Last updated on May 23rd, 2018 at 10:11 am
I knew a couple who purchased a 4RM HDB flat under the sales of balanced flat (SERS). With their boy growing up, it was getting squeezy at their parent’s place and they felt is was time to buy their own flat.
If you are unfamiliar with the HDB payments for a home purchase, this could help explain.
Stage 1: Buying the “option to purchase” (OTP)
For a payment of $2,000 in cash, HDB will grant a 3 month option to purchase the house. The best is to plan out your finances to ensure that the house is affordable. As you will see later, some issues are faced by this couple.
Stage 2 :Signing of lease agreement with 10% downpayment and stamp duty
As shown, the flat purchase price is $286k. Together with the stamp duty, the total payable works out to be about $32k at this stage. With this payment made, the flat is confirmed and no further deduction is necessary for awhile.
Stage 3: Collection of keys
HDB will deduct all the remaining CPFOA balances between you and your spouse. The remaining will be calculated to become your “Balance purchase price”. For this case, the “balance purchase price” payable is around $250k. However, they qualified for a loan amount (HLE) of only $224,200. This creates a “Shortfall” of almost $25,811!
The shortfall will be partially covered with future CPFOA contributions. However, as the collection of keys is estimated to be in 1.5years, they are unlikely to accumulate enough CPFOA. This means a possibility of needing to fork out cash proceeds to cover shortfall!
Resale levy to be paid which has to be in CASH!
HDB has told them that this works out to be $20,000 because of the husband’s previous subsidised home purchase. Double whammy!
Judging from their financial habits, it is unlikely that they will be able to save up this amount in time. This relates to a previous article we have written before.
From forums, it seems that the resale levy can be appealed to have it paid as part of the housing loan. I have urged them to try this avenue ASAP as it will take awhile for the appeals to get around HDB’s officers. Let us know if you had an experience with regards to HDB resale levy.
** New update 23may2018 from couple: HDB rejected resale levy appeal.
They even disallowed instalment payment which sounds unfair IMO. I am not privy to further details.**