CPFB | Upgrading your home

HOME OWNERSHIP

Looking to sell your current HDB flat and buy another?

Enjoy the home of your dreams, without compromising on your retirement

Should you upgrade?

Are you thinking of selling your current flat and upgrading to another? Before doing so, do consider:

Why are you upgrading your flat?
Is upgrading your best option?

If you have determined that you need to upgrade:

Are you eligible to do so?
Should you buy or sell your flat first?
What type of flats can you go for?
What locations do you want to live in?
Case study: Do you have sufficient savings for retirement?

Understanding your financing options

Upgrade to a new home while keeping within your means.

To make prudent financial decisions, consider:

How much do you need for your next flat?
How is your loan quantum determined?
Cash payments
Type of housing loans available
Should you use cash, CPF or both cash and CPF to finance your home?

The buying and selling process

Learn more about the steps involved:

Process of buying a new/resale flat
Process of selling your current flat
Types of ownership: Joint Tenancy vs Tenancy-in-common
CPF refund process
Case study: How much cash proceeds will you receive upon your flat sale?

A roof over your head and a secure retirement

After purchasing your home, how can you better secure your retirement?

Learn more about:

Voluntary Housing Refund
Partial capital repayment
Monetise your home

Intending to upgrade

Why are you upgrading your flat?

Before deciding to buy a larger or more costly flat, it's important to determine why you're doing so and if upgrading is the only option.

For some, you could be looking for a bigger living space, a preferred location, a form of property investment or even an 'upgrade' in lifestyle. However, every choice comes with trade-offs and careful planning is required to ensure that upgrading does not compromise your retirement needs.

An important question to ask yourself is whether your reason for upgrading is worth the costs and risks that come with it. Consider if you have the means to do so after you have fully evaluated the implications.

Banks now offer home loans linked to the Singapore Overnight Rate Average (SORA). It's important to be aware that the 3-month compounded SORA are currently at elevated levels.

What this means for you is the potential for an increase in your monthly housing loan payments over time. It is of paramount importance to exercise added prudence when considering borrowing and to maintain an emergency fund as a safeguard against unforeseen circumstances in the current interest rate environment. Additionally, it is crucial to approach new financial commitments with caution.

Is upgrading your best option?

It is important to evaluate whether the benefits of upgrading outweigh the costs of upgrading since you will need to pay for renovation costs and other expenses such as stamp duty and legal fees on top of the cost of buying the flat.

For instance, if your intention of upgrading is to move closer to your child's school, you may want to consider alternatives such as school bus or student care arrangements before resorting to buying a new flat.

Are you eligible to upgrade your flat?

If you have assessed that upgrading is necessary, you should first determine your eligibility.

Are you eligible to sell your flat?

Have you hit the Minimum Occupation Period(MOP)?

The MOP is the minimum time period that you are required to physically occupy your flat before you can sell it in the open market.

Visit HDB to learn more

Are you eligible to buy a flat?

Whether you're purchasing the flat alone or with your family, there are different eligibility conditions and schemes. For example, you must be a Singaporean Citizen aged 35 and above to purchase a flat alone.

Visit HDB to learn more

Should you buy or sell your flat first?

Whether you buy or sell your flat first, it comes with unavoidable risks and costs. Be it having to look for temporary lodging, or the reduced cash flow when purchasing your next flat, there are uncertainties involved.

If you buy another HDB before selling...

You have a place to move into first
However, do note:
- You have to sell your current flat within 6 months of purchasing your new flat
- You may have a reduced cash flow as you will not have the sales proceeds from your existing flat

If you sell your current flat before buying...

It may take a few months before you sell your flat in the open market
You may need temporary accommodation during this period which adds to the costs. Here are some options you can consider:
- Renting an apartment/bedroom
- Staying at your relative's/parents' place

Do note that whether you buy your next flat or sell your existing one first, the Loan- to-Value limits remain the same i.e., up to 80% for an HDB loan and 75% for a bank loan.

What type of flats can you go for?

Find out what homes are well within your budget, to ensure that you can comfortably pay off your home loan without putting a strain on other aspects of your life, especially your future retirement.

