Skip to content 
At certain point, many Singaporeans will be upgrading from HDB to condo mainly due to 2 reasons – capitalizing profit from their MOP flat or growing family needs.
Whatever the reason maybe, the journey of upgrading to a condo will be exciting and nerve-wrecking for you.
Why do I say that? Well, consider this – you are about to become a private condo owner. Isn’t that exciting?
This might be your first time upgrading to a condo, and you’d want to avoid any issues or missteps, right? That’s why in this article, I’ll share 8 overlooked mistakes to watch out for during this sacred transition.
1. Rushing To Sell Without Planning The Next Purchase
More often than not, owners of Minimum Occupation Period (MOP) flats feel enticed by substantial profits or become envious of neighbors who have already cashed out and upgraded to condos.
The sense of excitement can often lead to impulse decisions.
Firstly, prior to selling your HDB flat, you should have a rough idea where your next home is going to be, like near your workplace, parent’s house or children’s school?
Secondly, how much are the estimated funds required for the next purchase? Have you prepared these amount?
- 1% + 5% of cash down payment
- Buyer stamp duty
- Legal Fee
- Agent Commission
- Movers
- Renovation Cost
Thirdly, do you have any temporary accommodation upon selling your flat? What if the buyer of your flat doesn’t grant you a temporary extension of stay? Where will your family live during the transition?
The last thing you want is to be forced to settle for a less-than-ideal condo because you’ve been priced out or suitable listings are unavailable.
Before letting excitement take over, make sure to consult friends who have been through this or a trusted property agent to help you thoroughly plan everything.
2. Neglecting The Buyer Stamp Duty
This is where many upgraders often find themselves caught off-guard: the Buyer Stamp Duty (BSD).
Buyers must pay the Buyer’s Stamp Duty (BSD), which ranges from 1% to 6%, regardless of whether the property is residential, commercial, or industrial.
In the context of upgrading from HDB to condo, BSD is payable and here’s the tricky part:
If you are buying a resale condo, BSD has to be paid in cash first.
Albeit you can choose to reimburse yourself later from your CPF ordinary account.
Hypothetically say you intend to upgrade to a $1.6m resale condo, the BSD you need to prepare would be $49,600 in cash.
On the other hand, if you are purchasing a new launch condo, the Buyer’s Stamp Duty (BSD) may not be as much of a concern since it can be paid using your CPF funds.
So, be sure to prepare the corresponding cash portion for your resale condo BSD to avoid any unpleasant surprise.
3. Misinterpreting Additional Buyer Stamp Duty Remission
Some of you might consider the “buy first, sell later” path should you fall in love with a new home while window shopping. This happens quite often.
When you buy first, you are considered as purchasing a second property, and a 20% Additional Buyer’s Stamp Duty (ABSD) will be due within 14 days, payable by cash or CPF.
For married couples, you can apply for ABSD remission if you sell your current home within six months of purchasing the new one. However, PRs and singles under the age of 55 are not eligible for the remission.
Here’s where it gets tricky: you have less than six months to market and sell your current property.
Are you confident in finding the right buyer who is willing to offer a fair price for your property?
What if the buyer backs out at the last minute, causing you to miss the six-month deadline?
This could result in losing the substantial 20% ABSD you paid.
A word of advice: only opt for “buy first, sell later” if you have carefully planned with a trusted realtor; otherwise, it’s too risky.
4. Unfamiliar With The Timeline & Process
The condo transaction process isn’t overly complex, but it’s not straightforward either. There are two particularly important elements you should be aware of:
4.1 OTP Period
Typically buying a resale condo, you have 14 calendar days to exercise the Option To Purchase (OTP), otherwise the 1% you paid will be forfeited. However, this period can be negotiated for a longer duration, up to 3 months, if both the buyer and seller agree. In return, seller might demand a higher booking fee than the initial 1%.
This flexibility provides you with additional time to secure a buyer for your existing property before fully committing to the new purchase.
With this extra time, you’re less likely to feel rushed into selling quickly and accepting an offer that falls short of your expectations.
4.2 CPF Refund
When you sell your HDB flat, the CPF funds used and the accrued interest will be refunded to your CPF Ordinary Account (OA) within 14 working days after the completion day.
And it will roughly take about 1 week for the funds to be withdrawn for the purchase of your next property.
In total, it takes around 3 weeks for the funds to flow from your HDB flat to your condo purchase.
Most realtors will suggest adding an extra week as a buffer in the timeline planning.
