Tuesday, January 12, 2010

Buying an HDB Flat

Here are the step by step process we have done in search of our HDB flat: 

Work out our budget and preferences. Immediately after we got our PR approval in October 1, 2004, which is an eligibility requirement before owning an HDB flat, we were set on searching for and buying a flat. We made notes of our requirements/preferences, checked our budget and scoured the newspapers for advertisements.

Viewing of flats - a week after we got our approval, we were on our way to the flats of different families. We were able to view flats from Hougang and Sengkang. Some were really very nice and well renovated. Some were simple. Some were odd - very dark and with lots of writings on the walls.

Engaging an agent - first few flats that we viewed, we didn't have any personal agent. Who ever posted on the newspaper, that was our contact person. Then we encountered one agent which we thought offered a really good service and appeared to be really nice, honest and helpful. So we engaged his services for the next view flat viewings. We made a good choice. He was very helpful and gave us a lot of professional advice on buying a flat.

Andros Phay
HP: 9665-2252
Signing Option to Purchase (OTP) - We probably viewed around 5-10 units until we settled for one which really was of interest and met our requirements. We asked the help of our agent to negotiate the price for us. The day after the viewing, we went back to the unit as they agreed to our negotiated price. We signed for OTP on October 18. We paid $1,000 to the sellers, as required upon signing of the option documents. We were to decide if we want to go through with the purchase or not within 14 days.

More details regarding OTP.

Signing Exercise of Option - we have settled the Exercise of Option immediately after OTP to secure the flat. We paid another $1,000 to the sellers. The total amount to be paid to the sellers should not exceed $5,000. This amount is considered part of the down payment. After signing the OTP, we were helped by our agent to get a bank loan. POSB was referred to us as it offers better rates during that time. It was also convenient since their office is located at HDB Hub which is walking distance to our place in Toa Payoh. We sent them our application through fax.

POSB Toa Payoh Central Branch  
#01-09 HDB HUB SINGAPORE 310480
Tel: 6339 6666
Fax: 6356 7168
Operating Hours : 8:30 AM - 4:30 PM
Weekends : 8.30 AM - 1.00 PM (Saturday)
Personal Advisory Services
Operating Hours : 8.30 AM - 4.30 PM
Weekends : 8.30 AM - 1.00 PM (Saturday)

Housing Loan Proposal - day after faxing our details to POSB (October 19), with the help of our agent, we received the housing loan proposal. It specifies the following details
  1. amount of loan = 80% of resale price
  2. duration of loan - in our case, 30 years
  3. interest rate - 1st year = 1.350% lower than POSB HDB Special Rate (HSR) - 2.55%. 2nd year = 0.050% above HSR. Subsequent years, floating.
  4. prepayment period - there was a 1year lock in period wherein we cannot may a capital repayment or fully redeem the loan.
  5. legal subsidy - $1,500, if we appoint the same law firm the bank will engage in (which we did)
First Appointment - we received a letter from HDB on October 23 about the First Appointment to meet with HDB officials and the sellers which was scheduled on November 19. During the meeting we signed documents with the sellers and we were given the tentative resale approval (December 3) and tentative completion date (January 14). We were also given info on how much the valuation of the unit was (which was the same as our buy price). Cash Over Valuation (COV) were not much of an issue during that time.

480 Lorong 6
Toa Payoh
Singapore 310480
Weekdays: 8.30am - 5.00pm
Telephone Number: 6490-1111
Weekdays: 8.30am - 5.00pm
Email: hdbmailbox@hdb.gov.sg
More details on 1st Appointment.
    Resale Approval - we received another letter from HDB dated November 24 stating that the resale transaction was approved. This means that we (buyers and sellers) can push through with the whole processing of buying/selling the unit.

    Meeting with lawyers -  once loan was approved and the resale transaction was on-going, we arranged a meeting with the lawyers, which we assigned by POSB. We received a letter from the law firm, PKWA Law Practice LLC, regarding mortgage details on October 29

    PKWA Law Practice LLC
    480 Lorong 6 Toa Payoh
    HDB Hub East Wing #11-01
    Singapore 310480
    Telephone Number: 6397 6100

    We signed bank loans documents and paid the remaining amount of the down payment (20% of resale price less money paid to sellers $2,000) + stamp duties + legal fees (if more than the amount subsidized by the bank) by issuing a cheque to the law firm.

    Stamp Duties Computation
    First $180,000 - $1 per $100/- or part thereof
    Next $180,000 - $2 per $100/- or part thereof
    Thereafter - $3 per $100/- or part thereof

    More details on stamp duty and other fees.

    Computation of amount to be paid to lawyers:

    Purchase price $$$
    less: 80% home loan $$$
    less: OTP and EO paid to sellers
    Balance of 20% down payment
    plus: stamp duty
    plus: legal fees
    total amount to be paid to lawyers by cheque

    Effective date of sale - we received a letter from HDB January 1, 2005, stating the effective date of sale

    Second Appointment - as scheduled and agreed upon by both sellers and buyers, January 14. We signed the final documents for transfer of title and also received all the keys to the flat.

    More details on  completion of resale

    Move in to flat - last step of the whole process is our moving in to OUR HOME. We followed the date specified - second week of January 2005. The moving in took a few taxi trips from our rented flat in Toa Payoh to our new flat in Sengkang. This was also the time when we paid agent fee which was 1% of the selling price.

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