So you’ve been living in your HDB flat for a while now…
Life’s good.
You’re making good money.
Then one day, your friends start talking about some new condo that they bought.
And you begin to wonder…
Is it possible for me to upgrade from an HDB to a condo too?
Actually, it’s not as hard as you think…
I’m only mostly talking about the math part tho.
(Aside: the money part is HIGHLY subjective.)
You just need to figure out what are the estimated sale proceeds from selling your HDB flat.
And then do a little math to find out if you can afford the condo.
Don’t know where to start?
That’s why I’m here for you, bruv.
FYI: I’m aware that there is the possibility of keeping your HDB flat AND buying a condo, but that’s another article for another time…
TL;DR: Can I Afford To Sell My HDB Flat and Upgrade To a Condo?
To calculate Estimated Sale Proceeds:
Sales price of HDB flat – Outstanding mortgage loan – Mortgage loan prepayment penalty – Legal fees – Property agent commission
To calculate Estimated Cash Proceeds:
Estimated Sale Proceeds – Central Provident Fund (CPF) monies used (which you need to return to your CPF)
To calculate whether you can afford it:
Estimated Cash Proceeds = 5% of Downpayment
CPF monies available = 20% of Downpayment + Buyer’s stamp duty + Legal fees + Property agent commission
How To Calculate Estimated Sales Proceeds From Selling My HDB Flat?
To find out what are the estimated sales proceeds, you’ll need the following:
- Estimated sales price of your HDB flat
- Outstanding mortgage loan (bank or HDB)
- Mortgage loan prepayment penalty (if any)
- CPF utilised plus accrued interest
- Legal fees
- Property agent commission (if you’re using a property agent)
1) Estimated Sales Price of Your HDB Flat
To figure out the estimated sales price of your HDB, you can reference the HDB Resale Median Prices.
This way, you can get a sense of past resale transactions’ prices for similar units in your town area or flat.
2) Outstanding Mortgage Loan
If you took a bank loan, just give your bank a call to find out your outstanding mortgage loan.
If you took an HDB housing loan, you could check your outstanding mortgage loan by logging in to My HDBPage using your SingPass.
STEP 1: Navigate to “My Flat” and select “Purchased Flat” from the dropdown menu
STEP 2: Select “Financial Info”
STEP 3: Check your “Outstanding Balance” in “My Account Balance(s)”
You’ll see your outstanding mortgage loan under “Outstanding Balance”.
3) Mortgage Loan Prepayment Penalty
If you took a bank loan, you’d probably need to pay a prepayment penalty of about 1.5 per cent of the amount you borrowed.
4) CPF Utilised Plus Accrued Interest
Any CPF monies used to purchase your flat, either as a downpayment or for monthly instalments, will have to be returned with accrued interest to your CPF account when you sell your flat.
You can log in to the CPF website to find out how much you have to return.
STEP 1: Select “My Statement”
STEP 2: Scroll down and select “Property” under Section C
STEP 3: Check your “Net Amount Used” and “Accrued Interest”
5) Legal Fees
If you engage HDB’s solicitor to act for you in the sale, you can get an estimate of the cost using their Legal Fees Enquiry service.
| Type of Legal Fee | Purpose | Amount |
|---|---|---|
| Conveyancing fee | For transfer | Based on selling price and subject to min fee of $20 First $30k: 6.75 cents per $100 or part thereof Next $30k: 5.40 cents per $100 or part thereof Remainder: 4.50 cents per $100 or part thereof |
| For total discharge of mortgage | 1-Room flat: $22 2-Room flat: $33 3-Room flat: $44 4-Room flat: $55 5-Room flat: $66 Executive flat or maisonette: $77 |
|
| Registration and microfilming | For title search fee | $10.40 |
| For total discharge of mortgage | $38.30 | |
| Miscellaneous fees | To HDB | $5.00 |
Depending on how much you sell your flat for as well as your flat type.
You can expect to pay about $500 (this is only a guesstimate) in legal fees.
6) Property Agent Commission
If you used a property agent to sell your HDB flat.
You’ll usually need to pay between 1 to 2 per cent of the sales price, including prevailing GST.
Note: it is possible to sell and buy a flat without a property agent
So… How Do I Calculate the Estimated Sales Proceeds From Selling My HDB Flat?
Once you’ve gathered all of the abovementioned information.
Here’s how to calculate the Estimated Sales Proceeds:
Estimated sale proceeds = Sales price of HDB flat – Outstanding mortgage loan – Mortgage loan prepayment penalty – Legal fees – Property agent commission
If you’re doing the math for your HDB flat right now, you’re probably thinking:
But wait… there’s more.
If you used any CPF monies to fund the purchase of your HDB flat, you’d need to return that to your CPF Ordinary Account.
So… to find out how much money you can actually pocket from the sale of your HDB flat, you’ll need to find out what your Estimated Cash Proceeds are like:
Estimated cash proceeds = Estimated sale proceeds – CPF monies used (which you need to return to your CPF)
FYI: alternatively, you can also use HDB’s Sale Proceeds Calculator to do the math for you.
.
.
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Here’s a simple illustration to show you what I mean.
Zoe and Boon Keng (both are younger than 55 years old) currently own a 4-Room HDB flat, and they wish to upgrade to a condo.
They bought their flat 10 years ago (so they’ve fulfilled their MOP).
And have been using their CPF to pay for everything — including downpayment and monthly instalments.
To keep their costs low, they also decided to sell their flat without the help of a property agent.
