can ensure that you have the funds you need to purchase your dream home.
Downpayment and Related Costs
Buying an HDB resale flat in Singapore requires a significant amount of money upfront. In this section, we’ll discuss the downpayment and related costs associated with purchasing an HDB resale flat.
Calculating Downpayment for HDB Resale
The downpayment for an HDB resale flat is calculated as a percentage of the purchase price. If you are taking out an HDB loan, the downpayment is 10% of the purchase price, and you can pay it using your CPF savings or cash. If you are taking out a bank loan, the downpayment is 25% of the purchase price, and you must pay at least 5% of it in cash.
Stamp Duty and Legal Fees
In addition to the downpayment, you will also need to pay stamp duty and legal fees when purchasing an HDB resale flat. The buyer’s stamp duty (BSD) is a tax levied on the purchase price of the property, and it ranges from 1% to 4%. The additional buyer’s stamp duty (ABSD) is a tax levied on the purchase price of the property if you are a second-time buyer, and it ranges from 12% to 20%.
Legal fees are another cost to consider when purchasing an HDB resale flat. These fees cover the cost of engaging a lawyer to handle the conveyancing process. The legal fees for purchasing an HDB resale flat typically range from $1,500 to $2,500.
Staggered Downpayment Scheme
The HDB staggered downpayment scheme is a payment scheme that allows buyers to pay their downpayment in installments. This scheme is available to buyers who are taking out an HDB loan and have not owned a flat before. Under this scheme, the downpayment is split into two payments, with the first payment being 5% of the purchase price and the second payment being the remaining 5% of the purchase price.
In conclusion, purchasing an HDB resale flat in Singapore requires a significant amount of money upfront. The downpayment, stamp duty, and legal fees are some of the costs to consider when buying an HDB resale flat. The HDB staggered downpayment scheme is available for first-time buyers who are taking out an HDB loan.
The Resale Transaction Process
If you have decided to purchase a resale HDB flat, you will need to go through the resale transaction process. This process involves several steps, including the option to purchase and deposit, resale application and completion.
Option to Purchase and Deposit
Once you have found a suitable resale flat, you will need to obtain an Option to Purchase (OTP) from the seller. The OTP gives you the exclusive right to purchase the flat for a period of 21 calendar days. During this period, you will need to pay a deposit to the seller, which is usually 1% of the purchase price.
Resale Application and Completion
After obtaining the OTP, you will need to submit a resale application to HDB. This involves filling out a resale application form and submitting it to HDB, along with the required documents and fees. HDB will then process your application, which includes a request for value and an appointment for the completion of the transaction.
During the resale completion appointment, you will sign the resale contract and pay the remaining downpayment and other fees. The downpayment for a resale HDB flat is 20% of the purchase price, which can be paid using your CPF savings and/or cash. The other fees include legal fees, stamp duty, and registration fees.
Overall, the resale transaction process can be a complex and lengthy journey. However, with the right knowledge and guidance, you can navigate through it with ease.
Post-Purchase Considerations
Congratulations on your purchase of an HDB resale flat! Now that you have completed the transaction, there are a few post-purchase considerations you should take into account.
Refinancing and Monthly Instalments
One important consideration is refinancing your HDB resale flat. Refinancing can help you save money on your monthly instalments by securing a lower interest rate. You can refinance your HDB resale flat with a different bank or financial institution.
To get started, you can compare the interest rates offered by different banks and financial institutions. You can also use online tools such as PropertyGuru Finance to get an idea of what your monthly instalments might be.
It’s important to note that refinancing your HDB resale flat may come with additional fees and charges. Be sure to read the fine print and compare the total cost of refinancing before making a decision.
Property Cooling Measures and Future Planning
Another consideration is the impact of property cooling measures on your HDB resale flat. Property cooling measures are government policies designed to slow down the property market and prevent speculation.
In Singapore, property cooling measures can affect the market value of your HDB resale flat. It’s important to stay informed about any changes to property cooling measures and how they might affect your investment.
Looking to the future, you may also want to consider your long-term plans for your HDB resale flat. Will you be living in the flat for many years to come, or do you plan to sell it in the future?
If you plan to sell your HDB resale flat, you may want to consider making improvements or renovations that can increase its value. You can also keep an eye on market trends and property prices to help you make informed decisions about when to sell.
Overall, post-purchase considerations are an important part of owning an HDB resale flat in Singapore. By staying informed and planning ahead, you can make the most of your investment and enjoy your new home for years to come.
Frequently Asked Questions
What’s the minimum downpayment required for a resale HDB flat?
The minimum downpayment required for a resale HDB flat is 20% of the purchase price. This amount can be paid in cash, with your CPF-OA, or a mix of both. However, it’s important to note that the downpayment amount may vary depending on the type of loan you choose.
Can you tell me when the downpayment for an HDB resale flat is due?
The downpayment for an HDB resale flat is due upon signing the Option to Purchase (OTP). You will need to pay the downpayment within 14 days of signing the OTP.
What percentage of the HDB resale price must be paid upfront?
As mentioned earlier, the minimum downpayment for an HDB resale flat is 20% of the purchase price. This means that you will need to pay 20% of the resale price upfront.
Are there any calculators to help estimate the downpayment for a resale HDB flat?
Yes, there are calculators available online to help estimate the downpayment for a resale HDB flat. You can use these calculators to get an idea of how much you will need to pay upfront.
Is the downpayment for a resale HDB flat different from that of a BTO?
No, the downpayment for a resale HDB flat is not different from that of a BTO. The rules for down payments on HDB resale flats are largely the same as those that apply to BTO flats.
How does the Staggered Downpayment Scheme work for HDB resale flats?
The Staggered Downpayment Scheme allows buyers to pay the downpayment in two or three stages, instead of paying the full amount upfront. This scheme is only available for buyers who are eligible for an HDB loan and have not previously taken an HDB loan. The first payment is due upon signing the OTP, and the subsequent payments are due when certain milestones are reached in the construction of the flat.
Overall, it’s important to understand the downpayment requirements for an HDB resale flat before making a purchase. Make sure to do your research and use the available resources to estimate the downpayment amount and plan accordingly.