Get an estimate of your home affordability

Resale flats

Check:

Condition of flat
Remaining lease of flat and whether it can last the youngest buyer till age 95

See what flats are available:

New flats

Every year, there are several launches of BTO projects in both mature and non-mature estates. BTO projects tend to have a longer waiting time of 3 to 5 years on the average.

Check out HDB's portal for new flats

There will also be flats built in prime, central locations under the Prime Location Housing (PLH) scheme.

Learn more about PLH scheme

Sale of balance flats (SBF)

For completed sale of balance flats, you can collect your keys within 3 months. For those under construction, the wait time for collection depends on the stage of construction.

Open booking of flats

These are balance flats from past SBF launches which are announced by HDB from time to time.

You can apply for such flats anytime throughout the year.

Similar to SBF, you can collect your keys within 3 months for completed flats. For those under construction, the wait time for collection depends on the stage of construction.

Wondering where to live next?

There are many different residential estates in Singapore, each with a unique flavour of its own. Estates are classified into mature or non-mature estates. In general, flats in non-mature estates are more affordable than those in mature estates. However, this phenomenon may change with the times.

Mature Estates

Ang Mo Kio, Bedok, Bishan, Bukit Merah, Bukit Timah, Central Area, Clementi, Geylang, Kallang/Whampoa, Marine Parade, Pasir Ris, Queenstown, Serangoon, Tampines, Toa Payoh

Non-mature Estates

Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East, Jurong West, Punggol, Sembawang, Sengkang, Woodlands, Yishun

Considerations

Access to mature estates are prioritised for special groups such as first-timer families.
Mature estates are generally more expensive. For example, in previous BTO exercises, the starting selling price (excluding grants) of a 3-room flat in non-mature estates such as Choa Chu Kang was more than 30% cheaper than a 3-room flat in mature estates such as Kallang. It is important to note that the prices can fluctutate over time and may be influences by various factos such as market conditions

Keep your family close when choosing your next home

If you have decided that upgrading is necessary for you, why not consider living near your children or your parents?

Besides the convenience and being surrounded by your loved ones, you also get to enjoy housing grants and schemes provided by the Government to encourage families to live closer together. These include the Proximity Housing Grant (PHG), as well as other schemes like the Multi-Generation Priority Scheme (MGPS).

Regions to check out

There are some regions which will be benefitting from significant development over the next few years, with some already underway. Many of the non-mature estates can be found in these regions. Explore their regional highlights below.

west, north and north east region on Singapore Map

There are exciting plans to develop these urban areas into the Punggol Digital District and the Jurong Lake District, creating vibrant communities for living and working.

Explore the North Region

New neighbourhoods, lively communities

More families in the North can look forward to new green and blue spaces to live, work and play at.

Learn more about the upcoming plans and developments:

URA Masterplan (North Region)

Explore the North-East Region

Where the familiar meets the future

The North-East region will see new housing options in the area. Residents across generations will also get to enjoy new facilities and a fresh environment with a range of community amenities, alongside the wealth of greenery and waterways being developed at Buangkok, Punggol and Fernvale.

Learn more about the upcoming plans and developments:

URA Masterplan (North-East Region)

Explore the West side

Transforming work, life and play in the West

The West side remains Singapore's largest manufacturing hub. There are upcoming plans to bring about an improved working and living environment for everyone.

Residents can look forward to new employment, recreation and leisure opportunities in areas such as Tengah and Jurong Lake District.

Check out the new flats in these areas which may be more affordable as well.

Learn more about the upcoming plans and developments:

URA masterplan (West Region)

New classification of flats

In the 2023 national day rally, an important announcement was made regarding the three categories of flats in Singapore's housing market. The three categories are Standard, Plus, and Prime, each offering varying benefits and restrictions to potential homeowners.

Standard flats form the bulk of the housing supply and are subject to standard subsidies and restrictions, which are applied uniformly to all BTO flats.

Plus flats, a newly introduced category, offer a more attractive option as they are located in choicer locations within each region across Singapore, such as near MRT stations and town centres. These flats come with additional subsidies compared to Standard BTO flats, but they also have tighter restrictions.

