For those choosing to purchase your first resale HDB, it might be scary. Naturally, you’re planning to part with a large sum of money to make one of the biggest purchases you’ve ever made in your life (for most of us) thus far. Because of this, you start to google “How to buy a resale HDB flat” and prepare to arm yourself with ample knowledge that’s going to help you avoid mistakes.
To be honest, the HDB portal has an extremely thorough step by step process that helps brings you through how to purchase your resale flat. Still, we don’t know what we don’t know and this guide gives you a more in-depth view of what each step requires at a glance. So… lets begin.
Picture credits: The Straits Times
Step 1: Register Intent to Buy
With or without an agent servicing you, you’ll still have to personally register your Intent to Buy. This Intent to Buy allows HDB to perform the required Eligibility Checks necessary, inclusive of the grants and housing loans you are eligible for. That way, you’ll get a better understanding of what you’re eligible for. The best part: It’s FREE!
Any information input in this Intent to Buy acts as an indicator of your eligibility to purchase a property. In other words, it does not constitute an approval by HDB to buy a resale flat, or to take up an HDB housing loan or receive housing grant(s). These will be determined when you submit the resale application subsequently.
Important things to take note off:
The Intent to Buy has a validity period of 12 months; it must still be valid when you’re being granted the Option to Purchase (OTP) by any sellers.
The information input must be accurate and remain the same throughout your purchasing journey; if there are any changes, you must cancel the current Intent to Buy and register for a new one.
Step 2: Financial Planning
You wouldn’t want to go through the whole process just to realise that at the end of the day, you’ve got to sell your kidney and appendix just to pay off your loans right? This is where the HDB Loan Eligibility (HLE) letter comes into play. If you’re intending to get a loan from HDB, you must have a valid HLE letter when you’re granted the OTP by the sellers.
If you’ve got nothing but cash in your life OR you intend to take a loan from a Financial Institution (FI), you can go ahead and look for a place which fits into your budget. Do take note that if you’re intending to get a loan from an FI, you must have a valid Letter of Offer (LO) before exercising the OTP.
Step 3: Look For Your Dream Home
I’m not sure what kind of clarification you would require here but as a promotional passage, agents do have access to multiple tools and property portals, as well as connections, that make it a lot easier to find places similar to what you’re looking for. #justsaying
Step 4: Entering an Option To Purchase
Once you’ve found your dream place, you’re ready to negotiate for an offer. This is usually done by the agent, but if you’re acting on your own, you’re going to have to liaise with the seller (& their agent) on an appropriate purchase price for the place, as well as the conditions of the Option to Purchase, including the date of exercising the option, how long the option will last for, extensions necessary etc. This prescribed form can be downloaded from the HDB InfoWeb, and shouldn’t be amended.
When being granted the option, you’ll have to pay an option fee of any amount from $1 to $1,000. After being granted the option, the seller will no longer have the right to grant an OTP to any other buyers for the duration of your OTP. Thus, the option fee acts as a form of compensation in the case where you, as a buyer, decide to forfeit this Option to purchase another house.
That being said, being granted an Option by a Seller does not stop you from sourcing for other places to get OTPs from other sellers. Of course, if you’re going down this route, be mentally (and financially) prepared to fork out the necessary amount for every OTP you get into because you won’t be able to get back the option fee once you’ve been granted the OTP.
Step 5: Submitting a Valuation Request
After you’ve agreed on a Purchase Price with the seller and have the Option to Purchase granted to you, the next step is to submit a valuation request. This is necessary if you’re taking a HDB/ Bank loan and if you’re using CPF funds for your purchase.
This valuation will then act as the basis to determine your loan amount and your CPF monies used. The processing fee for this portion for each Request for Value is $120 (GST inclusive).
Important things to take note off:
If you need to submit a Request for Value, it has to be done by the NEXT WORKING DAY after the Option Date.
Step 6: Exercise Your Option To Purchase (or not)
After you’ve submitted your Request for Value for the property, the next step is to exercise the OTP granted to you.
If you’re planning on taking a bank loan, you need to have a valid Letter of Offer from the bank. The date of issue of this LO must be before or on the date you exercise the option.
If you choose to exercise the Option, you’ll have to pay the deposit. The deposit, including the option fee paid earlier, should not be more than $5,000 in total. This deposit will be negotiated between you and the seller.
If you decide not to exercise the Option, you can simply let the Option expire past the agreed date. Do note, you won’t be getting back the Option Fee you paid.
Step 7: Submit Resale Application
Next, you and the seller will have to submit a Resale Application.
This portion requires a little more timeliness on you (or your agent’s) part. When submitting a Resale Application, both Buyer & Seller will have to submit a Resale Application. After both parties submit your applications, you’ll be able to check the status of your application through the HDB Resale Portal.
Important things to take note off:
When submitting a resale application, either party can submit their application first, but after the first party submits their application, the other party will have to submit theirs within 7 days from the first party’s submission.
Naturally, you’ll need to pay an administrative fee to HDB for this. For 2-Room flats and smaller, the fee payable by both buyer and seller would be $40; for 3-Room flats and bigger, the fee would be $80.
Step 8: Endorsement of HDB Documents
Bear with me, we’re reaching the end.
After receiving the resale application, HDB will prepare a set of documents that you’ll be required to endorse through the resale portal. Both buyer and seller will be notified via SMS to endorse these documents within 6 days. When the documents have been endorsed and any necessary fees are paid, you’ll receive an in-principle approval.
An in-principle approval / Approval in principle is the agreement that the bank/HDB has agreed to extend you the funds for your property
The documents required for endorsement on the Buyer’s part are:
Buyer’s financial plan
CPF Withdrawal
Health Declaration Forms for Home Protection Scheme
Resale Documents for Acknowledgement
The necessary fees include payment for legal fees, stamp duty, and conveyancing fees.
Once this is done, an approval for the resale application will be granted (typically within 2 weeks). Buyers and sellers will also be notified of the approval via SMS and email.
Step 9: Completion of Resale & Keys Collection
Finally…
Buyers & Sellers are required to attend only 1 resale appointment at HDB for the resale completion. After the resale completion, you’ll officially become the flat owner. Congratulations!
So, that’s a brief (not really) summary of the process a Buyer has to go through to purchase a HDB resale flat. Naturally, there will be a number of documents and items to bring during the resale process and at the resale completion but both your agent and HDB should notify you of these.
Comments