Finances
 

Home purchase is a long-term financial commitment. Hence, it is crucial for you to assess your budget carefully before you buy a flat.

To assess your affordability, consider the following:

Learn more on the The ABCs of Financial Planning.

Available Cash Savings

Cash is required for the payment of

    • Deposit to seller (up to a maximum of $5,000)

      Deposit is paid at 2 stages:
        • when sellers grant you the Option and
        • when you exercise the Option

    • Initial Payment of Resale Price

      If you are taking a housing loan from HDB or if you are not taking any loan, you have to pay a 10% initial payment, based on the resale price or valuation price of the flat, whichever is lower. You can use your CPF savings or CPF Housing Grant or a combination of both to make initial payment. If there is a shortfall, you will have to pay the balance in cash.

      If you are taking a bank loan, the initial payment and mode of payment are as follows:

Date of OTP
Initial Payment
Before 20 Feb 2010
10% initial payment
  • 5% initial payment in cash
  • balance 5% can be paid with your CPF savings, CPF Housing Grant, cash
On or after 20 Feb 2010
20% initial payment
  • 5% initial payment in cash
  • balance 15% can be paid with your CPF savings, CPF Housing Grant, cash

    • Cash-over Valuation (COV) (if applicable)

      If the resale price agreed between you and your sellers is above the market valuation, the difference between the resale price and the market valuation of the flat has to be paid in cash.

      COV is however not a requirement for HDB resale transactions. Resale transactions take place on a "willing buyer- willing seller" basis and the price is open to negotiation and mutually agreed between both parties.

      Depending on the outcome of the negotiation between the buyer and the seller, the resale price may be above, at or below the market valuation. For resale transactions where the resale price is at or below the market valuation of the flat, there is no need for buyer to pay any COV.



CPF Monies

The use of CPF monies to buy a flat is subject to CPF Board’s prevailing policies. For more information, check CPF’s website.

You can login using your SingPass to check your CPF savings in the Ordinary Account.



Housing Loan (if required)

You can choose to obtain an HDB loan or a bank loan to assist you in financing your purchase if required.

HDB Housing Loan

Buyers must firstly fulfil all the eligibility conditions to obtain a housing loan from HDB.

It is mandatory for all potential flat buyers obtaining an HDB loan to have a valid HLE before exercising the Option to Purchase. Flat buyers are however advised to apply for the HLE even before searching for their flat.

This is to ensure that flat buyers are able to pay for their home and service the loan without overstretching their finances. The HLE letter provides buyers with information on:
    • Eligibility for an HDB loan
    • Maximum Loan Amount Eligible
    • Maximum Loan Repayment Period
    • Monthly Loan Instalment (to service the HDB loan)

You may apply for the HDB Loan Eligibility (HLE) online.


You may also use the following e-Services to estimate the loan amount and your monthly instalment:




Bank Loan

Buyers who are not eligible for an HDB loan will have to obtain a bank loan if they require a housing loan to finance their purchase of the flat. It is mandatory for all potential HDB flat buyers to obtain a Letter of Offer from the bank before exercising the Option to Purchase.

You are encouraged to explore the different housing loan packages offered by various banks. Do read through the terms and conditions for the different housing loans offered by banks and keep in mind that interest rates that may increase over the years.

  • More information on Bank Loan
  • Work out an estimation of your monthly expenses and cash available for loan instalments payments with our Cash Flow Planner e-Service.




CPF Housing Grant (if eligible)

The CPF Housing Grant [?] is a housing subsidy provided by the government to eligible buyers of resale flats. The CPF Housing Grant (in the form of CPF Monies and not cash) can be used for the initial payment or to reduce the mortgage loan for the flat purchase.

However, CPF housing grant cannot be used to pay the cash-over-valuation (COV) for resale flats transacted above the flats' market value.

Read more on various CPF Housing Grants available.

Last Updated on 12 Apr 2010