For many of us middle-class Singaporeans who marry in our 20s, our property journey begins with a BTO flat. Then, after a few years, as we grow our savings, advance in our careers and possibly even start our own families, we aspire to sell our HDB flat and upgrade to a private property.
As a 30-something mum of two, I am currently chasing this Singapore dream. My first home, a BTO flat, recently fulfilled its Minimum Occupation Period (MOP) this year, and I decided to sell it and move to a resale condo. Of course, my ‘real’ dream is to move into a landed property with a nice garden, but that requires a lot of money (much more than I could grow and save in five years at least, but I digress).
If you’re thinking about selling your freshly MOP-ed BTO flat to upgrade your property, here are some five key insights I gleaned while on my own journey that may help you!
*The author of this article has chosen to remain anonymous due to the sensitive nature of this article.
1. Don’t Take for Granted That You Can Find the Right Property at the Right Time
If you hope to maximise your profits, you would probably be counting down to your MOP date. Following HDB MOP rules, you’re probably hoping to sell your HDB flat as soon as you are eligible to. Given how hot the HDB resale market is currently, you might even want to start advertising your flat and entertaining viewings before the MOP date. This is all fine and dandy as it follows the HDB MOP rules, but don’t forget that you must also search for your new home at the same time.
While it seems entirely possible to do so, I personally found it quite overwhelming In between searching for condo listings, attending viewings, and having to manage the logistics of selling the flat, I was extremely tired. On top of that, finding a new home that checked all my boxes was no easy feat.
For new launch condos, the selection was limited, because projects are launched on a seasonal basis. When I was in the market, none of the then-new launches were suitable. For resale condos, my choices were even more unpredictable. Sometimes I liked the development but not the unit for sale; sometimes it was the other way around.
What I am trying to say is that it takes quite a lot of time, effort and luck to sell and buy property at the same time. The stars do need to align.
2. The Entire Move Can Take up to Six Months or More
Initially, I thought it would take around two to three months after MOP to sell my flat and buy a new property – mostly because I was very optimistic about being able to find a buyer for the flat and secure a resale condo unit I like. However, upon speaking with my property agent, I realised that even if that were the case, there are many ‘hidden’ processes that can delay the upgrading process.
Timeline for Upgrading from HDB Flat to Resale Condo
| Stages in the HDB upgrading process | How long it takes |
| Flat fulfils MOP (according to HDB MOP rules) and then register intent to sell | – |
| Issue Option to Purchase (OTP) to buyer | 7 days |
| Buyer exercise OTP | Up to 3 weeks |
| Submission to HDB | Up to 3 months |
| HDB completes processing | 6 to 8 weeks |
| Return funds back into your CPF OA and make an offer and pay option fee for condo | Up to 3 weeks |
| Exercise option for private property and pay stamp duties | Up to 3 weeks |
| Completion of purchase | – |
This is the general timeline for upgrading, assuming you have already found a buyer immediately. As you can see, even if you have a ready buyer, the process will take time. The stages with potential for delays are mainly the submission to HDB (after the buyer exercises their OTP), and the completion by HDB.
The submission to HDB is a negotiated term that is written into the OTP agreement. If the buyer is a first-timer and has no other personal matters before sealing the deal, an immediate submission is possible. However, if the buyer is also in the midst of selling their flat or needs to settle financing arrangements, then they may not be able to submit the sale to HDB so quickly. They generally have 90 days to do so (because that’s how long the HDB valuation report lasts).
For completion by HDB, the general timeline is six to eight weeks, but during busy periods it may be delayed to 10 weeks or longer. There is no real way to estimate or control this, so you can only hope for the best.
Add all the weeks up and you are looking at six months or longer! Additionally, during the handover period, you will need to make interim living arrangements. If you move back in with family, you will need to pay for movers twice (first to your family’s home, and then to your new condo). Likewise, you’ll need movers if you rent on the open market. With the current sky-high rental prices, that is a significant expense to account for!
So you may want to request an extension of stay or find another temporary accommodation.
3. Plan Carefully to Avoid Unexpected Cash Flow Challenges
If you are mostly relying on your HDB flat sales proceeds to finance the upfront payments of your new condo, you will want to prepare a super detailed timeline of the two ongoing transactions, indicating when the relevant payments are due.
