3 Steps to Prevent Rental Scams
TLDR: Prevent Rental Scams in Real Estate Scammers are targeting prospective tenants by impersonating Real Estate Salespersons (RES) to deceive...
Read More
What Happens To Your Housing Loan Once You Sell Your House?
TLDR
When selling your home in Singapore, ensure you pay off your outstanding home loan, refund any CPF monies used, and cover miscellaneous fees like agent commission and legal fees. For upgrades to Executive Condominiums (EC), consider whether to settle your mortgage upfront or use sale proceeds. Existing property loans are exempt from TDSR, allowing you to obtain a second loan for upgrades. Consider your financial situation and consult with experts for strategic real estate advice.
If you’re a first-time home seller, there could be things you’re not familiar with. You might ask yourself, “What happens to my mortgage when I sell my house?”
Or if you’re going from a flat to a condo or EC, you might wonder how much of your HDB sale proceeds you’ll be able to use.
Fear not – we’ll help you work it out!
Can You Sell Your House Before Paying Off Your Mortgage?
Absolutely! Yet, in order for the ownership of the property to be officially transferred to the buyer, you must pay off your current loan first.
Your Sale Proceeds Will Be Used To Pay Off Your Mortgage
Selling your home comes with several financial considerations – like paying off your mortgage, refunding to your CPF, managing grants and commissions, and more – that will impact the final sale price.
Keep these details in mind and you’ll be prepared to navigate the process with confidence.
Pay Your Outstanding Home Loan
Your first step should be to take care of any outstanding home loans, be it from HDB or a bank. The amount will be taken from the sale proceeds. With your CPF, you can cover the downpayment and any additional expenses such as stamp duties and legal fees.
Refund your CPF monies
If you had utilized your CPF Ordinary Account (OA) funds to pay for your home, you would need to reimburse the principal amount, plus any accumulated interest, back to your CPF account.
This could have been utilized to finance your down payments, monthly payments, and buyer’s stamp duty. Moreover, for those who had been awarded any housing grant, you would have to return it to your CPF OA.
To ensure that you take into account the accrued interest for all of the above, remember that this is the interest that the principal amount would have earned if it was sitting in your CPF OA instead of being used to pay for your house.
With a current interest rate of 2.5% per annum, we have provided a step-by-step breakdown of calculations in our article.
As an alternative, you can log in to your CPF account or use HDB’s sale proceeds calculator.
Don’t let the amount taken from your sale proceeds discourage you; the amount refunded to your CPF account can always be used to finance your next home!
Miscellaneous Fees – Agent Commission, Resale Levy Etc
Your sale proceeds will also cover a variety of additional costs, such as an agent commission (typically 2% of your home’s selling price), legal fees, and a resale levy (if applicable).
Remember, agent commission is negotiable – so don’t hesitate to make sure you get the best deal! Plus, keep in mind that if you’re looking to buy a subsidised flat for your next home, you’ll likely be subjected to a resale levy.
Should You Pay Your Existing Mortgage Upfront If You’re Waiting For The Completion Of Your New EC?
When you decide to upgrade from an HDB to an EC, you have the advantage of not having to put your current home on the market for six months after you receive the keys to your new EC.
Furthermore, you won’t have to pay the Additional Buyer’s Stamp Duty (ABSD)! You may be wondering if it’s better to settle your mortgage loan ahead of time or keep up with the monthly payments until you can sell your house; the choice is yours!
When considering your next purchase, it’s essential to look at your cash flow, available financing, and living expenses. Ask yourself if you have enough money to pay off your mortgage, plus enough extra to cover the downpayment, legal fees, BSD, and resale levy (if applicable).
Rather than paying off your mortgage upfront, you could use the sale proceeds from your property to cover the remaining balance.
Having more money in the bank for emergency funds or investing it in higher-yielding options could also be beneficial.
Ultimately, it’s up to you to consider the advantages and disadvantages of both choices.
Exemption Of Existing Property Loan From TDSR
Even if you already have an existing property loan, you can still obtain a second loan.
For instance, if you’re looking to upgrade your HDB flat, your current mortgage payments won’t be calculated into your Total Debt Servicing Ratio (TDSR), which means it won’t affect the amount of money you can borrow for your new property.
To get the loan, you’ll need to provide certain documents such as a copy of the HDB approval letter and a letter of undertaking for the sale of your HDB flat.
