Ways to Upgrade Your HDB Flat to Private Condominium in Singapore Strategically

"HDB Flat to Private Condominium"

After for more than five years of you residing in HDB and now it is time you want to upgrade your residential house to a condominium. When you were younger and wanting a house to settle down to build your family, you began searching for the latest Build to Order (BTO) launches or resale HDB flats so you can be near to your parents.

Bto Latest Launches

Now, that your finances are going strong and stable, you are dreaming of upgrading your home to a private residential condominium. 



Before being able to do so, you got to make sure that you comply to certain measures and regulations the government has implemented. 

Minimum Occupancy Period (MOP)

Singaporeans know that they will need to serve their Minimum Occupancy Period (MOP) before selling or renting out the whole unit of HDB flat, even the BTO flat that you proudly purchased as your first home. 

Now, that you have complied with the MOP and you can finally start planning and buying your dream house. You may have some familiarity with the process, the similar one that when you bought your first home but there’s differences between buying a private residential property and a HDB flats. 

Using Bank Loan

Taking up bank loan rather than relying on HDB loan which means you will need to fork out more down payment, 20% of the property value which at least 5% has to be in cash and the remaining 15% in cash and CPF savings. You will also incur lower interest rates on your loan with HDB loans pegging at 2.6% and bank loans close to 1.5%. 

You will also have to draw up proper plan to pay your mortgage. This is due to limits of how much CPF monies you could use to pay off for your mortgage. There are two limits that cap the maximum amount of CPF monies you can use to repay mortgage – Valuation Limit (VL) and Withdrawal Limit (WL). If you have reach these limits, you will have to fork out the remaining mortgage payments in cash. 

CPF Calculation For Mortgage Payment

Check out this CPF calculator here to see how much you will need to fork out for mortgage payments. You also have to comply with Total Debt Servicing Ratio (TSDR) which you can only utilize up to 60% of your gross income to pay off your debt obligations, including credit card debt, student loans, personal loans and other loans. 

There’s also Loan-to-Value (LTV) that sets maximum loan you can take against property’s value depending on your situation. 

Below are three possible scenarios for HDB flat owners who decide to upgrade a condominium.

Buy Condominium and Sell Your HDB Flat

In this scenario if you intend to sell off your HDB flat before buying your condominium which you will likely have sufficient cash resources to pay your down payment but you may need to consider where you will need to move out if you do not have time to purchase of your new condominium and sale of HDB flat perfectly. 

You will need to race with time and stressful moving process the entire home within a short space of time. 

If you intend to sell your HDB flat after getting your condominium, you will need to ensure you have enough cash reserves to pay your down payments as well as comply with TSDR. 

This will cause your LTV ratio where you may be required to fork out 50% of property value upfront. Besides, don’t forget the ABSD you will need to pay because this will be considered as the second property. This situation will complicate the transaction process but you can still apply for bridging loan from banks with new home and if you sell your HDB flat within 6 months of your condominium purchase and you will be able to apply for a refund. 

Buy Condominium and Rent HDB Out

In this situation when you do not want to sell off your HDB flat after buying your condominium. This shows you have passed the TSDR, LTV and ABSD challenges – you have strong financial situation in this case. You took the chance to rent out your HDB flat out to generate passive income, in return you are able to recoup the costs that you have incurred. 

There’s regulations for renting out your HDB flat depending on the citizenship quota around the area. You can check here to adhere the quota.

After all this situations, you will be excited to move into your new condominium and could be swimming or have barbecue with friends by the pool. But as time goes by, you may find yourself using less of the facilities provided and you will still need to pay for your facilities and management fees but you will definitely achieve your dreams of your lifetime. 

Do You Know Ways to Upgrade Your HDB Flat to Private Condominium in Singapore Strategically ?

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