Estimated Sale Proceeds | Amount |
|---|---|
| Sale price of HDB flat | $500,000 |
| Outstanding HDB loan | $250,000 |
| Mortgage loan prepayment penalty | $0 |
| Legal fees | $290 |
| Property agent commission (1%) | $0 |
| CPF utilised plus accrued interest | $300,000 |
| Estimated Cash Proceeds | $50,290 |
Their estimated sale proceeds: $349,710.
But because they used their CPF, they need to return $300,000 (accrued interest included).
So their estimated cash proceeds: $50,290.
Makes you wonder if you should be using cash or CPF to pay for your home, huh?
Let’s see if this is enough for them to afford a condo…
How Do I Know If I Can Afford a Condo?
To find out if you can afford a condo, you’ll need the following:
- Price of the condominium
- Downpayment
- Buyer’s stamp duty
- Additional buyer’s stamp duty (if applicable)
- Legal fees
- Property agent commission (if you’re using a property agent)
1) Price of the Condominium
This part is pretty straightforward.
2) Downpayment
If you have NO existing home loans
Minimum cash downpayment is 5 per cent, only if…
- Loan tenure does not exceed 30 years, AND
- Borrower’s age does not extend past 65 years during the loan
Minimum cash downpayment is 10 per cent, only if…
- Loan tenure exceeds 30 years, OR
- Borrower’s age extends past 65 years during the loan
If you have existing home loans
The minimum cash downpayment is 25 per cent.
When Do I Make The Downpayment For My Condo?
The first 5 per cent is paid (entirely in cash only) when you book your unit (aka exercise your option to purchase).
The other 20 per cent is paid within 8 weeks from exercising your option to purchase.
And can be funded using a mix of your CPF and cash.
3) Buyer’s Stamp Duty
The Buyer’s Stamp Duty (BSD) applies to all property purchases in Singapore.
And is calculated based on the property’s purchase price or the property or the market value of the property (whichever is higher).
| Purchase Price or Market Value of the Property | BSD Rates for Residential Properties | BSD Rates for Non-Residential Properties |
|---|---|---|
| First $180,000 | 1% | 1% |
| Next $180,000 | 2% | 2% |
| Next $640,000 | 3% | 3% |
| Remaining Amount | 4% |
You can use IRAS’s Stamp Duty Calculator to figure this out.
4) Additional Buyer’s Stamp Duty
If you’re a Singapore Citizen with no other residential properties, then you can ignore this.
But if you own other residential properties, you’re looking at a 12 per cent ABSD rate.
| Profile of Buyer | ABSD Rates from 16 Dec 2021 to 26 Apr 2023 | ABSD Rates on or after 27 Apr 2023 |
|---|---|---|
| Singapore Citizens (SC) buying first residential property | Not applicable | Not applicable |
| SC buying second residential property | 17% | 20% |
| SC buying third and subsequent residential property | 25% | 30% |
| Singapore Permanent Residents (SPR) buying first residential property | 5% | 5% |
| SPR buying second residential property | 25% | 30% |
| SPR buying third and subsequent residential property | 30% | 35% |
| Foreigners (FR) buying any residential property | 30% | 60% |
| Entities buying any residential property | 35% | 65% |
| Housing Developers buying any residential property | 35% | 35% (Plus Additional 5% (non-remittable)) |
| Trustee buying any residential property | 35% | 35% |
5) Legal Fees
Unlike HDB flats, when it comes to private property… the legal fees jump up to between $2,000 to $4,000.
This is highly dependent on the lawyer you hire and what kind of deal you get.
6) Property Agent Commission
When buying a private property like a condo, there aren’t any fixed rules (read: industry mandated laws) regarding property agent commission.
The usual rate when engaging an agent to buy a property is usually 1 per cent of the property purchase price.
Some buyer’s agents might split the commission with the seller’s agent or even collect it from the seller.
So it really depends.
So… How Do I Know If I Can Afford a Condo?
Basically, you’ll want to see how much cash and CPF do you need upfront.
Here’s how to calculate if you can afford the condo:
Cash and CPF needed upfront = Downpayment + Buyer’s stamp duty + Legal fees + Property agent commission
Now, let’s look at Zoe and Boon Keng’s situation again.
The couple wants to buy a condo that is worth $1,000,000.
So here’s how much they need upfront:
Cash and CPF Needed Upfront for Condo | Amount | Source |
|---|---|---|
| Downpayment (5% to exercise option to purchase) | $50,000 | Cash |
| Downpayment (20% 8 weeks after exercise option to purchase) | $200,000 | Cash or CPF |
| Legal fees | $2,000 | |
| Property agent commission (assuming you buy on your own) | $0 |
Even though they need to pay the first 5 per cent in cash ($50,000).
Their estimated cash proceeds from selling their 4-Room HDB flat ($50,290) more than covers this.
The remaining $202,000 can technically be paid for using their CPF monies.
And since they returned almost $300,000 to their CPF-OA.
It means that they can technically afford the $1,000,000 condo.
Should I Sell My HDB Flat and Buy That Condo?
If you have dreams of living in a condo.
Then this simple exercise should help you figure out how much you can get from selling your HDB flat.
And whether you can manage the initial downpayment for the condo.
HOWEVER.
My calculations do not consider the monthly mortgage you will be servicing for the rest of your life.
Take Zoe and Boon Keng’s $1,000,000 condo as an example.
You’d be looking at servicing a mortgage of $750,000.
Unless you can derive some form of rental income from this new condo that you’re buying.
You’re going to be in a situation where you’re asset rich but cash poor.
Which may or may not agree with your financial goals.
So before you sell your HDB flat and buy that condo.
Think further than just the initial downpayment that you have to make…
If you are unsure, you could always start a discussion in our Property group on Seedly, where our savvy community members will be on hand to give their thoughts!
