Andy August 30 2021

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Things To Know Before Buying a HDB Resale Flat

Following the COVID-19 waves and subsequent tightened border restrictions, HBD projects are taking a slow turn in Singapore. This means that BTO flats are not as many as usual, leading people to consider HDB resale flats instead. And especially after the Circuit Breaker came into effect in 2020, the HDB resale market has grown. So, if you want to buy a flat, below are some guidelines on determining HDB resale flat prices in Singapore.

Things to Know about HDB Resale Flats

As a buyer, in addition to the market value of the HDB resale flat you want, you have to incur an additional cost, including:

Cash Over Valuation (COV)

If you consider buying a resale flat, you must have come across this term at least once in your research. The COV is the difference in price between the actual market value of the flat provided by the HDB and the price you agree on with the seller. Usually, you have to pay this amount from your pocket because financing aids do not cover it. Therefore, it affects the total amount you pay for your flat.

Option to Purchase (OTP)

OTP is a legal agreement between a seller and a buyer to buy a residential property. As a buyer, you have to pay an option fee to reserve the property you are interested in. However, you forfeit this amount if your reservation period expires or you back out of the deal.

 

How to Finance your HDB Flat?

You must plan your finances before you decide to buy an HDB resale flat. A comprehensive financial plan for purchasing an HDB flat can include the following:

Cash and CPF Ordinary Account Savings

When buying a home, you pay a cash price for the deposit and as part of the initial payment.  The option fee is also a cash payment, which the CPF savings does not cover. Also, the amount of cash you have is used to size the loan amount you can take from the bank.

CPF savings, on the other hand, are used to pay part or whole amount of the house. You can also use the amount to pay monthly installments for your mortgage or even the full payment of your flat as you collect the key. However, there's a cap to the maximum amount of savings you can spend on purchasing a flat.

Housing Loan

You can also take up a housing loan from HDB or a monetary Authority-regulated financial institution in Singapore. You only get the loan after meeting all eligibility requirements.

CPF Housing Grants

You can also apply for a grant scheme to subsidize the HDB resale flat price in Singapore. You can get the amount to make the initial payment or lower the loan amount you receive.

 

What affects HDB Flat prices?

Even with the surge in the current pandemic, the prices of HDB resale flats are not dropping. And with the requirement to work from home, more people are looking for HDB resale flats with bigger spaces and close to amenities.

These, among other factors like the flat's location, the HDB valuation issued by the HDB, affect the total amount you have to pay for a flat. And if you want to check the selling price of a flat in your desired location, the HDB resale price portal could be a place to start.