Prime flats, on the other hand, are situated in the choicest locations within Singapore, typically closer to the city centre. They offer the highest subsidies among the three categories. However, these flats come with the strictest conditions to ensure they are allocated to those who truly need them. It's important to note that Prime flats are currently offered under the PLH (Prime Location Public Housing) model.

Learn more about the housing type

Case study: How will your home purchase eventually impact your retirement payouts?

Learn about how James' and Mary's decision today will eventually impact the amount of monthly payouts they receive in their golden years

Follow along our interactive animation

Financing options

Now that you've got a flat in mind, how can you go about financing it?

It is important to buy a home that you can afford and adopt the right mortgage repayment strategy so that you can preserve savings in your Ordinary Account for your retirement.

How much do you need to buy your next home?

When you first purchase your home, you have to make some upfront payments and take a loan to finance the remainder of the payment.

There are different ways to finance your home. They include using grants, loans, your Ordinary Account savings and your cash savings, including the sales proceeds from your existing flat.

Ordinary Account

Your Ordinary Account savings can be used for the downpayment and monthly instalments.

However, there are limits to the amount of Ordinary Account savings you can use for your property. Use the Housing Usage calculator to estimate the amount.

Some expenses cannot be paid with Ordinary Account savings as well.

Learn more

Cash

You can use cash to pay your downpayment and housing loan.

Grants

Second-time home buyers are eligible for grants as well. These include:

Step-up CPF Housing Grant
Fresh Start Housing Grant
Proximity Housing Grant

Housing grants obtained are usually credited to the applicant's Ordinary Account after the booking of flat. Housing grants can generally only be used for the downpayment, to offset the purchase price.

Visit HDB to learn more

How is your loan quantum determined?

The quantum of upfront payment you have to make depends on the loan quantum you can take. The loan quantum also depends on the type of loan you choose to take, as well as your Loan-to-Value amount, total debt servicing ratio, mortgage servicing ratio and loan tenure.

Learn the implications of these terms to make a more informed decision.

Visit MAS to learn more

Total debt servicing ratio

The total debt servicing ratio (TDSR) refers to the portion of a borrower’s gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for. A borrower's TDSR should be less than or equal to 55%.

E.g., If your combined monthly income is $8,000, you can use up to $4,400(55%) for your total monthly debt repayment. If you have other loan obligations such as a car loan of $1500, your monthly instalment for your home will be capped at up to $2,900.

chart showing a borrower's TDSR should be lesser or equal to 55%

Mortgage servicing ratio

The mortgage servicing ratio (MSR) refers to the portion of a borrower’s gross monthly income that goes towards repaying property loans, also known as monthly instalments (MI).

The MSR is capped at 30% of a borrower's gross monthly income. To be prudent, we recommend capping the MI amount at 25% of your monthly income. Do note that MSR applies only to housing loans for the purchase of a HDB flat, or an executive condominium*.

E.g., If your combined monthly income is $8,000, the maximum monthly instalment allowed is $2,400(30%).

chart showing that the MSR is capped at 30& of the borrower's gross monthly income

Loan-to-Value limit

The Loan-to-Value (LTV) limit determines the maximum amount an individual can borrow from a financial institution for a housing loan.

The LTV limit depends on the number of outstanding home loans you have and the loan tenure.

A lower LTV would mean that members have to finance more of their downpayment using either CPF or cash savings.

Learn more

Difference in LTV between HDB loan and bank loan

Loan tenure

The loan tenure is the duration which you are given to repay your loan.

With all things held constant, a shorter loan tenure can mean higher monthly instalments but lower interest paid in total. While a longer loan tenure may lower your monthly instalment, you may end up incurring higher interest expenses in total.

*Where the minimum occupation period of the executive condominium has not expired

Some payments to be made in cash...

Purchase price above market valuation

When a resale flat is sold above HDB's valuation, the price above the market valuation is known as Cash Over Valuation (COV).

Some things to note:

You cannot use your Ordinary Account monies to pay for the COV and can only use cash.
As HDB's valuation is only obtained after the seller and buyer agrees on the price, you may wish to estimate the price carefully and determine your budget before agreeing on the purchase price.

