What an HDB second-timer must know before deciding to sell

Say you’ve been living in your first HDB flat for 5 years now (or more), and you’re thinking of selling your flat to get another BTO/SBF or resale flat. In an ideal scenario, you’d profit from your first flat, put some of that cash towards your second flat, and put the rest in the bank for a rainy day. But unfortunately, things are not quite that simple for the HDB second-timer.

There’s your resale levy to consider, plus the fact that your sale proceeds have to go back to your CPF account before you can take out any cash. In this article, we break it down for you.

For the HDB second-timer who wants to buy a BTO/SBF flat

Resale levy

If you buy your second flat before selling your first flat, your resale levy will be deducted from the sale proceeds, with any shortfall to be paid in cash. If you sell your first flat before you buy your second flat, you’ll have to pay your resale levy in cash upon buying your second flat.

The amount payable depends on the size of your first flat:

Refund to CPF account

Upon selling your flat, you’ll also have to refund to your CPF account the principal amount that you’ve withdrawn, and the accrued interest you would have earned if the savings were not withdrawn from your CPF account.

Now, your accrued interest is computed on your principal amount on a monthly basis (at the prevailing CPF Ordinary Account interest rate) and compounded yearly. What many homeowners fail to realise is that this accrued interest continues to compound even when their flat has been fully paid off. The longer the money is withdrawn from your CPF account, the more interest you’ll have to return to your CPF when you sell your flat.

(Recommended article: How your HDB sale proceeds might get “taken” by CPF)

To view your current accrued interest, log into your CPF account and check under “My Statement”. Scroll down to “Section C” where you can find the “Property” section and accrued interest.

Alternatively, you can refund back the money (partially or in full) used for housing way before you decide to sell it, under the CPF Voluntary Housing Scheme. This helps you to reduce the accrued interest that you would need to pay if you were to refund it when you sell your flat.

(Recommended article: You can refund your CPF monies used for your house even when you’re not selling it. Here’s how.)

For the HDB second-timer who wants to buy an HDB resale flat

You don’t have to pay the resale levy if you’re buying a resale flat.

Refund to CPF account

Like BTO second-timers, you’ll also have to refund to your CPF account the principal amount that you’ve withdrawn, and the accrued interest you would have earned. To view your current accrued interest, log into CPF account and check under “My Statement”.

For the second-timer buying a resale flat AFTER selling your current flat

If you’re taking a 2nd HDB Concessionary Loan, you’ll get to keep only 50% of the cash proceeds, or S$25,000, whichever is higher from the sale of your HDB flat. How much loan amount you can get is based on the CPF refund and remaining cash proceeds to ensure that you don’t overborrow.

(Recommended article: Loan-to-value (LTV) limit: a Quick Guide for Property Buyers)

For the second-timer buying a resale flat BEFORE selling your current flat

If you’re taking a 2nd HDB Concessionary Loan in lieu of receiving the sale proceeds of your existing flat, you’ll be charged commercial interest rates. These rates are pegged to the average non-promotional interest rate for the purchase of HDB flats offered by the three local banks.

After you’ve sold your current flat, you’ll have to redeem the loan with the full CPF refund and up to 50% of the cash proceeds from the sale of your flat. Once this is done, the loan will be converted to an HDB concessionary loan rate (currently at 2.6%).

For the second-timer who wants to buy a resale flat with the sale proceeds + refunded CPF monies from their current flat

Apply for the Enhanced Contra Facility (ECF), which allows you to sell your existing flat and buy another resale HDB using the sale proceeds and refunded CPF monies. Do note your refunded CPF monies cannot be used for stamp duty and conveyancing fees.

How do you apply for the ECF?

You’ll need to indicate in your Resale Application form if you’re opting for ECF.

Buying an HDB flat as a second-timer

Although you might be selling your flat for more than you purchased it for, after taking into account your resale levy, the amount to return to your CPF account and other miscellaneous expenses, it’s not guaranteed that you’ll receive cash proceeds from the sale of your flat.

Bearing this in mind, make sure you do your sums clearly so that you won’t get stuck in a tight spot. You can use HDB’s Sale Proceeds Calculator to estimate the amount of cash you’ll receive from the sale of your flat. Good luck!

Would you sell your HDB flat before or after buying a new one? Let us know in the comments section below or on our Facebook post.

If you found this article helpful, 99.co recommends 9 things to consider when buying your second property and 5 Important HDB Schemes Singaporeans Might have No Clue About.

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[Additional reporting by Virginia Tanggono]

Frequently asked questions

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