By : Lim Wei Di
06 December 2018
Buying a flat is a huge financial commitment (you already know that!) and getting a second flat is no easier. There are many things to consider, so read on to make sure you have everything covered before putting your money down for your second home.
Computing your estimated sale proceeds
Do you know how much proceeds you might receive from the sale of your existing flat? As the cash proceeds will form part of your budget for your next flat, having a realistic estimate is crucial to helping you calculate the amount you can afford to spend. Simple math!
With information such as your outstanding mortgage loan, CPF funds used including interest, resale levy (if applicable), and some of the other payments due, you can use HDB’s Sale Proceeds Calculator to get a ballpark estimate of the cash proceeds from the sale of your flat!
You do not have to worry about the resale levy, if you plan on getting a resale flat on the open market next.
The resale levy applies to those who plan to buy a new flat from HDB, but have previously received some form of subsidy for their first flat – be it through the purchase of a flat from HDB, or a resale flat with the CPF housing grants.
As new HDB flats are sold at a subsidised price, the resale levy is put in place to ensure that there is a fair allocation of public housing subsidies between first-timers and second-timers.
Second-timer home buyers can also be eligible for housing grants! If you are buying a resale flat that is within 4 km of where your parents/ child currently stay, you may be eligible to apply for the Proximity Housing Grant, which aims to help more families live close to each other for mutual care and support.
Use HDB’s Distance Enquiry for Proximity Housing Grant e-Service to check if the resale flat you intend to buy falls within the proximity range to qualify for the grant.
Taking up a second HDB loan
If you are intending to take a second HDB loan, do note that your loan amount will factor in your CPF and cash proceeds from the sale of your flat. This is to ensure that you do not over-borrow!
The commercial interest rate will be applied to your HDB housing loan if you plan to sell your current flat only after buying your next flat. The interest rate will be converted to the concessionary rate only after you have sold your current flat, and used the proceeds to repay your housing loan.
Want to sell your existing HDB flat and buy another flat at the same time? Consider applying for the Contra Facility, which allows you to use the cash and CPF proceeds from the sale of your existing flat to purchase your next flat, concurrently.
The Contra Facility can help you reduce the cash outlay needed for your next flat, the mortgage loan amount needed and the subsequent monthly repayments. If you are buying a new flat, you can collect the keys to your new flat and renovate it, while selling your existing flat!
We hope this article has made financial planning for your second HDB flat less daunting. Follow us on Facebook for more useful information on buying a HDB flat and HDB living.