View past resale transactions

Resale levy

Resale levy is paid when you subsequently purchase a second subsidised flat.

Do account for the resale levy when you are purchasing a second subsidised flat to ensure that you have the necessary finances to carry out the transaction.

Visit HDB for more information

5% downpayment for bank loan

If you are taking up a bank loan, you have to pay 5% of the downpayment in cash. The remaining 20% can be paid using CPF savings.

Miscellaneous costs

There are other costs which have to be paid in cash:

Renovation costs
Your agent’s commission
Option fees

Should you take out a bank loan or an HDB loan?

Are you at the crossroads of choosing between an HDB housing loan or a bank loan for your flat purchase?

Learn the difference between an HDB loan and a bank loan before determining the best option that suits your needs.

	Bank loan	HDB housing loan
Loan quantum	You can borrow up to 75% of the flat purchase price if the loan period is 25 years and below	You can borrow up to 80% of the flat purchase price However, you will be required to use all of your Ordinary Account savings above $20,000 first
Downpayment and payment during key collection	The minimum downpayment and payment during key collection required is 25% of the purchase price You may use your Ordinary Account savings for your downpayment However, 5% of it has to be paid for in cash	The minimum downpayment and payment during key collection required is 20% of the purchase price which can be fully paid for using your Ordinary Account savings
Use of CPF savings and previous property sales proceeds	You may use or retain any amount in your Ordinary Account (up to applicable limits)	If you are taking a second HDB loan(up to applicable limits), you and the essential occupier need to use 50% of the cash proceeds from the disposal of the existing or last-owned HDB flat
Interest rates	Bank interest rates fluctuate as these are more affected by the economic environment	The HDB interest rate is 0.1% above the Ordinary Account interest rate, which is currently 2.6%
Repayment amounts	Fluctuates depending on loan interest rate	Relatively constant due to stable interest rate
Capital repayment or refinance loan	Early and late repayment penalties may apply Penalties are subject to the terms and conditions of the loan provider May only refinance loan with banks and unable to refinance to HDB loan	There is no early repayment penalty, but a late payment charge of 7.5% per annum Option to refinance to bank loan

What other schemes are available to facilitate the upgrading process?

There may be instances where you have to pay the downpayment for your next flat before you've received the sales proceeds from your existing flat. In such cases, there are schemes and bridging loans available.

HDB

HDB has schemes to facilitate the buying and selling process for existing flat owners.

Enhanced Contra Facility
Contra Payment Facility for new flats

Visit HDB to learn more

Banks

Banks also provide bridging loans to facilitate the upgrading process.

Check out their pages to learn more:

Should I use cash or CPF to finance my home?

Most people view the monies in their Ordinary Account as the main source to finance their home purchase. While it is true that CPF is an essential means to financing your home, it is important to balance the purchase of your dream home with your future needs. This is because your CPF savings will eventually become your retirement income.

Here are some considerations for using cash or CPF.

Using cash

Using CPF

Less flexibility for your other expenses

Using cash to pay for your home purchase/loan means less cash available for your other expenses. However, the unused CPF monies will contribute to your retirement sum.

More flexibility for your other expenses

Using your CPF frees up your cash savings and allows you to use it for other expenses.

More stable returns on your savings for retirement and housing

The unused monies in your Ordinary Account can earn up to 3.5%* risk-free interest. These Ordinary Account monies can also be a source of emergency fund for financing your flat in times of need or savings for your retirement.

Less certainty on your savings for retirement and housing

While you can place the unused cash in various investment instruments and possibly earn a higher rate of return than the Ordinary Account, it is also possible to earn a lower rate of return or even make a loss.

Potentially higher cash proceeds upon sale

Using cash means that you will not need to make a CPF refund to your CPF account upon the sale of your property. Thus, you may receive higher cash proceeds.

Possibly lower proceeds upon sale

You will need to refund more to your CPF account and thus may receive lower cash proceeds. Nonetheless, you can still use your CPF refund for your next flat, even though it cannot be used for payments that need to be paid in cash such as renovation.

In summary...

