If you’ve decided on making the big step to upgrade from an HDB apartment to a condo unit, then it pays to know the finer details. Here’s a quick rundown of what steps you’ll have to take, depending on whether you sell-then-buy, or buy-then-sell.
Key Highlights
- If you buy a condo before selling your HDB flat, Additional Buyer’s Stamp Duty (ABSD) must be paid first, and the buyer is reimbursed if the flat is sold within six months
- You need to set aside a minimum cash down payment, of 5% of the property price or valuation (whichever is lower)
- Never put down the deposit for Option to Purchase (OTP) before you get an in-principle approval from a bank.
If you are buying the condo, before selling off your HDB flat
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First things first. Make sure you meet the Minimum Occupancy Period (MOP) of five years unless you’ve had it extended for some reason (e.g. a penalty for an offence), if not you won’t be able to sell your unit.
1. Get In-Principle Approval from a bank. This document, usually valid for two weeks, states how much the bank will lend you to purchase a house.
2. Pay a non-refundable deposit to the OTP. This is 1% of the property price. Never put down the deposit before obtaining In-Principle Approval – if you put down a deposit and then fail to secure a loan, the deposit will be forfeited.
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3. Within the validity period of the OTP (usually 14 days), you must exercise the Option. You’ll pay an additional 4% of the property price, and sign the sale and purchase agreement. Note that the deposit for the Option, plus the cost of exercising it, cannot be covered by a bank loan; it must be paid in cash.
4. Two weeks after exercising the Option, you have to pay the Buyer’s Stamp Duty (BSD) as well as the ABSD.
The BSD is 1% of the first $180,000 of your property price, 2% of the next $180,000, and 3% of remaining amount.
The ABSD is 7% of the property price for Singapore citizens, and 10% for Singapore Permanent Residents.
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5. Within two months of exercising the Option, you must pay the remainder of the property price. Note that the highest possible Loan-to-Value (LTV) ratio is 80% (i.e. the bank can loan you up to 80% of the property price or value, whichever is lower).
Besides the bank loan, you would have paid 5% of the property price by this point (during the purchase and exercise of the OTP).
For the remaining 15%, the money can come from a combination of cash or your CPF Ordinary Account (CPF OA) monies.
6. If you sell your flat withbin six months, apply to IRAS for a refund of the ABSD once the sale is transacted. Note that there is no reimbursement if you take longer than six months to sell your flat.
If you are selling your HDB flat first, and then buying a condo
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This process is similar to the above, with one key exception:
- Get in-principle approval
- Put down the deposit for the OTP
- Exercise the OTP within two weeks
- Pay the BSD within two weeks of exercising the option – but note there is no ABSD, as you have sold your flat and this is not a second property
- Pay the remaining property price within two months of exercising the OTP.
This article was first published by 99.co, Singapore's fastest growing property portal.
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