For me, the most unexpected part was having to wait for the funds to be returned to my CPF Ordinary Account (OA). Remember, when you sell any property, you will need to return whatever CPF OA monies you used to finance it (plus accrued interest). Yes, you can use it to help finance your next property, but you must first return it and this doesn’t happen immediately!
The process takes three weeks after the HDB flat sale is completed. So, if you need the funds for the downpayment of your condo, you must wait.
You can always sign the OTP earlier, which can be as soon as your flat buyer has exercised their option if you want to avoid paying Additional Buyer’s Stamp Duty (ABSD) fees, if you have the cash to pay the option fee (usually 1%).
However, when you exercise the option, you will be expected to pay the remainder of the deposit (usually 4%) in cash. Around the same time, you must also pay the Buyer’s Stamp Duty (BSD) in cash.
For a $2 million private residential property, you’re looking at cash payments of $20,000 (1% option fee), $80,000 (4% balance deposit) and $69,600 (Buyer’s Stamp Duty). If you’re unsure how much stamp duty you have to pay, you can use an online stamp duty calculator, like this one by PropertyGuru Finance.
4. Be Prepared for Higher Mortgage Rates in 2023
If you financed your HDB flat purchase with a bank and got your previous home loan five years ago, or refinanced your home loan in the past two to three years, then you were probably enjoying a great rate for your HDB flat’s mortgage. For me, I refinanced in 2021 and was enjoying 1.5% p.a. until I sold the flat.
But over the course of the COVID-19 pandemic, Singapore mortgage rates have been on the rise with the global interest rate hikes. In this current high interest rate environment, we’re looking at home loan rates that trend upwards of 3.38% p.a.. So, when you buy your condo and take up a new mortgage, you can expect higher mortgage rates and thus, higher monthly mortgage repayments.
In the grand scheme of things, this might not really matter because mortgages are often a 20- to 30-year commitment so ups and downs are pretty much par for the course. However, if you have been doing your calculations and budgeting based on outdated market rates, then you may need to adjust them accordingly.
5. Know the Hidden Costs of Living in a Condo
I was prepared for the higher property price tag and condo maintenance fees, but I soon discovered that there are many more hidden costs and lifestyle changes to adapt to when living in a condo unit.
Unlike the previous HDB estate I lived in, there are no hawker centres nearby. There are also no amenities like supermarkets, hardware stores and clinics within walking distance. The nearest ones are a short drive away, and they are considerably more expensive because they are near private homes.
Next, there are many services that are more expensive simply because you live in a private home. Air-conditioning servicing is one such example – for some reason, even if your condo set-up is completely the same as that of a similar-sized flat, you will likely be quoted a higher price. I’m not entirely sure what the reason is, but I found this to be the same case for renovation quotes too.
If you live in a duplex, some service providers (e.g. movers) also charge extra for their workers to climb the stairs.
6. Stay Flexible and Know Things May Not Go as Planned
Thus far, it may seem like I’m complaining about everything. However, it is quite the contrary – there were hiccups along the way, but I do not regret moving at all and am very excited to be in my new home.
I just wanted to share my biggest takeaway, which is that things may not always go according to plan.
Even as a typical Type A person who loves planning and managing projects, I was blindsided so many times during this journey. However, if you keep an open mind and stay flexible, everything will eventually find a way to work out.
Upgrading from HDB Flat to Resale Condo
There are many articles and guides online that share how you can sell your newly-MOP-ed HDB flat for profit and use the sales proceeds to put down a downpayment. From my experience, it’ll be quite a journey as there are many things that “you won’t know that you don’t know” until you actually go through the process. But I hope my sharing has made it less daunting for you to take the leap.
If you’ve decided to buy a condo, you’ll need help planning your finances and choosing the ‘best’ mortgage package for you. As far as the theoretical calculations go, it can be quite straightforward in terms of finances, especially for dual-income households earning at least the median salary or above.
While I cannot make any blanket comments on the financial feasibility of upgrading – you can speak with PropertyGuru Finance Mortgage Experts for tailored home financing advice. They can also assist you in picking a home loan most suited to your needs. All the best!
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