And even then, you can only purchase a 2-room flexi-flat in non-mature estates. To help you to achieve the financially free lifestyle youve always wanted. How to Make Money from your First HDB BTO, Checking for Upcoming Sales Launches and Balloting for Flat, How much Grant or Subsidy will I get from HDB, Save Money by Refinancing your Mortgage with Property Guru, Additional costs for selling ones first BTO, Save Money by Refinancing your Mortgage with, Side Income in 2022: How to Earn More with a Full-time Job in Singapore, How to Save $1 Million for Retirement, Broken Down by Age, Should I Use Choose an HDB Housing Loan or Bank Loan, https://www.hdb.gov.sg/residential/buying-a-flat/new/eligibility/hdb-flat, Tools for referral links and exclusive offers, How to Adjust your Spending to Stay Ahead of Inflation. At the current low-interest-rate environment, the bank loan interest rates of 1.2 to 1.5% may look a lot more attractive. You can see here that the timeline is rather messy, and timing is of the utmost importance in this exit plan. In this article, we discuss the timeline of using the Contra Payment Facility for your new BTO flat when selling your current HDB flat. So far, it does look like a nice profit coming out of the first BTO. selling property things consider This option appeals to HDB or EC upgraders who do not wish to be hit by another round of MOP. If you intend to use the proceeds from the sale of your existing HDB or EC, you have a short runway to liquidate your home. Court proceedings, however, are a lengthy and expensive process take the case of Madam Herni Fadhillah Saad for example, who had to wait 5 years before she was finally able to take possession of the resale flat shed bought. If they fully utilise the CPF refund of$139,752to offset the new mortgage, it leaves them with$169,248 in balance,$70,810 morecompared to what was remaining on their original BTO. Having read through the horror list above, it might seem like a no-brainer that selling your flat first is the way to go for second-timer HDB homebuyers. Even if they are still within the income ceiling, they will also have to go through another anxiety-inducing round of BTO roulette with lower chances of getting a good queue number when applying as second-timers. While the refunded CPF monies cannot be used to pay stamp duty or conveyancing fees, the ECF can help to reduce the cash outlay required for the flat purchase, thus reducing the mortgage loan amount needed and consequently the monthly repayments as well. investment property buying advisoryhq selling properties guide Also, they come with a fresh lease of 99-years. additional miscellaneous administrative fees, the surge of BTO projects springing up every other year, $22,000 (downpayment) + $5,000 (CPF grant) + $94,562 (mortgage paid) =. With costs mounting, second-timer HDB homebuyers might find themselves compromising on their wants and choosing a flat thats there and available, rather than a flat theyre genuinely excited about, just to stem the flood of funds streaming out the pocket. Once the sale of the flat has been officially completed, the owners or inhabitants are expected to vacate the premises to give way to you, the new owner. HDB announces upcoming BTO projects and press releases of projects on their website. You can, therefore, take the seller to court, and ask that he be compelled to go through with the sale. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Lets speculate. ALL RIGHTS RESERVED. While this option seems to be the least restrictive, it is also complex in the sense that it is difficult to make an optimised investment decision. If youre unlucky, a flat owner might decide they no longer want to go through with the sale and just.stay put. This might mean moving in with kind relatives willing to take you in, but for most, itll mean having to rent an apartment until youre able to find your own home. clipart clip cliparts selling sell library 20sale 20clip 20for 20art clipground powerpoint Still pretty good! Do you have a proper exit plan? With CEA And Are Largely Associates Registered With Propnex Realty Pte Ltd (Agency Licence No. If youre lucky to get a good queue number, you can choose your flat earlier. If this trend continues, it might mean that any BTO purchased from 2012 onward might not experience the same astronomical growth in resale prices. Once the Sale and Purchase Agreement is signed, the seller is legally obligated to go through with the purchase. The Enhanced Contra Facility (ECF) is a relatively new scheme introduced by HDB and the CPF Board to help second-time buyers. Step 1: Buy BTO There are some awesome products and services that Im using that helped to supercharge my financial journey! Resale flat owners may not move out right away. The grant amount is assessed at the point of the BTO application. Or maybe you just like the new BTO or EC launches. Many of us may procrastinate on refinancing our home loans due to the complicated process of refinancing. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. It is, however, a risky and expensive proposition. Sale proceeds from the current HDB flat. As CPF is primarily for retirement, this is in place to ensure retirement needs can be met. This is because the further down the process you go, the more you stand to lose. Or are you going to rent? According to HDB, 13% of BTO flats located in Punggol (and Sengkang) had been sold after their MOP ended. Buying a new home is, however, a serious financial endeavour, so be sure youre mindful of the above before you start the process to avoid any unnecessary mishaps. The cookies is used to store the user consent for the cookies in the category "Necessary". Total Debt Servicing Ratio and Mortgage Servicing Ratio. To build sustainable wealth, the easiest way is to live within our means. Lets take a look at the price of a high-floored 4-room BTO that just cleared its MOP, and wassold at $480,000 this year(according toURAsonline tool). PropertyLimBrothers does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Accrued interest is any interest the money would have generatedif left untouchedin their CPF OA accounts. Salespersons Working Collaboratively In A Joint Marketing And Joint Cobroking Arrangement Co-Operatively Our BTO has added at least $100k more to our net worth. But from 2013 till today, it seems that resale flat appreciation has flatlined. greatcoloradohomes critical steps take before selling Its always not easy to understand the policy and requirement especially when you are doing it for the first time, therefore I like to use an infographic to present the information, timeline planning is important for a smooth transaction between selling and buying, due to key collection deadline to avoid under pressure to sell your current flat, contact me for a non-obligation discussion. property fast express ensure trick sells puts buying thing And was able to compare the different banks to get the best rate. However for this to work, there are many assumptions at play. There are more variables here in making the right