What you need to know before upgrading your HDB flat to a condo

By EdgeProp Singapore / EdgeProp | August 14, 2018 1:45 PM SGT
Thinking of upgrading from your HDB flat to a private condo unit? Make sure you cover all the bases before you take the leap.
1) Your MOP period
Are you a Singapore Citizen (SC) who already owns a HDB flat or an Executive Condominium (EC) unit? If so, you must first fulfil the Minimum Occupation Period (MOP) to be eligible to buy private property. The MOP is five years and you will have to stay in the flat throughout the duration before you are allowed to buy private property.
Permanent residents (PRs) will be required to sell their flat within six months of purchasing private property. Owners of private properties or a Housing and Urban Development Company (HUDC) flat are not subject to MOP restrictions.
2) How much you can borrow
Banks assess your loan eligibility based mainly on the following criteria. They are:
i) Total debt servicing ratio (TDSR)
The TDSR dictates that the total loans you need to service in a month should not exceed 60% of your total gross monthly salary. This includes all types of loans, including property, car loans, personal loans and even student loans.
ii) Loan-to-value (LTV) ratio
When you’re buying your first home, you are eligible to borrow up to 75% of the property value if you’re taking up a bank loan. This was reduced from the previous 80% in the latest round of property cooling measures.
When you buy your second property, your loan-to-value (LTV) ratio drops to 45%, for loan tenures up to 30 years. If the loan tenure stretches beyond 25 years or your 65th birthday, your LTV drops to 30%.
3) The minimum cash down payment
When you buy your first home, you are required to pay up to 5% down payment in cash if you use a bank loan. For your second property, you will need to pay up to 25% of your property’s down payment in cash.
This will be measured against the property’s valuation limit, which is determined by the property value or purchase price, whichever is lower.
4) The Additional Buyer’s Stamp Duty (ABSD) you...