While using CPF to finance your home may provide more liquidity and flexibility in cash, you will lose out on earning the risk-free interest rates of up to 3.5%* in your Ordinary Account for your savings on retirement and housing. Ultimately, do consider both your short term and long term needs before deciding which option is most suitable for you.

You can use CPF for the initial purchase of your home and subsequently use cash or a mix of both cash and CPF for your mortgage instalments.

Manage your Ordinary Account usage

Buying and selling process

Buying your next flat

Are you looking to buy a new or resale HDB flat? You may be looking to upgrade to a larger (and more costly) flat for a variety of reasons. While doing so, it is important to buy a flat within your financial means and also consider your retirement needs.

3 steps to buying your next flat

	New Flat	Resale Flat
Search, plan, contract	Check eligibility to buy flat and grants available Search for desired area to live in upcoming flat launches	Register intent to buy Search for desired flat Negotiate with seller and request for Option to purchase (OTP) Choose mode of financing Request for value from HDB Exercise OTP
Application process	Apply for flat online at HDB's website during sales launch or open booking Book a flat based on queue position Pay the option fee	Submit resale application Endorse resale documents Pay resale fees Obtain approval from HDB
Completion of sale	6 months after booking of flat, sign the Agreement for Lease Make downpayment When the flat is ready, collect the keys Pay balance purchase price	Attend completion appointment at HDB

Selling your existing flat

Do understand the sale process, so that you can plan and manage your timelines and smoothen the process.

Having a good estimation of your sales proceeds can also help you make a more

informed decision when it comes to your next home purchase.

3 steps to selling your property

	HDB flat	Others
Plan, contract	Register intent to sell on HDB's website Receive a preliminary assessment on your eligibility to sell your HDB flat Determine the selling price of your flat, list flat for sale, negotiate with buyers Grant Option to Purchase (OTP) to potential buyers	Doing paperwork and listing flat for sale Viewing and negotiations with buyer Grant OTP to potential buyers
Application process	Buyer exercises OTP Buyer and seller to submit resale applications online within 7 days of each other Endorse resale documents Pay resale fees Obtain resale approval	Buyer exercises OTP Buyer signs Sale and Purchase agreement Buyer pays Buyer's Stamp Duty / Additional Buyer's Stamp Duty (if any)
Completion of sale	Attend completion appointment at HDB	Completion of sale upon full payment

What are the implications on my CPF?

When you used your CPF savings for your property, your retirement savings are reduced. As such, upon the sale of your property, the sales proceeds will be used to pay off the outstanding housing loan taken to buy the property and refund the CPF amount used for your property and accrued interest, regardless of the Manner of Holding. This is to restore your retirement savings.

If you had pledged the property to make up your retirement sum, you will also need to refund the pledged amount.

Learn more

What if I face a shortfall?

As long as your property is sold at market value, you do not need to fork out additional cash to top up the shortfall if the sales proceeds are insufficient to refund the amount of CPF monies used with accrued interest, after paying the outstanding loan.

However, you are required to refund the option monies received to your co-owner’s and your own CPF savings as it forms part of the selling price of the flat.

The remaining sales proceeds after paying off the housing loan will be distributed based on the proportion of your principal amount used with accrued interest(P+I) to the total P+I of all owners.

Read article to find out more Watch video

Refund to CPF upon sale of flat: before vs after age 55

The process for refunding your Ordinary Account monies differs whether you do so before or after 55.

Here’s what happens to your money after you sell your flat.

Learn more

required CPF refund before 55 and after 55

Manner of Holding

The type of ownership of your flat is termed as the Manner of Holding.

Joint tenancy

Under a joint tenancy, you and your co-owners will have an equal interest in the property.

While you and your co-owner can subsequently sell the entire property, you will need to convert to tenancy-in-common first to only sell your share of the property.

The right of survivorship also applies.

Tenancy-in-common

Under tenancy-in-common, each co-owner owns a separate share in the flat, with the total shares adding up to 100%.

The right of survivorship does not apply, meaning that upon the demise of an owner, his/her interest will be distributed according to his/her will (if any). In the absence of a will, it will be distributed in accordance with the Intestate Succession Act.

