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As part of our efforts to continuously improve our customer services, the CPFB and HDB jointly implemented the Enhanced Contra Facility (ECF) for resale flats from 15 June 2000.
The ECF enables an HDB flat owner to sell his existing flat and at the same time purchase another resale flat by using the sales proceeds to be refunded to his CPF account, to pay for the resale flat. The amount to be refunded to the flat owner's CPF account can also be used to pay for the insurance premium under CPF's Home Protection Scheme (HPS), but not for stamp duty, legal fees and the cash-above-valuation (difference between resale price and market valuation).
Previously, the Contra Facility which was introduced in June 1995 only allowed the flat-owner to use the cash proceeds from the sale of his existing flat to pay for the resale flat that he was concurrently buying. With the ECF, the flat owner can now use both the cash proceeds and CPF refund to pay for the resale flat. The benefits are as follows:
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Lower cash payment needed. Hence, no need for bridging loan |
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Lower mortgage loan quantum and instalment which lightens lessee's financial burden |
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No additional cash outlay for HPS. Also lower HPS premium |
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More cash proceeds from the resale transaction |
FAQs
I intend to sell my HDB flat in the open market and buy another one as well. How can I benefit from the Enhanced Contra Facility?
Under the prevailing policy, all your existing CPF savings in the Ordinary Account will be utilised for the purchase of a resale flat before HDB grants a mortgage loan to you. In addition, you can only use your CPF savings to make the payment up to the amount of the resale price or the market valuation. But if the resale price is higher than the market valuation, the difference must be paid in cash.
With ECF, you will benefit as the CPF contra will effectively reduce your mortgage loan further, thereby reducing your monthly loan instalment. If the flat that you are buying is at a price higher than the market valuation, you can also use the resale cash proceeds under the ECF to offset this payment instead of paying through your personal savings or taking up a bridging loan.
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What are the conditions for Enhanced Contra Facility?
The conditions are as follows:
- The contra party must not be an undischarged bankrupt or having any bankruptcy proceedings commenced against him.
- The two resale applications for resale of Flat A (contra party's existing flat) and Flat B (the flat that contra party is buying) and the application for the ECF must be submitted together.
- HDB reserves the right not to approve the ECF application where there is a mortgage in favour of a financial institution and/or CPF mortgage/charge on Flat A and/or Flat B or where private solicitors have to be engaged.
- All existing balance in the CPF Ordinary Account and all CPF monies that will be refunded to the CPF Ordinary Account from the sale of Flat A, and which are available for use in the ECF, must be fully utilised before HDB grants a mortgage loan to the contra party.
- The resale of Flat A must be completed before the resale completion of Flat B, both of which can be on the same day.
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If I sell my existing flat and buy another resale flat under the ECF, how long will the entire resale transaction take?
The timeframe for the completion of a resale transaction under ECF is still estimated to be about 6 to 8 weeks from the first appointment date.
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If I wish to apply for ECF, what are the relevant forms that I need to sign?
You will have to endorse on the "Application for Enhanced Contra Facility" form and submit it together with the resale applications. You are advised to read the Terms and Conditions of the ECF which are attached to the ECF application form. Subsequently during the first appointment, you will be required to endorse on a "Letter of Authorisation and Indemnity".
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