An Essential Guide to Upgrading from HDB to Condo
Updated: Jul 26, 2021
To many people, their HDB flat holds special memories to them - it may be their first big purchase or the very first home they own with their loved ones.
While it may be emotionally hard to let go of a property that holds so much sentimental value, letting go of your HDB for a condo unit does also bring a number of advantages.
In this article, we take an in-depth look at the following topics to help you decide if you should consider upgrading from a HDB flat to a condo:
Why upgrade from a HDB flat to a private condo?
Private condo comes with additional facilities
With people staying at home more these days, it is certainly useful to have a swimming pool or park situated just below your house.
Private condo comes with added security
Condos usually come with surveillance cameras, gated facilities, round-the-clock guards, all of which provides additional safety and a peace of mind.
Private condos are situated near prestigious schools and prime districts
Most residential properties located near prime office locations or prestigious schools are private condos. If you prefer to live near where you work or send your children to good schools that are near your home, you can consider condo to shave time off your daily commute.
If you and your spouse can purchase two properties together without ABSD
If you have purchased your HDB flat as a family nucleus, you’ll have to pay for additional buyer’s stamp duty when either you or your spouse purchase a another property.
With the ABSD rates for the second property at 15% of the property price, selling your HDB and buying two private properties may be something you worth considering.
When can you upgrade from HDB to condo?
When considering an upgrade, it’s important to know when your minimum occupation period (MOP) will be up.
You will only be able to upgrade to a condo when you have completed your MOP. The MOP is usually five years from the date you collected the keys to your HDB flat. During this five-year period, you must have been physically living in your HDB flat.
To check when your MOP will be up, simply log into the HDB portal.
Steps in upgrading from HDB to private condo
Before upgrading, it is useful for you to ask yourself these questions:
- Do you want to purchase a new launch or resale condo?
- Do you want to continue owning your HDB flat?
- Are you able to get an approval-in-principle (AIP) for a bank loan?
If you’re unsure of the questions above, you may wish to consult a real estate agent who has the professional knowledge to advise you.
In general, the steps to upgrade from a HDB flat to a condo are:
Step 1: Get an AIP from a bank
The AIP will indicate how much loan you are able to obtain for your property purchase. Once you have an AIP, you can begin the hunt for your condo that fits your budget and other criteria you may have. Getting an AIP not only gives you a peace of mind, it is also important because some sellers may not want to sell you their resale unit unless you are able to prove that you can afford to pay them.
Step 2: Decide on your dream condo
You may wish to consult a real estate agent at this step. An experienced real estate agent will work with you to identify a condo unit that fits your criteria and budget.
Step 3: Purchase the property
Once you’ve found the right property, it’s time to proceed with the purchase. Similar to purchasing a HDB resale flat, you will have to:
1) place a deposit (typically 5%) for an Option to Purchase (OTP)
2) finalise the loan with the bank and obtain a letter of offer
3) engage a lawyer to handle the conveyance
4) sign the Sale & Purchase (S&P) Agreement
Financial matters to consider
BSD and ABSD
After you have signed the S&P agreement, you will have to make payment for the buyer’s stamp duty (BSD) and additional buyer’s stamp duty (ABSD), if any.
If you have not found a buyer for your HDB flat, it is possible for you to pay for the ABDS first and get a refund if you sell your flat within 6 months.
Payment for your condo
Eight weeks from signing the S&P agreement, you are required to pay for the rest of the down payment.
For a resale condo, you or your bank must pay for the property in full within 2 months from exercising the OTP. If you are purchasing a new launch condo, you will received a bill from the developer at specific construction milestones and pay 5% or 10% depending on the milestone.
Proceeds from sale of your HDB flat
If you plan to use the proceeds from the sale of your HDB flat to finance your new purchase, it is important that you do thorough calculation of your estimated sales proceeds prior to your purchase. This can be calculated based on the:
- estimated selling price for your HDB flat
- outstanding loan on your flat
- amount of CPF and CPF accrued interest that has to be refunded
For the amount of CPF and accrued interest, you can check on the CPF portal or app by logging in with your Singpass.
Selling your HDB flat
Once you have made the decision to sell your HDB flat, the first step is to log onto HDB resale portal to register your intent to sell. After registering your intent to sell, you can then find the right buyer for your property.
Unless you’re a real estate agent yourself, you might want to consider engaging a trusted real estate agent to guide you through the whole process. Most people have limited experience selling properties. The process can be full of ups and downs and it is best to have an experienced professional by your side to guide you especially when so much is at stake.
Looking for advice on how to upgrade from a HDB flat to a private condo? How about having a chat with me to find out more about your options? You can reach me here.