This information can guide you on the financial planning for your resale flat purchase, and help you to determine the suitable flat choices within your budget, making it easier when it comes to searching for your flat.
To work out a comprehensive financial plan, be sure to consider the following:
- Cash and CPF savings
- Housing loan
- CPF Housing Grant Scheme
- Payments involved
For a start, you can use our financial tools to determine your current financial position and how much you can borrow for your flat purchase. If you require further guidance and details, please refer to more information on financing a flat purchase.
Cash and CPF savings
You will probably use both cash and CPF savings for your flat purchase. Your resale flat financial planning should therefore cover:
- How much cash is required
- Amounts that can be paid using CPF savings
You must use cash for the following payments:
- Deposit to seller (a maximum of $5,000, paid in 2 stages: the option fee, and the deposit)
- Part of the initial payment (if you take a bank loan, or have insufficient CPF savings)
- Amount not covered by CPF savings and eligible housing loan amount
- Cash proceeds from disposing the last flat if you are taking a second HDB loan*
*If you are taking a second HDB loan to buy the resale flat, you will need to set aside part of the cash proceeds from the disposal of the existing or previous flat. That amount will be used to right-size the loan amount for your second HDB loan.
You will also need to set aside cash savings for other expenses such as furnishings, renovation, and some other costs and fees payable .
CPF Savings:
The savings in your CPF Ordinary Account (OA) can be used for:
- Initial payment in whole or in part (depending on whether an HDB or bank housing loan is used)
- Partial or full payment for the flat purchase
- Monthly mortgage instalments
However, do take note that there is a CPF withdrawal limit on the amount of CPF savings that can be used for your flat purchase. Once that limit is reached, you will not be able to use more CPF savings to pay for the flat.
Flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer's Ordinary Account (OA). The rest of the available CPF OA balance must be used to pay for the flat purchase.
From 10 May 2019, the total amount of CPF that can be used for your flat purchase will depend on the extent the remaining lease of the property can cover the youngest buyer to the age of 95. Details on the use of CPF savings for the flat purchase are shown below.
Flat applications received on or after 10 May 2019:
For information on the use of your CPF to buy a flat, you may use the online calculator at CPF Board’s website.
Flat applications received before 10 May 2019:
^The VL is the lower of the purchase price or the property value at the point of purchase. Usage beyond the VL (up to applicable limits) is allowed if the property buyers have accumulated their Basic Retirement Sum.
For further enquiries on the use of your CPF to buy a flat, please contact CPF Board Service Line at 1800-227-1188.
Information on the remaining lease of an HDB block is available on the HDB Map Services under "Housing".
Housing loan
To help you finance your flat purchase, you may choose to get a housing loan from HDB or a housing loan from the financial institutions (FIs) regulated by the Monetary Authority of Singapore.
To take on a housing loan, you need to meet the eligibility conditions and credit assessment criteria. You must also take note of these financing requirements:
Financing requirements:
Housing Loan From HDB:
We provide housing loans at concessionary interest rate to eligible flat buyers. These loans are subject to credit assessment and the prevailing eligibility conditions.
If you wish to get an HDB housing loan, you need to first apply for and obtain an HDB Loan Eligibility (HLE) letter. The HLE letter will inform you of the amount of loan you can get, based on your financial situation. As a good practice, obtain an HLE letter before you start searching for a flat, as knowing your housing loan amount will help you to calculate your budget to buy a flat.
If you take a housing loan from HDB, do note the following:-
- You will need to have a valid HDB Loan Eligibility (HLE) letter when you book a new flat from HDB, or obtain an Option to Purchase from a resale flat seller
- When you take a housing loan from HDB, you can later refinance your loan with another housing loan from a bank. However, if you take a housing loan from a bank, you will not be allowed to refinance your loan with a housing loan from HDB
- For a second HDB concessionary housing loan, the loan quantum will be right-sized by utilising the CPF monies refunded and some of the cash from the disposal of your current/ previous flat
- For resale flat applications submitted to HDB from 28 Aug 2018, flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer's Ordinary Account (OA). The rest of the available CPF OA balance must be used to pay for the flat purchase.
- For resale flat applications submitted to HDB on or after 10 May 2019:
- Buyers who buy a flat with a remaining lease that can cover the youngest buyer till the age of 95 and above, the HDB housing loan amount that they may take will be up to 90% of the lower of the flat’s purchase price or value (“90% loan-to-value”).
- Buyers who buy a flat with a remaining lease that does not cover the youngest buyer till the age of 95, the HDB housing loan amount that they may take will be pro-rated from the 90% loan-to-value limit.
- You can click on the following links to use the online calculators to compute the allowable CPF usage and the HDB housing loan:
- HDB housing loan (Resale flat)
- Buyers of flats with less than 20 years remaining on the lease are not eligible for an HDB housing loan
Information on the remaining lease of an HDB block is available on the HDB Map Services under “Housing”.
For more details, please refer to Housing Loan from HDB.
Housing Loan from Financial Institutions:
You can choose to finance your flat with a housing loan from the Financial Institutions (FIs) regulated by the Monetary Authority of Singapore (MAS). If you take a housing loan from an FI, you will not be allowed to refinance your loan with a housing loan from HDB.
When choosing a housing loan from an FI, assess the different housing loan packages offered by the FIs thoroughly and weigh your options carefully. Some key terms and conditions to look out for include lock-in periods, interest rates, and other financial considerations.
If you take a housing loan from an FI, do note the following:-
- You must have a valid Letter of Offer before you exercise the Option to Purchase for the HDB resale flat
- You will not be allowed to refinance your loan with a housing loan from HDB
For more details, please refer to Housing Loan from Banks.
CPF Housing Grant Scheme
You may be eligible for CPF housing grants, which are housing subsidies that the government gives to eligible Singapore Citizens. They can be used for a flat’s initial payment and for reducing the housing loan amount.
Find out about the different types of CPF housing grants.
Payments involved
The main payments you need to make for a resale flat purchase are as follows:
- Deposit to seller (option fee and deposit)
- Initial payment
- Cash payment for balance purchase price (if applicable)
There are also additional costs and fees that you need to be aware of.
Deposit to Seller:
This amount can be negotiated with the seller and is taken off the resale price.
Initial Payment:
You make the initial payment after acknowledging the resale documents in the HDB Resale Portal. The amount is based on the resale price or market valuation of the flat, whichever is lower, as well as whether you are:
- Taking an HDB housing loan
- Not taking any housing loan
- Taking a bank loan
The cash payment for balance purchase price only needs to be paid when the resale price is higher than the market valuation.
Source: HDB