financial planning for upgrading from hdb to private condo

About 80 per cent of Singaporeans live in HDB flat. It is the dream of many to upgrade to a private condo. This financial guide to upgrade from an HDB to a private condo is to help you towards realising that dream.

If you are thinking about upgrading from an HDB to a private condo, I hope you are not doing it just because it is a trendy thing to do or to catch up with the Lees and Tans.

Or if you want to move into a private condo because you always think it would be nice to enjoy the pool or gym, it is likely before long the novelty will wear out.

It is always important to know your game plan before embarking on this high-commitment endeavour.

is hdb a retirement asset
Read my article on "Is Your HDB Flat Still A Retirement Asset Today?" to understand why it is not wise to keep your HDB flat in the long run

Reasons for Upgrading From HDB to Private Condo

In my other article, “Is Your HDB Flat Still A Retirement Asset Today?” I highlighted the potential depreciating value of HDB flat.

Unless you don’t care about the future value of your HDB flat (can be technically zero when it reaches 99 years) or you don’t have the financial means for various reasons to upgrade, then it’s all right to stay put. Upgrading is not for everyone.

However, most people do care that their flat is worth something in future.

If you are financially prudent and capable, then upgrading to a private condo or even sell one buy two is something you should work towards to.

With that goal in mind, the next pertinent question is, how do I do it?

Several Options:

There are several options you may consider:

  • Keep your HDB flat and buy a private condo
  • Sell your HDB flat and buy a private condo
  • Sell your HDB flat and buy Executive Condo (EC)
  • Sell your HDB flat and buy two condos (or one condo and one commercial property)

In another blog, Sell One Buy Two, I also highlighted the disadvantage of keeping your HDB flat while buying a private condo, namely having to pay 12% Additional Buyer Stamp Duty (ABSD).

Buying an EC is a viable option if you can meet the eligibility criteria. Besides a family nucleus, your gross family income cannot be more than $16,000 a month. EC will need to fulfil the five years Minimum Occupation Period (MOP) like an HDB flat, during which you can’t rent out or sell.

If you are exploring the idea of selling your HDB flat to buy two condos, please get in touch with me because it is a bit more complicated.

In this article, I will only discuss what is involved when purely selling your HDB flat to buy a private condo.

have a goal when buying propert
It is vital to keep the end goal in mind when buying property and not to keep up with the Lees and Tans

Keep the Future In Mind

When you sell your HDB flat and upgrade to a private condo, if possible, use only one name instead of both husband and wife. In this way, should you consider buying an investment property in the future, the other name is free, and no Additional Buyer Stamp Duty is payable.

Of course, this will largely depend on your financial status. If only the husband or wife is working, then likely it will not be feasible, unless you have a lot of cash reserves.

Minimum Occupation Period (M.O.P.)

Before you start to look for a new property, you need to check your eligibility to sell. You will need to fulfil the Minimum Occupation Period (MOP), which is five years.

Generally, the MOP is calculated from the date you collect the keys to your flat. It excludes any period when you rent out the whole flat or when there has been an infringement of the flat lease.

But if you got your flat under the Selective En bloc Redevelopment Scheme (SERS), then it would be either

  • 7 years from the date of selection of the replacement flat; or
  • 5 years from the date of occupation

whichever is earlier.

You can login to My HDBPage with your SingPass and check if you have met the MOP to sell your flat, under My Flat > Purchased Flat > Flat Details > Minimum Occupation Period (MOP).

upgrading from hdb to private condo
Before you sell your flat be sure to check your eligibility to sell

Financial Planning

The most crucial step is to do proper financial planning.

Start with assessing your resources so you can know your budget for your purchase.

Resource 1: Sales of your flat

You need to calculate the estimated sales proceeds of your flat, factoring in the estimated price, outstanding loan and amount of CPF plus accrued interest to be refunded.

To check the amount of CPF used plus accrued interest, you will need to login to CPF website with your Singpass.