If your purchase timeline is tight and urgent, and you cannot afford to wait four weeks, you may need to consider a bridging loan to complete the condo purchase.
5. Overstretching Or Maxing Out Your Budget
Many of us are driven by emotion and excitement when it comes to purchasing things we’ve never owned before.
Take upgrading from an HDB to a condo, for example. You might start visualizing relaxing by the pool or hosting BBQ parties with friends.
This excitement can easily lead you to see the value in upgrading and to subsequently decide to spend more than initially planned.
I’ve even heard of some people stretching their budgets to the max to buy a condo.
However, I personally caution against taking on such significant financial risks just for an upgrade.
What if you encounter unexpected challenges right after upgrading, such as job loss, retrenchment, or an illness that impacts your ability to work?
And remember, the mortgage payments still need to be made, regardless of your financial state.
In a worst-case scenario, you might be forced to sell your condo and incur the Seller Stamp Duty (SSD). Moreover, you would have to wait 15 months before you can purchase a resale flat on the open market.
Look, you don’t want to be in that predicament.
So always have some buffer, set aside a good amount of rainy day funds and upgrade within your means.
6. Underestimating The Costs Of Condo Ownership
Let’s take a quick glance at the cost difference in owning an HDB flat and a condo:
| Costs | HDB – $600,000 | Condo – $1.6m | Remarks |
|---|---|---|---|
| Monthly Installment | $2,177 | $5728 | Assuming 75% loan, HDB at 2.6%, Condo at 4% |
| S&CC / MCST Fees | $66.50 | $450 | MCST fees might be higher for older condos. |
| Property Tax | $103 | $200 | The higher your annual value, the more you pay. |
| Total | $2,350 | $6,400 |
This is merely an example, and the actual cost could differ based on the price of the condo you plan to upgrade to.
As demonstrated, the monthly expense of owning a condo can be up to 2.7 times higher than that of an HDB flat.
The monthly mortgage payments will be substantially higher, in addition to other expenses such as maintenance fees and property taxes. Have you anticipated these costs, and can you manage them over the long haul?
Never let yourself becoming a slave to the condo just because you can afford to buy one.
Recognize these numbers beforehand and prepare them if you are certain about upgrading to a condo.
7. Potential Delays In Renovation & Price Surge
When you’re getting ready to renovate your resale condo, remember a few things that might stretch out the timeline.
First off, getting the green light from your condo management can take a while.
Also, finding a contractor isn’t always quick, especially when they’re all booked up. And then there’s the headache of delayed material deliveries, which can really set you back.
Sometimes, you might uncover unexpected issues like hidden plumbing or wiring problems that need fixing. And if you decide to change your renovation plans partway through, that’s going to add more time for getting new materials and permissions.
Plus, your condo might have rules about when you can actually do your renovations, which can slow things down even more.
So yeah, just keep these things in mind to avoid surprises and plan for a bit more cushion time—it’ll make the whole process a lot smoother.
8. Buying Into Overly “Old” Condo
Some HDB upgraders decide to switch to a condo, often influenced by their neighbors’ moves and a desire to follow suit.
With a limited budget, they may find themselves looking at older, more affordable condos.
However, they might not fully anticipate that these older condos can sometimes be targeted for en-bloc sales, where a developer buys the development to redevelop it into a new, modern complex.
Here’s where the potential pitfall lies for you:
“Imagine you’ve just purchased an older resale condo, invested in renovations, and settled in, only to find out it’s going en-bloc soon after.”
If the en-bloc happens too quickly after your purchase, you’ll be forced to sell the unit and might have to pay Seller’s Stamp Duty (SSD) due to the quick turnaround.
This can result in unexpected financial losses and the stress of having to find another new home, creating a significant burden on you and your family.
9. Upgrading From HDB To Condo Is Still Feasible If..
By now, you should be more aware of the 8 commonly overlooked mistakes during the upgrading process.
The purpose of this article isn’t to dissuade you from upgrading but to serve as a guiding light through the unclear and challenging aspects of your upgrading journey.
Here are a few general guidelines to consider before upgrading to a condo:
- Aim to keep the monthly mortgage payment of your condo to no more than 30% of your household income.
- Build up an emergency fund covering at least 12 months of expenses in case of unexpected income loss.
- Avoid stretching your finances too thin or maxing out your budget.
Looking for an extra pair of eyes to spot all potential issues when upgrading to a condo? Contact me today—let’s work together to navigate your upgrading journey smoothly!
