Procedure in Buying an HDB Flat

After making that crucial decision of finally getting your own flat, there's another dilema of where to find that perfect place and how to go about purchasing it. There are a lot of factors to consider when choosing a flat. The location is a primary consideration. It will determine accessibility to your work place, school, amenities such as shopping establishments, food, medical institutions/GP's, enrichment schools, sports centre and recreational areas. The neighbourhood will influence your lifestyle, so choose a place where you can exercise your needs.

Once you have narrowed down the town that meets all your needs as mentioned above, you now select the flat according to orientation, where the sun rises, if the wind's direction enters the unit.If it's not a new block, will there be future upgradings or is it accessible by lift. The unit's level is crucial also, lower levels will tend to have more noise and if its facing the road noice and dust. If you want to avoid renovation costs then choose a flat that has work done already, but usually sellers will add the renovation cost on top of the valuation price of the flat. Are you willing to pay for renovations done a few years already or renovation not to your own taste? If not then consider paying the same amount for your own renovation after acquiring the flat. The neighbours will be a key to a peaceful surrounding. We are lucky to have 3 neighbours that we can interact with. It's amazing when 4 races share a floor. We spend outdoor activities with our Chinese neighbours and my kids spend time in their flat to play with the dogs, my kids also are chums with our Indian neighbour's child and visits their place often. And enjoy chats with our Malay neighbour.

So finally, when you have decided on a flat it's time for technicalities to finalize the purchase.

BUYING A RESALE FLAT AS A SINGAPORE CITIZEN

Here's the link from HDB website tackling the necessary procedures and requirements in purchasing a flat.

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatOverview?OpenDocument

1.You must check your eligibility to purchase a flat first. Check which bracket you fall. An example is for a family nucleus, 1 Singaporean & 1 Singapore PR  or 2 Singapore PR's can purchase a flat.

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatEligibility%20Schemes%20-%20Summary?OpenDocument

2. Now you have to check Affordability. You must compare your Monthly income against your Monthly Expenses to see how much is left to finance your payment for your new home. HDB has a tool to check your Loan eligibility and your monthly repayment. This will give you an idea if HDB can extend their housing loan to you based on your monthly salary and monthly expenses, and this tool will project your monthly repayment amount based on the figures you provide. At this stage you will determine if you are able to make the purchase now or later.

Click on this link to HDB's Financial Tool as mentioned above to calculate your loan amount, repayment figure and tenure.

https://services2.hdb.gov.sg/webapp/BP27MaxLoan/BP27PMax1.jsp

3. Check if your are eligible under the Ethnic Group Eligibility for Buyers. This scheme aims for racial integration and harmony among the community. A mix of races is maintained in public housing estates. If the the block you chose already reached the limit of your race, then you are not able to make the purchase of the flat.

Here's the link to check Ethnic GroupEligibility for your chosen Block

http://services2.hdb.gov.sg/webapp/BB29ETHN/BB29STREET

4. Now you are getting closer to get that dream home. You must now acquire an HDB Loan Eligibility Letter (HLE). This is valid for 3 months. You are advised to acquire this letter before looking for a flat. You can lodge an application via internet. The link is below.

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Financing%20Your%20Home%20(e-Financing)HDB%20Housing%20Loan%20-%20How%20To%20Apply?OpenDocument&SubMenu=HDB_Housing_Loan


5.After getting your HLE You now must obtain Option to Purchase from the Seller. Buyers and sellers of resale flats must use an HDB standard "Option to Purchase" as the form of contract for their resale transactions. The Option to Purchase provides buyers with an option period of 14 days to consider their prospective purchase. During this period, they can check on their eligibility, financing aspects, etc. before deciding whether to proceed with the purchase.


Upon exercising the Option to Purchase, a binding contract is entered into between the seller and the buyer for the sale and purchase of the flat. The buyer and seller can then submit their resale application to HDB for processing.

6. You can now submit your Resale Application through a housing agent or if you are processing your own application, can get a form from HDB or submit via online application. Below are the links for the online application and applicable fees. Indicate the CPF housing grant request to avail of the additional CPF monies to help you with your purchase.

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatProcedures%20-%20Submit%20Resale%20Application?OpenDocument

http://www.hdb.gov.sg/bb31/ispm055p.nsf/Welcome?OpenForm
 
7. It's not rocket science isn't it? A few simple steps and now youre on your way to your 1st appointment with HDB. Your eligibility will be determined further. The fees will be computed, the CPF withdrawals, the resale procedure will be discussed and fix the effective date of resale.Both buyer and seller must be present. You will receive the Approval letter of the resale after 2 weeks from the date of 1st appointment. Below is the link for the details of how this appointment will go about.

http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatProcedures%20-%20Attend%201st%20Appointment?OpenDocument

8. Completion of SALE! The resale transaction will take about 6-8 weeks to complete from the 1st appointment date. Both buyer and seller will receive an appointment date to complete the resale transaction. But before this date the seller must prepare the flat for handover and the buyer must be invited to inspect if everything is in order. You must ensure that any unauthorised renovation works done in the unit have been rectified. On the day of the completion of sale appointment, you will sign all the necessary documents to make the final transfer of rights and receive that KEY to your new abode.


http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatProcedures%20-%20Attend%20Completion%20Appointment?OpenDocument

9. Final step...celebrate!

BUYING A RESALE FLAT AS A SINGAPORE PERMANENT RESIDENT (SPR)

The same procedure applies to a Singapore PR except for Step 5. Since a SPR will take up a loan from the bank and not HDB, you have to obtain a Letter of Offer from the bank first. After acquiring this, then you can enter into agreement with the seller and exercise the Option to Purchase.

As a SPR you are not eligible for the CPF Housing grant, but you can use 5% to pay the down payment. The other 5% will be paid in cash. This totals the initial payment of 10% of the flat selling price. The 90% of the flat selling price will be loaned by the bank. Some banks offer only 80% loan and 20% down payment.

 HOUSING AGENTS

The normal practice is the Seller will pay the agent 1% of the flat selling price. If the flat is priced at 300k the agent will be receiving a commission of $3000. If you will engage your own agent to find you a flat you will have to shoulder the 1% agent's commission.

HDB FLAT TENURE

Additional info on the tenure for HDB flats. You are able to keep you flat for 99 years but thereafter, you will surrender the unit to HDB at no compensation. This means that by 30 years max, you have already paid the flat in full. Another 69 years you get to keep the flat but turn it over after without getting any payments.