The amount of cash from the proceeds will help to pay for the cash portion required for the purchase of the new condo.

selling hdb flat
Watch out for the 5 blind spots when selling your HDB flat

Resource 2: Available CPF OA Funds

You can only use the money in your Ordinary Account (OA) to pay for your new purchase, including the Buyer Stamp Duties and legal fees.

If you have reached 55 years old, you would need to set aside the prevailing Basic Retirement Sum (BRS). Only the amount over the BRS can be used for the new purchase.

Resource 3: Bank Loan

You will need to approach a banker to get an Approval-In-Principle (AIP) which states how much the bank is willing to loan you for the purchase.

There are no HDB loans for condos, and this includes Executive Condominiums (ECs). As such, it’s important to understand some of the changes you’ll face if you’ve never used a bank loan before.

Total Debt Servicing Ratio (TDSR)

For homebuyers to exercise prudence, MAS limits how much money you can borrow by imposing Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR). Under MSR, you can only use no more than 30% of your salary to pay for the mortgage loan; and for TDSR 60%.

The good news is MSR is applicable for purchase of HDB flats and TDSR for private property. What it means is, based on the same salary, you can borrow twice as much when you buy private property as compared to HDB flat.

Loan-To-Value (LTV)

Besides TSDR, the maximum Loan-To-Value (LTV) for bank loan is 75 per cent if it is your first loan and 45 per cent if second loan.

That means, if you buy the condo before you sell your HDB with an outstanding loan, then you can only borrow 45 per cent.

upgrading from hdb to private condo
Taking a bank loan has many considerations such as TDSR and LTV which will determine how much money you can borrow

Bank Loan Packages

There are myriad available loan options, all with different terms and conditions and interest rates. It’s not like your old HBD loan, where the interest rate is just simply 2.6 per cent per annum.

You may need to be a bit more hands-on. Bank loan rates fluctuate over time, so you may want to refinance after a certain number of years to enjoy the low interest rates. Most private property owners start looking at refinancing options every three years or so (as bank loan rates tend to rise sharply after the first three years).

housing loan
Remember there are no HDB loans for Executive Condominiums. There are myriad available loan options, all with different terms and conditions and interest rates.

Resource 4: Other Sources

In case you need more cash, and you have assets, such as unit trusts in Singapore, fixed deposit, stocks, bonds and gold, you can use them as pledges to secure more loans. Of course you can sell them to cash out, but it’s not always the right timing to do so.

For example, early termination of fixed deposit will have penalty. Selling unit trusts or stocks when the market is bearish is also not wise.

Do contact me for more information on how these work. There are also other possible non-traditional ways to get more loans if you need the extra cash.

upgrading from hdb to private condo

Cost of Purchase

Once you know your resources, you then work out a budget for your new purchase. Here are some costs apart from the property price:

Down Payment For New Purchase

First, do be prepared to make a bigger cash down payment. When you took an HDB loan, chances are you didn’t have to pay anything out of your pocket: this is because HDB loans can cover 90 per cent of the property price, and the remaining 10 per cent can come from your CPF.

When buying a private property, however, you need to set aside 25 per cent for the down payment since your maximum loan is only 75 per cent.

Out of the 25 per cent down payment, five per cent is always in cash, and 20 per cent can come from your CPF.

The timeline is a bit different for buying a resale and a new launch (will discuss in more details in another article on the timeline)

Buyer Stamp Duties (BSD)

Buyer Stamp Duties is payable for every purchase. Here is the payment:

First $180,000 : 1%
Second $180,000: 2%
Next $640,000: 3%
Amount above $1,000,000: 4%

You can use your CPF to pay for the BSD.

Additional Buyer Stamp Duties (ABSD)

If you sell your HDB first then buy the private property, then ABSD is applicable. If it is your second property, ABSD payable is 12%.

You cannot use your CPF to pay for this ABSD.

