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For HDB upgraders: Sell your HDB flat first or buy a new condo first?


In a Straits Times article on 15th November, it was reported that “some 7,169 buyers with HDB addresses bought new and resale private homes in the first three quarters this year, a jump of over 21 per cent compared with the same period last year”.


If you are also thinking of upgrading from an HDB to a new condo, should you sell your HDB first or buy the private condo first?


In today’s article, we take a look at the pros and cons of both options.


With the red-hot property market at this current time, with record prices and record transactions, we are in a sellers’ market right now and therefore, it would make more sense to buy first and then sell off the HDB flat.


But is that really the case?


To help you decide, we look at 3 factors that can affect your decision:

  1. Finances

  2. Moving Timeline

  3. Market condition


Advantage of buying a condo first


To buy a new condo before selling, you will need money, either in cash or CPF funds, as you would not be able to use the proceeds from the sale of the HDB to finance the new condo.



Buying a new condo would require upfront payments of 5% Option-to-Purchase (OTP) fee in CASH, 15% down payment (either cash or CPF) and available) and all the stamp duties (either in cash or CPF).

And that is not the only financial matter you have to consider.


If you are still paying off the HDB flat, you are essentially financing 2 housing loans concurrently.


As the housing loan for the new condo is considered a second mortgage, your loan-to-value (LTV) ratio will be significantly reduced from up to 75% to 45%.


There is also the Additional Buyer’s Stamp Duty (ABSD) of 7% for purchasing a second property, though you will be refunded if you sell off the HDB flat within 6 months.


Next, you have to consider the timeline.


Buying a condo first and then selling off the HDB would mean you must dispose of the HDB within 6 months of collecting the keys to your new condo.


The benefit here is that you only have to “move house” once instead of multiple times as you will only sell after getting the keys to the new condo.



Buying a condo first would mean less hassle. As you are not stressed by timelines, you can look around for any good deals, choose a unit that is really to your liking and take your time furnishing it into your dream home.



Advantage of selling HDB flat first


In a sellers market, the pricing power is on the seller’s side and that would mean getting a higher value for your unit.



You know exactly how much of your proceeds from the sale of the HDB and how much you can commit for the purchase of the new condo.


Selling first would also mean one lesser mortgage to service and you avoid the dreaded ABSD.

Unless you are very well-off, selling off the HDB first would make more sense financially.



Without the albatross of a 6 month sell period, you have time to stage your HDB nicely and market it to maximise the value. It usually takes between 3 to 6 months to sell an HDB flat and you do not need to be stressed by the timeline in the event of low market interest.


The setback of this option is the hassle of having to move multiple times. If you are unable to find a new condo that fits your requirements, you may end up renting and that would result in inconveniences and higher costs.


Of course, you can ask for a temporary extension of stay but that is subject to the agreement of the buyer.

 

In summary, selling first or buying first is really dependent on your circumstances. If you are able to purchase first without needing to use the proceeds from the sale, you can pick and choose your next dream home. Selling first would be getting better for the current unit but you will be facing a tighter timeline.


Buy first or sell first, whichever decision you make, do check out MOGUL.sg for the latest new condo launches on offer or list your unit for sale here, to transact fast and easy.


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



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