How to upgrade from a HDB flat to a condo or landed property

By Felicia Tan / EdgeProp Singapore | March 10, 2020 2:49 PM SGT
Wallich Penthouse Singapore upgrade HDB to condo
Photo: Albert Chua/EdgeProp Singapore
If you are old enough to remember the original five Cs – cash, condominium, credit card, car, and country club – a term used widely in Singapore in the 1980s and 1990s, you would also know they are considered to be status symbols, and represent part of the Singaporean dream. Once you have accumulated all five, you are deemed to have made it in life.
These days, millennials under the age of 30 have redefined the five Cs, replacing them with career, cultural proficiency, credibility, and convenience, while retaining cash. That said, having a condominium or private property to your name still represents a measure of success.
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Why upgrade?

If it has been your lifelong dream to live in a condominium, take stock of your finances and priorities before actually taking the plunge.
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First, consider your priorities. Why are you really making the move? Can you afford it? Do you need a larger space? Do you need the amenities? Do you want to have the freedom of owning pets without the restrictions set by the HDB? Do you need a home that is near an MRT station?
You will need to discuss these matters with your spouse and family members, especially if it might cause a strain on your finances.
Unless you are moving from a flat in a coveted location like Newton, Queenstown, or Bishan, into a new development with a competitive entry price, you will most likely have to fork out more money for your new home.
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When to upgrade?

You should only consider upgrading when you can afford it comfortably, and when you have fulfilled your Minimum Occupancy Period (or MOP).
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Your MOP, which spans for a period of five years, starts from the day you collect your keys to your flat. The MOP does not include periods where your flat is unoccupied (read: rented out entirely), or where there is an infringement in the lease of the flat.

Work out your finances

Once you are ready to make the move, you should determine a budget for an apartment that you can comfortably afford.
You will need to look at how much you can borrow, the minimum cash down payment required, how much of your CPF savings you can use, and other financial considerations before upgrading.
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Need to know how much upfront cash do you need to buy a condo in Singapore?
You will also have to look at bank loans, where interest rates are subject to market conditions, unlike HDB loans, which are more stable. Calculate mortgage loans (with our mortgage calculator).
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Additional costs

Beyond saving enough to pay for an actual unit, you also have to keep in mind the added or hidden expenses that come with living in private property. These include higher maintenance fees (you’re looking at an estimate of $300 to $1,000 per month), more expensive home insurance premiums, utility bills, as well as the lack of grants and government handouts during the Budget season.
Property taxes are also pegged to the value of your home; the higher the value, the higher the percentage you’ll have to pay in taxes. Your Buyer’s Stamp Duty also increases along with the value of your home.
You will also need to set aside a sum for rentals should there be delays in your development.
canberra edgeprop singapore mrt stations hdb flat
Photo: Albert Chua/EdgeProp Singapore

Where should you move to?

Like buying a BTO (build-to-order) or resale HDB flat, you get to choose between a new development and an existing unit. The former means a wait time of around two to three years, whereas you can move in right away for the latter.
Choosing a location also depends on what you are looking for. For a development that is conveniently located near an MRT station, see these. Prefer something near a mall or F&B establishment? We’ve got you covered.
When it comes to a home with a view, look out for units on higher floors, or developments near the city or coastal areas.
You should also look out for developments that enjoy a good reputation. A bad developer or management may make or break your property and affect its value should you consider moving in the future.
In Singapore, in general, freehold properties will see higher gain in value compared to their 99-year leasehold counterparts.
casuarina road landed property singapore edgeprop singapore
Photo: Albert Chua/EdgeProp Singapore

EC, condo, or landed property?

Executive condominiums, which are similar to private condominiums but fetch a more affordable price, can be sold like a private condominium once the MOP is completed. The downside? You will need to sell your HDB unit within six months once you have confirmed your new unit.
A private condominium is just like an EC, except it comes with fewer rules.
It’s the same with landed property, only it’ll cost more (you’re looking at forking out a cool $2 million at least).

Other considerations

Do you intend to sell your HDB flat before or after buying your new home? You will be subject to an Additional Buyer’s Stamp Duty (or ABSD) if you are keeping your first home, unless you manage to sell off your flat within six months of getting your new home.
If you are keeping both homes for now, you will need to pay off both home loans, and you will be able to borrow less money for your mortgage.
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