Once an OTP is signed, ABSD must be paid within:

  • 14 days from the date of exercise if the document is signed in Singapore;
  • 30 days of its receipt in Singapore if the document is signed overseas.

If the couple sell their flat within six months, they can apply for the remission of ABSD, only if the new property is under the couple’s name.

upgrading from hdb to private condo
Remember to factor in the BSD, ABSD (if applicable), legal fees and agent fees (if applicable) into the cost of the property purchase

Legal Fees

There will be legal fees for both selling the HDB flat and buying the private condo.

Agent Professional Fees

The normal agent professional fee for selling HDB flat is two per cent.

In most cases, the buyer does not need to pay any agent professional fee for the purchase of private property. If the purchase is a new condo launch, the developers will be paying.

financial calculations for upgrading

An Example

Property price: $1,000,000

Buyer Stamp Duties: $24,600 (can pay with CPF)

Additional Buyer Stamp Duty (if applicable): $120,000 (cash)

Legal fee: $3,000 (Amount can vary with lawyers. Can pay with CPF)

Down Payment: $50,000 (cash) / $200,000 (cash/CPF)

Loan (max): $750,000

Progressive Payment Scheme for New Launches

If you are buying a new launch condo, you can opt for a Progressive Payment Scheme.

Since the payments are done progressively according to the stages of construction, which typically takes about three years, your bank loan will not kick in immediately. So, in a way you are buying time. 

The bank interests you are paying are only based on the amount disbursed and not the full loan amount. Hence, at the early stages, interest payments are quite nominal.

The payment schedule for a typical PPS is:

Property Price: $1,000,000

  • Option/booking Fee (5%): $50,000 (cash)
  • S&P Completion/exercise fee 15% (OTP + 8 weeks): $150,000 (cash/CPF)
  • Stamp Duty: $24,600 (CPF)
  • ABSD (if applicable): $120,000 (cash)
  • Foundation complete (10%): $100,000 (5% cash / 5% cash or CPF)
  • Reinforced Concrete Framework Complete (10%): $100,000
  • Partition Walls Complete (5%): $50,000
  • Roofing / Ceiling Complete (5%): $50,000
  • Door, Window, Electrical Plumbing Complete (5%): $50,000
  • Car Park, Roads & Drains Complete (5%): $50,000
  • Temporary Occupation Permit TOP (25%): $250,000 (get keys to apartment)
  • Legal Completion Date CSC (15%): $150,000

Be Prudent

My advice when working out your finances to buy your dreamed house is not to deplete all your reserves. 

Set aside enough reserves to last you for at least one year in the unforeseen event that you lose your job or get a pay cut. This can be in the form of cash or CPF. The latter is preferred because the interest rate of CPF is likely better than the bank.

The Covid-19 crisis has taught us an invaluable lesson to be prudent because we can be caught on the blind side.

If you are thinking about upgrading from your HDB to private condo, and are a bit confused by the whole process, do feel free to drop me a message. I will be more than happy to meet up with you for a non-obligatory discussion.

Like my facebook page (and turn on notification) so that you can be informed of my next article on the Timeline When Upgrading from HDB to Private Condo.

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danny han pwp

Danny Han has always been in the people’s business, having spent 23 years as a church pastor, five years as an insurance agent, and the last 16 years as a property consultant.


Danny has a genuine interest in people and firmly believes in personal integrity. While helping homeowners with their property needs, their interest always takes precedence over his personal gains. Hence, Danny has consistently earned his clients’ complete trust and loyalty. Many of them have become his personal friends.


Danny received his Diploma in Mechanical Engineering from Singapore Polytechnics and Bachelor of Science from Oklahoma Christian University of Science and Arts in Bible & Psychology.


Besides keeping abreast of the property market trend and constantly equipping himself to better serve his clients, Danny is a passionate foodie, a weekend cyclist, and an avid hiker. 

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