HOUSING MATTERS
Process Of Buying
A Resale Flat
For couples who just got married, the next phase of their lives would be finding a place to stay. In other words, they would want to buy their first home. Thankfully in Singapore, there are so many options that are available. The most important factor would be that you just need to have the money prepared.
The most common option that people would go to is to buy a HDB flat. And It will either be a Build-to-Order (BTO) or a resale flat. Definitely, there are differences between the options and it is up to you to eventually decide on a decision.
For this article, we would be discussing the process of buying a resale. It is different from buying a BTO and for first time buyers, this article will give you a picture of how the process would be like.
Selecting your flat
Since you will be buying a resale flat, that would also mean that some homeowner must be selling their house as well. You would go through a real estate agent or through multiple websites to find out the available units.
Will not go through much on this part nevertheless you can get to our article prior to making a final decision.
After selecting your flat
When you have finally come to a final decision, this is where all the administrative part will start to come in. Fortunately HDB has made it an easier and much more organized process when it comes to buying a Resale flat. They have set up a portal to cater to the transaction buying and selling a resale flat.
Let us go to the first step and along the way, the details and fees involved would be discussed as well.
Step 1: Register Intent to Buy
This first step has to be done even before selecting your flat. The main reason why is to receive an assessment regarding your eligibility to buy a resale, getting any CPF Housing grants and if you are able to take a HDB housing loan.
This is a great thing as it will at least give you a benchmark of what you are able to afford and let you manage your expectations. You would have to fill up the number of Buyer and Occupants when registering for Intent to Buy. You will have to declare your salary as well.
You are not able to amend the information that you have added after you had submitted your Intend to Buy. You will need to delete first prior to adding or removing any details.
Step 2: Get Option to Purchase (OTP)
Next is the action of you putting a bid on the flat that you want. The term is called Option to Purchase (OTP). This action is like a pre-sale step where the seller must hand you the OTP if you really want to buy the flat.
At this stage, you would need to pay a deposit to the seller. The deposit will be divided into 2 stages and payment is capped at $5,000.
- Granting of OTP
Cost: Up to $1,000 (paid as option fee)
- Exercising of OTP
Cost: Deposit up to $4,999 (cap of $5,000 and minus off the option fee above)
Prior to getting the OTP, as a buyer, you must complete one very important step. You would need to get a HDB Loan Eligibility (HLE) letter from the HDB. This step would be applicable to you if you intend to take on a HDB Housing loan.
The HLE is a useful document where it will inform your eligible loan amount, monthly installments, and repayment period.
Once getting hold of the HLE and the resale price have been agreed upon, the seller is then able to grant you the OTP. Thus this is the first stage. You have 21 days to exercise the OTP.
When you have exercised the OTP, that is when you would need to pay for the second stage. This would mean that you have confirmed that you will be buying the flat.
Step 3: Choice of financing
For this step, if you are planning to take a HDB Housing loan, you would have the relevant information above.
However, if you decided to take a bank loan instead. It would differ slightly. If you are taking a HDB Housing loan you would need to obtain a HLE but for a bank loan, you will need to obtain a valid Letter of Offer from a bank or a financial institution.
Step 4: Request of home value
You will need to find out the value of the flat from HDB if you intend to use your CPF monies and/ or a housing loan. It will be used to determine the capacity of how much CPF monies that you can use.
Your request will take about 10 working days to be answered. And a processing fee of $120 will be required to determine the resale flat value.
Step 5: Submit Resale application
At this stage, this is when more administrative work will be involved. When you have exercised the OTP, you and the seller must submit your respective parts of the resale application via the HDB Resale portal along with the necessary documents.
It is might be possible for both you and the seller to submit it simultaneously, therefore, there is a 7 calendar days timeframe for the other party to submit their application. For example, if you submitted it on Monday, the seller has until Sunday to submit theirs. If you missed the timeframe, you and the seller have to redo the process all over again.
You and the seller will each also have to pay an administrative fee when submitting the resale application form. The fee will depend on the type of flat. If it is a 1- and 2- room, it will be $40. And if anything bigger, it will be $80.
Like mentioned above, you have to submit certain necessary documents. Here is the list below:
Step 6: Endorse Resale documents
Upon the receipt of the documents from both you and the seller, you will be notified by HDB. It will then take approximately 8 weeks to process the application.
During the 8 weeks, you will need to endorse the documents that the HDB had to prepare for you in the Resale portal. The documents consist of:
- Buyers’ financial plan
- CPF withdrawal
- Health declaration for Home Protection Scheme (HPS)
- Resale documents for acknowledgment
NOTE: You would need to endorse the documents within 6 days
Step 7: Payment
After endorsing the resale documents, you will have to pay the legal fees which consist of conveyancing, title search, and caveat fees. All of them you are able to pay via credit card online.
- Conveyancing Fee:
To transfer the ownership of a property from one owner to the other.
- Title Search:
To ensure that you have the legal right to buy the property.
- Caveat Fees:
To protect your interest in the flat
Step 8: Receive approval of Application
It will take 2 weeks after you and the seller have endorsed the documents and paid for the applicable fees for the HDB to grant you an approval.
You will then be sent an SMS when your HDB approval letter has been posted on the portal. You will then be given a scheduled appointment to complete the transaction of the purchase of the resale flat.
The things you need to do prior to the resale completion appointment.
Inspect the flat
Before you accept the possession of the flat, you would need to inspect the flat. You would need to check that the physical condition of the flat is acceptable
Buy Fire Insurance
This is mandatory to everyone who owns a HDB flat. Fortunately, you do not need to search for the insurance plan. HDB has an appointed insurer to provide you with the purchase of the fire insurance.
Payment
Lastly, if you are taking an HDB housing loan, you would have to pay for the balance of the purchase of the flat and any unpaid Stamp Duty.
Step 9: Appointment
The last step; the handover of the flat. You would need to be present at the appointment as you would need to sign the transfer document by the seller of the resale of flat and the mortgage document/ agreement by you.
You would need to confirm that the flat is in an acceptable condition. And you will have to complete any other payable fees as well. After all, has been resolved, you will then be officially handed over the keys.
Make sure you make the right decision
There you go, the process of buying a resale flat. With the existence of the HDB Resale portal, it has been an easier way for you to handle the procedure of buying a resale.
What is important is that you be committed to the choice that you have made. Basically buying a resale would translate that you are not buying a brand new flat with a lease of 99 years and it will mean that you must really like or love that place in order for you to decide in settling for it.
Therefore, keep in mind if you intend to resell it back, there maybe limitations towards potential buyers due to the remaining lease. You can click here to see the difference.
Hope this article was useful. Do share with your family and friends. Till next time.
Disclaimer
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