decision and there should be sufficient analysis that shows your plan is resilient. We do not recommend this as BTO down payments are typically more affordable and the short timeline might be too risky. There may be other factors to prevent you from applying for a BTO. Since resale flats are already constructed, there is less uncertainty over construction delays. It does not store any personal data. It was estimated that in 2014, about 10 percent of second-timer HDB applicants pulled out of successful applications. The key perk of going into private property is that you may rent out the entire property immediately from purchase. Buying your flat first means you dont have to worry about scrambling to find a place to live before you have to move out of the flat. But the subtraction doesnt stop here. We also use third-party cookies that help us analyze and understand how you use this website. Under the old AHG scheme, before it got enhanced in 2009, they would have been entitled to $5,000 in CPF grants. Once the keys have been collected you will have 6 months to dispose of your previous property. Fresh articles, market trends and news right to your device. Or should you focus on buying a bigger and more comfortable home (which will inevitably be more expensive)? We should factor in that the couple might have spent a big amount on renovation on their first home (BTOs come bare) which according to Qanvast,averages $48,000 today. And a couple of items will be deducted from your sales proceeds: To me, the CPF money utilized and its accrued interest will technically not affect your net worth as it is still your money. The resale levy is not applicable for resales, and private properties such as condominiums. $440,000 $98,438 $139,752 =$201,810. These cookies will be stored in your browser only with your consent. The commercial interest rate is pegged to the 3-month average non-promotional interest rate for purchase of HDB flats offered by the 3 local banks (currently thats at 3.38 percent). 2. Even in todays depressed market, that can get pretty expensive very fast. In A Team Model Serving Both Home Sellers And Buyers Together. In terms of absolute amounts, one will always have a profit during the sale of their BTO. After all, the couple will have to purchase a new BTO at todays more expensive prices, requiring them to service a larger mortgage. In Singapore, most couples have the opportunity to live in government-subsidised Build-To-Order (BTO) flats. Second-timers have already gotten a subsidy for their first flat. Disclaimer: Information provided on this website is general in nature and does not constitute financial advice. Before you decide you hastily sell your HDB or EC, read this article to see which might be a better next step to take. Regardless of the fact that youll be selling your current flat later, youll still be liable to pay an Additional Buyers Stamp Duty (ABSD) on the second flat depending on the citizenship of you and your co-applicants, this can run anywhere between 17 to 25 percent of the purchase price of the flat. What choice will you make? I mentioned earlier that our BTO has added at least $100k more to our net worth. An additional $100,000 at 5% would mean an additional passive income of $5,000 per year. With the governments cooling measures kicking in, todays sellers are getting far less for their flats than they initially projected. Please click the link in the email to confirm your subscription! investopedia It takes an estimated 8 to 10 months to sell your flat on the open market, though this can be longer depending on whether theres interest in your flat in the first place, and how motivated the buyer is to complete the transaction. A 6-figure sum in profits. homebuying Next, they have to work out how they had used from their CPF to pay off their first BTO. If you are currently waiting out your MOP for a sale, there are some developments in the current housing market that might put a wrench in flipping BTOs as a money-making plan. The upside to this complicated process for second-timer HDB homebuyers, however, is that you have a home thats ready to move as soon as youve concluded your sale! If youre looking to upgrade to a larger flat, you might be interested in HDBs Conversion Scheme. Unlike BTOs, resale flats are often occupied at the point of sale. Can you afford to? If accounting for an inflation rate of 2%, that would be roughly $40,000 back when they first moved into their Punggol BTO flat. Source:https://www.hdb.gov.sg/residential/financing-a-flat-purchase/housing-loan-from-hdb/contra-payment-facility-for-new-flats. This cookie is set by GDPR Cookie Consent plugin. I used Property Guru to refinance my home loan. Analytical cookies are used to understand how visitors interact with the website. In these cases, it might be more worth your time to speak directly to the seller and see if you can work things out, before resorting to taking them to court. Stay with your parents? To get a bigger flat, you will have to buy a resale in the open market. With this option being 2 years shorter than the 5 year MOP, there is a little more flexibility for investors looking to exit sooner in their property moves. If there are no good offers from buyers, this might lead to a less than ideal sales price for your property. Of course, your mileage may vary depending on the renovation costs. Bank loan: Obtain approval in principle (AIP) from the bank, which is the equivalent of HLE. *You need to top up the additional cash within the period HDB provides. The PropertyLimBrothers Inside Sales Team Is A Brand Platform That Has Fully Licensed Real Estate In essence, this is how it works: After a five-year Minimum Occupancy Period (MOP), BTO flat owners will be able to sell off their homes on the open market presumably, at a much higher market price. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyLimBrothers will endeavour to update the website as needed. Depending on the space, you might even need to rent a storage unit to hold your furniture while you settle on your eventual home in land-scarce Singapore, thats not going to come cheap. The good news is that you can claim a refund for the full amount paid if you manage to sell your first property within 6 months of your new purchase. This cookie is set by GDPR Cookie Consent plugin. The key thing to look out for when you are doing this is the timeline. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Just like how you shouldnt max out your credit cards, you shouldnt max out your TDSR. Its a pretty complicated process for second-timer HDB homebuyers since it involves the coordination of 3 parties (you, the buyer of your flat, and the seller of the flat youre interested in), so we would recommend hiring an agent if youre attempting this. If you have even an ounce of doubt or uncertainty, you should spend more time to consider if you are making the right decisions. Should second-timer HDB homebuyers buy first, then sell? Under your application status, you can also see the application rate of the BTO project that youre eyeing on.