Recently I have been engaged in the process of purchase of a HDB resale flat. Though I get to read so much on the process of purchase of HDB resale flats for PR (Permanent Residents), the process for a resale HDB purchase becomes a little serious and tensed most of the times when it comes to oneself.
I would like to share our experience in buying the HDB flat. We completed the process without an agent.
After a significant period of 4 years, we decided to buy a HDB flat. Due to a temporary stay in India for about 6-10 months, due to some travel within our hometown and other personal and family commitments, we had to stay away from Singapore. Our return to Singapore after this short time, made us realize the necessity of owing a HDB compared to renting one. This is mainly because of a significant cut toward CPF, which is more starting the 3rd year of PR. Also, due to this break, our CPF funds were not enough to cover my 20% down payment.
This is how the HDB payment works. I shall say for example in SGD,
The Valuation cost of HDB = 400,000 (I don’t wish the disclose the exact rate)
The Cost Over Value (COV) = 20,000 (say)
Total cost of the house now = 420,000
Approach the banks and get an in principle approval to check your eligibility for loan and have a guide value of the funds you have to arrange out of your hands
OTP signing: 1000 and decide the date for OTP execution. This will be usually within next 14 days.
Generally these 14 days is for you to check with banks to know what you did in step 1. But Step 1 has to be done earlier so that you don’t have to regret the 1000 dollar deposit.
OTP execution: 4000 and decide the first sitting date. Better to decide the lawyer during step3. For us, the bank provided the lawyer as part of their package. There is an extra form downloadable form HDB to be signed if we don’t engage an agent. This is a 1 page simple yes/no form, to be signed by the buyers.
Get the Bank approval letter for the loan by submitting the OTP execution (copy of it).
We had to go to HDB Toa Payoh to submit the documents form signed in step 3 in person, just in case the online was not the right way. However, we can scan and send over the same.
The seller’s agent will arrange with HDB to mark our first sitting date. This is done Online by the seller’s agent.
This was the time we call the lawyer to get introduced. In the mean time, the bank had sent us the lawyer details and contact person.
First Sitting with HDB: Should submit all the documents and they will check eligibility of both buyer and seller. This day buyer has to tell them the date to register. If slot is available on that day, it will be fixed right in front of the buyer.
You may have to wait for the acceptance letter from HDB for the application, which is expected to arrive in 1 – 2 week’s time.
Meet the lawyer with appointment, on the same day as 1st appointment (to save time). This is because, of you have to take funds form the CPF, it is a 3 week process. So, the lawyer will do that for you. Meet him and sign a few documents. This will include some insurance documents as well.
In this meeting, you will have to hand over a post dated cheque favoring the lawyer’s firm, to work on buying the stamp papers for registration. This is about 7000. It is about 1.5 – 1.6%. The lawyer will tell you the amount.
Now, it is the fund arranging activity.
Loan will be only 80% of 400,000 (HDB value) = 320,000
Say in CPF you have = 30,000
So, funds needed = 420,000 (total value) – 320,000 (bank loan) – 30,000 (CPF) – 5,000 (OTP) = 65,000
Extra funds for Legal fees + stamp duty and tax were about 7,000.
We don’t have an agent fees (didn’t engage one) and legal fees (covered in loan). If you were to engage a agent, and an external lawyer = about 1% + 2000 = 6200
So total funds required in hand for completion of purchase = 72,000
This is the time when we engage our interior decorator (renovator) and see how much funds we need for the necessary renovations needed in the house.
Prepare the Demand Draft (Cash Cheque) in favor of HDB for the mount 65,000 and keep it ready for the second appointment.
On the day of Second appointment, give the Cash cheque and receive the Keys from the lawyer.
Since there is no agent involved, you have to go in person for the second appointment. Else the seller’s agent will do this process for you.
Advantage of Agent is that he meets the lawyer for you, and brings the docs to your house to get it signed. And during the second sitting, the agent collects keys from the lawyer on your behalf and gives it to you and he will do the meeting with the buyer’s agent, which otherwise the buyer has to do.
Hope this information helps you to plan ahead.