1. Am I eligible to buy a HDB resale flat?
It is important to first go through the eligibility list and see if any of the schemes are applicable. Although the criteria to purchase a resale flat is not as strict as that of a BTO, not everyone may be eligible. Find out more about the different eligibility schemes here.
2. Can I afford to buy a resale HDB?
Deciding to get a resale flat over a BTO would most likely mean an increase in cost, which statistics have shown to be true. The price of a resale flat can vary anywhere from $300k to over a million dollars depending on the location, type of flat (e.g. 3-room or 4-room HDB vs Executive Apartment or Executive Maisonettes), and whether it is on a high floor or low floor, just to name a few.
There are a few things to factor in when calculating your affordability:
- Housing Grant(s) eligibility
- Maximum loan amount and loan term you can get
- Any other existing loans
- Amount of cash/CPF required for the downpayment and monthly mortgage
- Renovation costs
Housing grants are subsidies given by the government to offset some of the costs involved when purchasing a flat from them. These grants will be transferred into the homeowners’ Central Provident Fund (CPF) Ordinary Accounts (OA) to be used for the purchase, and homeowners will have to return this sum plus accrued interest back into their CPF OA upon sale of the unit. If you would like to know which grants you are entitled to / the total sum of the grants, contact us for a non-obligatory consultation!
Maximum Loan Amount and Loan Term, and any Existing Loans
We would highly recommend to start paying down your debts 12 months before making any home loan applications, especially if you decide to go for a bank loan instead of a HDB loan. Reason being that any existing loan(s) will affect the maximum loan amount, as the December 2021 cooling measures lowered the Total Debt Servicing Ratio (TDSR) to 55% as compared to 60% previously. The TDSR limit simply means that your home loan repayment, plus all other debts like credit card or other loans, cannot exceed 55% of your declared income.
The Loan to Value (LTV) limit was also tightened for HDB loans from 90% to 85% on top of the current Mortgage Servicing Ratio (MSR), which limits mortgage repayments to no more than 30% of the borrowers’ income. This means that the total loan amount that one can borrow has been reduced, which may allow buyers who are more cash-rich to purchase higher quantum units while keeping their MSR under 30%.
The homeowners’ age on the date of application determines the loan tenure, which will affect the amount of mortgage to be paid monthly. HDB loans are capped at 25 years, or until the age of 65, whichever is earlier. If you are taking a bank loan, the loan tenure is capped at 30 years, or until the age of 65, whichever is earlier.
You may consider engaging a mortgage broker to find the cheapest bank for your property loan to save some time and effort (most likely will not cost you anything as the brokers will collect commission from the banks). Our team is here to assist you should you require recommendations for a mortgage broker or simply provide advice in terms of financial planning towards getting a suitable HDB without overstretching.
You can get a maximum renovation loan equal to six months of your income, or up to a maximum of $30,000, whichever is lower. Do remember to factor in extra cash required if you intend to do elaborate renovations! We have successfully worked with multiple renovation / interior design companies; if you would like recommendations or advice, do drop us a message here.
Obtaining the In-Principle Approval (IPA), also referred to as an Approval in Principle (AIP) from the preferred bank or your HDB Loan Eligibility (HLE) letter (if taking a HDB loan) will give a better idea of how much you can borrow. To put it into perspective, here is a breakdown of the payments that you would need to make:
3. What is the HDB Resale Process?
Now that we’ve got the nitty gritty details out of the way, the resale process can be fairly simple! You can get most of the administrative work done via the HDB Resale Portal or if you engage an agent (hyperlink to contact us), they will guide/help you through the entire procedure!
Here are the steps to the resale process:
Once we have completed the steps above, congratulations on getting your first home! If you have other burning questions, reach out to us! Our agents at Open House Singapore will be more than happy to assist you.