Selling your share of the property

Joint tenancy

If you or your co-owners decide to sell your share of the property, you would need to convert the joint tenancy to a tenancy-in-common first.

Tenancy-in-common

If you hold the property under tenancy-in-common, you are able to sell your share in the property.

Similar to a sale of the entire property, you will be also be required to refund the principal amount of CPF used and the accrued interest (P+I) based on your respective proportions.

You might need to fork out additional cash to refund to your CPF account if you use more CPF monies than your share of property. This is to ensure that CPF members who had used more CPF savings than their share of property will still have sufficient CPF savings for their retirement and housing needs.

Learn more

Case study: How much cash proceeds will I receive when I sell my flat?

When selling our flat, we tend to overlook the costs involved, and may overestimate our total proceeds received in cash. Besides paying off the outstanding home loan, we also have to refund the CPF principal amount used plus accrued interest, and to pay for expenses such as your agent's commission and sale-related administrative and legal fees. It is also possible not to have any cash proceeds despite selling your flat at a higher price!

Let's take a look from the context of John and Sarah to help us make a more informed choice when it comes to our own flat sale.

When John and Sarah got the keys to their HDB flat 5 years ago in 2017, they purchased it at $240,000. The breakdown of the costs is as follows:

Initial flat purchase cost
Purchase price	$240,000
Downpayment (10%)	$24,000
Loan taken (90% LTV)	$216,000

John and Sarah sold their flat at $520,000. Upon settling the outstanding loan, making the required CPF refunds and other costs involved, they received balance sales proceeds of $234,000. The breakdown is as follows:

Selling transaction
Selling price*	$520,000
-outstanding loan	- $183,000
- CPF refunds (principal amount used and accrued interest)	- $90,000
- other expenses related to sale (agent commission, admin and legal fees)	- $13,000
= Balance sales proceeds	= $234,000

*Selling price includes the option monies received from buyer

John explaining to Sarah why the cash proceeds is lower than what she expected

When you pay your monthly instalments to HDB or banks, only the principal amount gets deducted from your outstanding loan balance. The interest is paid to HDB or banks for granting you the loan.

In this case, you may notice that despite paying approximately $59,000* in monthly instalments so far, only 56%($33,000/$59,000) goes towards paying off the principal amount. The remaining sum of $26,000 are interest expenses that do not reduce your overall loan balance.

Do take note of the above, so as to be more informed of where your monthly instalments are going to!

*$59,000 is the sum of the total monthly instalments paid over 5 years, based on a HDB loan of $216,000 and a 25 year loan tenure

Securing your retirement

Securing your retirement while living in your flat

While upgrading your flat, it is important to ensure that your retirement needs are taken care of as well. While it may not be top of mind when buying your home, your housing purchase has a significant impact on your ability to pursue the purposeful retirement you are dreaming of.

Find out how you can ensure your retirement needs are not compromised while upgrading your flat.

Make a Voluntary Housing Refund

If you've used your Ordinary Account savings for your property, you are eligible to make a Voluntary Housing Refund.

The earlier you make a voluntary refund, the more interest you will earn to boost your CPF savings for retirement. In addition, you may receive more cash proceeds when you sell your property as you will need to refund a lesser amount to your CPF account.

Having more CPF savings will translate into higher or longer CPF payouts in your golden years.

After effecting the Voluntary Housing Refund, you can re-use your Ordinary Account savings for future housing needs too, ensuring the liquidity of your savings.

Learn more

Make a partial capital repayment

If you are taking an HDB loan, you can consider making a partial repayment and paying off your housing loan in advance to reduce your financial commitments. Doing so will help to shorten the repayment period, cutting down on the interest that you would need to pay. This can help to increase your savings and further grow your retirement income.

However, do be mindful if you are taking a bank loan as you may incur early repayment charges. Do check with HDB or your bank for more details.

Learn more

Monetise your home to boost your retirement income

There are a few means to increase your passive income and boost your retirement income while living in your flat. These include the Lease Buyback scheme, right-sizing or even renting out a room in your flat.

Explore if any of these options are viable for you!

Learn more

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