If you’re selling an EC (after MOP) or a private property, you don’t have to worry about TDSR – simply provide a signed sale and purchase agreement with the buyer and a certificate from IRAS to prove stamp duty payment, and your monthly loan repayments are taken care of!
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Is Singapore’s Property Market on the Verge of a Crash? Understanding the 5 Factors at Play
The Singapore property market has long been an attractive option for both local and international investors. However, as with any...
Read More
3 Winning Strategies for Skyrocketing Your Property Market Profits (Including Real-Life Success Stories)
TLDR In the dynamic property market of Singapore, maximizing profit is key for sellers and investors. Three essential strategies stand...
Read More
Are You Worried About Overpaying On Your Property? Here’s The Secret To Finding Out Its Perfect Purchase Price!
TLDR Understanding property valuations and their impact on mortgage loans is crucial in the Singapore real estate market. By considering...
Read More
Great Reasons for Condo Owners to Sell upon Reaching TOP – A Guide to Sub-Sale Transactions
TLDR A recent sub-sale transaction in Midtown Modern set a new record with a 2-bedroom home selling at $3,150 psf....
Read More
Finding the Perfect Match: Top 20 : A Guide to Choosing the Best Property Agent in Singapore
TLDR When it comes to buying or selling real estate in Singapore, having a professional and knowledgeable property agent is...
Read More
Revival of Singapore Luxury Housing Market in 2023
TLDR The property market in Singapore has witnessed significant shifts in the past two years, with a surge in prices...
Read More
The Dual Impact of Rising HDB Flat Prices in Singapore: A Balanced Perspective
TLDR HDB flat prices in Singapore have nearly doubled every 16 years, reflecting a long-term trend of appreciation averaging about...
Read More
Top 5 : Potential Risks Should Be Considered When Investing Property Within Singapore’s Competitive Real Estate Markets
Singapore, a bustling financial hub in Southeast Asia, has seen its real estate market flourish over the years. The city-state's...
Read More
The Secret Strategies of Singapore’s Property Tycoons: Lessons You Can Learn
The Singapore property market has always been a hot topic for both locals and foreign investors. With its stable economy,...
Read More
5 Factors : Why Singapore’s Property Market Is Still A Safe Haven For Investors
Real estate investment has always been a popular choice for investors looking to generate passive income and build long-term wealth....
Read More
Is it Better to Sell Your Newly Launched Condo Before or After Completion? Here’s What the Statistics Indicate
TLDR Determining the best time to sell a newly launched condo involves weighing the benefits of selling before or after...
Read More
The Strategic Advantage: Why Owning a Condo Near HDB Flats Can Be Your Best Property Move
TLDR Owning a condo near HDB flats in Singapore offers a strategic advantage often overlooked by buyers. Proximity to HDB...
Read More
Can You Make the Leap to a Condo Upgrade in 2024?
As the Chinese New Year festivities wind down, folks are once again on the prowl for new homes, and understandably,...
Read More
Singapore Property Investing: Is It Better To Flip Or Hold?
Investing in Singapore property can be a profitable venture, but investors must choose the right strategy to maximize their returns....
Read More
I Decided to Pay the Additional Buyer’s Stamp Duty to Purchase a Condominium While Retaining My HDB: My Reasons
TLDR Despite a 20% Additional Buyer’s Stamp Duty (ABSD) for second properties in Singapore, Yang chose to hold onto his...
Read More
Singapore’s HDB Projects: From Unique Landmarks to Just Another Brick in the Wall?
Take a look at this chill spot in Yew Tee. Someone's gone all out to make it feel like an...
Read More
The Hidden Hurdles of Purchasing a BTO Flat in Singapore: Unveiling 4 Lesser-Known Challenges During the 5-Year MOP
TLDR When contemplating the purchase or sale of a property under the Minimum Occupancy Period (MOP), it's crucial to consider...
Read More
Budget 2024: What To Expect For The Singapore Residential Market?
TLDR In 2025, owner-occupiers of residential properties can benefit from property tax relief based on the Annual Value Band. Retirees...
Read More
Top 5 Secrets : Foreign Investors Are Rarely Told About Singapore’s Real Estate Market
Singapore's real estate market has been a popular choice for foreign investors due to its stable economy, strategic location, and...
Read More
