You will be able to list the steps of an HDB resale purchase in order and say what happens at each one.
Before you look at any flat, open the HDB website, read the resale process pages and timelines, and note the current caps on the option fee and the exercise fee. HDB changes the resale process from time to time. The HDB Flat Eligibility (HFE) letter is one example of a change. An agent should know the process, but the HDB website is the authoritative source, so check the current rules there first.
The HDB resale process follows a fixed order and runs through HDB's own resale portal. Each step either commits you further or costs you money. If you know which steps do which, you can work out what you will pay, when you will pay it, and whether it comes from cash or CPF.
Farah and Hakim (an invented example) are a couple buying a resale HDB flat in Bedok. They had already chosen a bank loan package in Lesson 5.5, "Compare an HDB loan and three bank packages", and had their in-principle approval. The seller wanted a quick sale. On a Friday night, the seller's agent messaged them: if they were serious, the seller could grant them the option on Monday. Hakim wanted to accept right away. Farah wanted to know what accepting would commit them to, what they would pay and when, and what they would lose if something went wrong. The steps below answer her questions in order.
Two things come before any viewing that matters. The first is the HFE letter. You need it before a seller can grant you an option. It tells you which grants you get and whether you can take an HDB loan, and if you take an HDB loan, the letter states the loan amount. Lesson 2.4, "Get your HDB Flat Eligibility letter and read it", shows you how to get one.
The second is the loan itself. With an HDB loan, the HFE letter covers it. With a bank loan, get an in-principle approval from the bank before you commit. This is the bank's indication of how much it is willing to lend, so you know the amount before you sign anything.
Once you and the seller agree a price, the seller grants you an option to purchase on HDB's prescribed form through the resale portal. It gives you the exclusive right to buy the flat at the agreed price within a set option period.
You pay the seller an option fee for the option, in cash. This is the first money you put at risk: if you let the option lapse, the seller keeps the fee. HDB caps the option fee, and you and the seller agree the amount within that cap. Farah and Hakim's option fee is S$1,000 (an example figure).
After you get the option, submit a request for HDB to value the flat. HDB does the valuation and usually gives the result within days. Because the result arrives while the option is still open, you learn the cash over valuation before you are fully committed. Lesson 6.2, "Valuation and cash over valuation", covers what to do with that figure.
To go ahead, you exercise the option before it expires and pay the exercise fee, in cash. Farah and Hakim's exercise fee is S$2,000. HDB caps the option fee and the exercise fee together as a combined cap, and both fees count towards the purchase price.
Exercising the option is the point of commitment. If you pull out after exercising, you can lose what you have paid, and the seller may have other claims against you. Settle your loan, your cash and your plans before you exercise.
Buyer's Stamp Duty (BSD) falls due shortly after you exercise. Many buyers pay it in cash first and get it reimbursed from CPF later. Lesson 3.1, "BSD: tiered rates that work like tax bands", explains how that works.
Next, you and the seller each submit your part of the resale application on HDB's resale portal, within the time HDB sets. HDB reviews the application and, if everything is in order, accepts it. Both of you then log in to endorse the documents. You do not approve the resale yourselves. HDB approves it, and only after you and the seller have endorsed the documents and made the necessary payments. Check the HDB website for how long approval currently takes.
The last step is the completion appointment. At this appointment your loan is drawn, your CPF and cash pay the rest of the downpayment, the seller's loan is repaid, and you collect the keys. HDB publishes typical timings from application to completion on its website, and it is usually a matter of weeks.
Which parts CPF can pay depends on your loan and the CPF rules. The course "Big goals: wedding, home, car and kids", lesson 4.2, "Which parts must be cash and which CPF can pay", sets out those rules. For Farah and Hakim, with a bank loan, the sequence is:
Option fee: S$1,000, cash. Exercise fee: S$2,000, cash. BSD: cash first, reimbursed from CPF later. At completion, the rest of the downpayment: cash over valuation and the minimum cash share of the bank loan in cash, the rest from CPF. At completion, legal fees: usually CPF. At completion, the loan: paid directly by the bank. After completion, renovation, furniture and moving: cash.
Once she had this list, Farah could answer the agent. She told them they would take the option on Monday, but only after checking that they had the cash ready for each step. Lesson 6.5, "Build your purchase timeline", puts real dates on this payment sequence.
In the activity below, write the resale steps in order, with the payment due at each and whether it can come from CPF.
Write the resale steps in order. Next to each one, note the payment due and whether you can pay it from CPF.
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