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  • Writer's pictureBenjamin Loy

Financial Terms You Need To Know When Selling and Buying a HDB

Unlike the buying and selling of most items, there are many more aspects to consider (and with that, the involvement of other individuals as well, such as professionals from various fields) during the transaction of properties.

If this is your first rodeo getting involved with real estate, where the purchase of a new home is on the cards, did you know that you might need the assistance of bankers and lawyers to complete the process?

Don’t freak out if your answer is ‘no’, because I’ve got your back! The whole point of this blog post isn’t to confuse you further; on the contrary, this was written with the intention to get you acquainted with the necessary financial terms relevant to the buying and selling of HDBs.

Read on for more clarity!

Outstanding Loan

First things first, if you do not have a sufficient amount at present to supplement the procurement of your home, you have the option to borrow money from HDB or the bank. When it comes to HDB flats, you might also be eligible for housing loans at a concessionary interest rate. However, this is subject to HDB's criteria, one of them being that the sum granted is based on a percentage of your annual income.

More considerations are that firstly, your property can now be used as collateral for the loan. It will also be dished out after the initial down payment is made, when the remaining purchase price has been paid to the seller, and that interest is charged from the first disbursement.

With that as background context, outstanding loans would be the total amount that you still owe HDB, or the bank.

CPF Used

When you buy a HDB, you can use your CPF Ordinary Account savings, which include your CPF Housing Grant if eligible, for the initial payment. If you have lots of money in your CPF, you’ll be glad to know that you can use it to pay up to 20% of your home’s down payment, such that you have more cash on hand for emergency funds and other expenses.

CPF Accrued Interest

Accrued interest is the interest that you would have earned from your original CPF funds if you had not used any of it to fulfil the cost of your property. The interest is computed on the CPF principal amount withdrawn for housing on a monthly basis according to the current CPF Ordinary Account interest rate, and compounded annually.

Sales Proceeds

This is as straightforward as it sounds-- Sales Proceeds is the capital gain that you receive when you sell off your HDB. A number of factors determine how much you earn from the sale, such as the estimated price of your estate, amount of your outstanding mortgage loan, CPF funds used, property agent fees, legal consultation prices, mortgage loan prepayment penalties, and more.

Agent’s Commission

To buy or sell your home in the shortest time possible, and at a price that you are satisfied with, it is crucial to engage the help of an astute and proficient realtor who knows the landscape like the back of his or her hand. Of course, they have to be fairly remunerated for their efforts and bear in mind that you get the quality of service you pay for, so don’t scrimp!


Put simply, Valuation is HDB’s estimation of how much a HDB unit is worth.

Cash over Valuation

Cash over Valuation is the disparity between the sale price of a resale HDB flat and its actual valuation by HDB. Typically, this describes the phenomenon when a buyer forks out more and purchases the property for way more than its Valuation price. Although it might sound like a huge compromise on the buyer’s end, in most cases, this occurs as a willing and keen agreement.

Buyer’s Stamp Duty

When you purchase a property, you have to also cough up extra to cover The Buyer’s Stamp Duty, or BSD. It is a tax that every home buyer has to pay, and how much it costs depends on the property’s price because BSD is a percentage of the estate’s value. For residential properties, the first $180,000 entails a charge of 1% more, 2% for the next $180,000, 3% for the next $640,000, and lastly, if there is any remaining, it requires an additional 4%, all rounded down to the nearest dollar.


The legal process of transferring ownership of a property from one person to another is known as Conveyancing. Aspects to be mindful of are citizenship status for eligibility, land or floor area of the property, price, financing options, property title and tenure, encumbrances, names of the registered proprietors, and manner of ownership holding. This is a huge domain on its own, so it’s conservative to approach your trusted realtor to find out more, even if it’s questions pertaining to the other segments above.

I hope that this has brought you sufficient insight, however if you’re itching to find out more even after reading this, feel free to get in touch with me for further clarifications. I’ll be glad to answer any questions and go further in depth with regards to any particular area related to real estate, regardless of whether it has been mentioned here or not.

If you need insight, or are thinking of selling or buying a property, Do consider reaching out to me @ | 8186 5466






See you soon,

Benjamin Loy


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