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6 Factors on Whether You Can Afford to Upgrade From HDB to a Private Condo?

Most of us living in HDB flats dream of owning a private condo and with HDB resale prices climbing 19 straight months, that dream may just become a reality.

In today’s article, we look at some factors you need to take note of if you plan on upgrading from an HDB flat to a private condo.

1) Minimum Occupation Period (MOP)

First things first!

For you to sell your HDB flat and upgrade to a private condo, you must have fulfilled the MOP, which is 5 years from the day you collected the keys to your HDB flat at the HDB Hub.

Once you have completed the MOP, you can buy a private condo or a landed property.

2) Can I afford to upgrade?

The downpayment for a private condo or landed property is 25%, with 5% in CASH and the other 20% in either cash or CPF funds.

If you do not have any outstanding housing loan, you can borrow up to 75% of your new home’s value from a bank.

So, be sure to have sufficient cash on hand for the down payment and ensure that you are able to service the monthly instalments to avoid any unpleasant situations.

To calculate the estimated sales proceeds from selling the HDB flat, you will need to have the following:

  • Estimated selling price of your HDB flat

  • Outstanding housing loan

  • Housing loan prepayment penalty (if early redemption)

  • Used CPF funds plus accrued interest

  • Legal fees

  • Agent commission

After you have your estimated proceeds from the sale of your HDB flat, you will have a clearer idea of the financial costs of the property you are upgrading to.

If the private condo you are upgrading to costs $2 million, you will need a minimum of $100,000 in cash AND $400,000 in either cash or CPF funds for the down payment. The remaining $1.5 million can be paid with a bank loan.

3) Loan-to-value (LTV)

How much you can borrow from a bank to finance the purchase of your new home is known as LTV.

If you have no outstanding housing loan, the LTV is 75%, thus the down payment of 5% in cash and 20% on either cash or CPF funds.

If you have an outstanding home loan, the LTV limit is 45% or 25%, with minimum cash down payment of 25%.

4) Total Debt Servicing Ratio (TDSR)

The current TDSR is 55%, meaning your total debt obligations such as personal loans, car loans, credit card outstanding amount AND the loan applied for cannot be more than 55% of your monthly income.

Therefore, it is important that you avoid incurring large amounts of debt at least 12 months prior to applying for the new home loan.

Bear in mind that if you do not meet the TDSR, you will have to come up with a bigger amount for the down payment.

5) Additional Buyers’ Stamp Duty (ABSD)

When you are buying the private condo before selling the HDB flat, you will be required to pay the ABSD, which is normally paid 2 weeks after you exercise the option to purchase (OTP).

Not to worry, if you dispose of the HDB flat within 6 months of purchasing the private property, you can get a refund of the ABSD.

6) CPF funds

After you sold the HDB flat, whatever amount you withdrew from your CPF to pay for the purchase of the flat, must be returned with accrued interest.

Of course, the returned amount can then be used to pay for the purchase of the new property.

The danger here is when you have a negative sale, meaning the sales proceeds, after clearing off the mortgage loan, is not enough to cover the CPF funds used in the original purchase.

Without using funds from CPF, you will have to fork out additional cash, which you may have planned for other uses such as holidays or children’s education.

Whether you upgrade to a new launch or resale condo, the most important thing is not to over-commit and do your financial planning to ensure that you do not lose the property or have to sell at a loss.


Are you looking for new launch developments or the latest resale listings? Head to to browse your preference of properties for sale in 3D.

Have a question? Let us know in the comments below or on our Facebook post.



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