Decide whether to sell or buy first when you move from one home to the next.
Farah and Hakim have children and own a flat in Bedok. Before selling it, they find a completed three-bedroom condo near their children's future school, priced at S$1.2 million (an invented example), and the owner's agent presents the purchase as almost settled. Hakim wants to book it that weekend. Farah wants to know what happens if the Bedok flat takes six months to sell.
Every move between homes has this problem: you need somewhere to live, but you can't spend the money from the old home until it is sold. You can solve it by selling first or by buying first, and each order puts the risk in a different place.
Sell first means selling your current home before buying the next one. Once the sale completes, you know exactly what went back to your CPF and how much cash you received. Lesson 8.3, "Selling: proceeds, the CPF refund and the timing", shows that calculation. You buy the next home with a known budget, carry one loan at a time, and pay no Additional Buyer's Stamp Duty (ABSD) for a second property.
The cost is that you need somewhere to stay, because a sale and a purchase rarely line up to the day. Most people rent for a few months, move in with family, or negotiate to stay on in the old home for a short time after completion. HDB has an arrangement that lets sellers stay on for a limited period if the buyer agrees, and a private sale can include a similar clause. Rent, storage and moving twice are real costs, but they are known costs.
There is also market risk. If prices rise while you are between homes, the next home costs more. Some sellers accept this in exchange for certainty, and others find it the hardest part of selling first.
Buy first means buying the next home before selling the current one. You move only once, straight from the old home to the new one, but you carry three costs while you own both.
The first is ABSD. As Lesson 3.2, "ABSD: who pays it and when it comes back", explained, a citizen couple buying a second home pays ABSD upfront, due within weeks of signing. A married couple can claim it back if they sell the first home within the remission period and meet the other conditions. The money still has to be found first, and it is refunded only after the sale.
The second is the loan. While your existing loan is outstanding, a loan for the new home counts as a second housing loan, which has a lower LTV limit and a larger minimum cash downpayment (Lesson 4.1, "LTV limits and the cash you must put in"). As Lesson 4.3 showed, the TDSR counts both loan instalments, which can shrink the second loan further.
The third is time pressure. Once you have committed to the new home, the old one must sell by a deadline, and a buyer who knows you are in a hurry pays less. If you cover the upfront costs with a bridging loan, you add interest and another lender's conditions.
A couple with more cash, a flat in strong demand, or a new launch years from completion might reasonably choose to buy first.
Every buy-first plan has a deadline, and you should know it before you sign:
If you own an HDB flat and are buying a private home, the deadline is the ABSD remission period. If you miss it, IRAS keeps the ABSD. If you are moving from one HDB flat to another, HDB generally requires you to sell the old flat within a set period after you take the new one. You cannot own both indefinitely. If you are buying a new launch, the deadline runs from completion of the new home, which may be years away. That gives you more time but leaves you exposed to the market in the meantime.
If you sell first, the deadline is softer: how long you can afford, or can bear, to live somewhere temporary. IRAS and HDB publish the current periods and conditions, so check them for your exact purchase.
Farah and Hakim worked out both versions. Using the 15% ABSD rate from Lesson 3.2 (an invented example), buying first meant finding S$180,000 for ABSD (15% x S$1.2 million = S$180,000) on top of the condo's downpayment and stamp duty. The Bedok flat would also have to sell within the remission period. Their savings could not cover this without a bridging loan.
Selling first meant about four months in a rented flat near Farah's parents, with rent and moving costs of roughly S$12,000. They chose to sell first and wrote the deciding line into their plan: "We are not willing to owe S$180,000 to IRAS on the hope that our flat sells in time."
For your own move, work out both orders with real figures. For buying first, add up the ABSD, downpayment and stamp duty, and check whether your savings cover them without a bridging loan. For selling first, estimate how long you would live somewhere temporary and what rent, storage and moving would cost. Before you sign, find the deadline that applies and check it with IRAS and HDB. Then choose an order and write the deciding reason into your plan.
Right-sizing later in life means selling a larger home to buy a smaller one. It is often the same problem in reverse, and the order of selling and buying matters in the same way. It can release cash and CPF, and HDB and CPF have schemes for older owners that affect how this works. Lesson 6.1, "Your home as a retirement asset", in the course Retirement & Estate: income for life and a plan for what you leave, covers how that money becomes retirement income.
In the activity below, write whether you would sell first or buy first for your next move, and the deadline that drives the choice.
Write down whether you would sell first or buy first for your next move, and the deadline that decides it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).