So you have found the HDB resale flat that you want and want to complete the purchase. You have never done this before and doesn’t know what to expect. Below are the key stages of completing the HDB resale flat buying process. It can help you know what to anticipate.
1) Obtaining Option to Purchase (OTP)
When you have decided on the HDB flat that you are going to purchase, you need to obtain an OTP. It signifies the seller’s offer to sell you the offer. You are required to pay a fee to show your commitment as well. The OTP will have an expiry date for you to exercise the option to purchase the HDB flat at the specified price. Once you have the official OTP, the seller cannot offer to sell the HDB resale flat to any other buyer unless you agree to it or when the OTP expires.
Moving forward to proceed with your purchase, you will sign the OTP to exercise it before the expiry date. This is your confirmation that you will indeed buy the HDB resale flat at the specified price. Another fee will be payable to the seller at this stage. Once this is finalised, the HDB resale flat buyer and seller are bound legally for the HDB resale flat transaction.
The OTP validity period is usually 1 week from the time of issue. This is the period where you can use to find the HDB bank loan for your HDB resale flat purchase. You should make HDB bank loan comparison with at least a few banks to compare their different terms and rates. Use a HDB bank loan calculator to aid your research.
Once your HDB bank loan is approved, you will be given a “Letter of Offer”. There will be a validity period for you to accept the HDB bank loan. Because interest rates can change, the bank cannot offer you interest rates that are valid for a prolonged period. Once you accept the HDB bank loan offer from the bank, you have to take up the HDB bank loan to purchase yoru HDB resale flat. Failing which, there may be a penalty fee that you have to pay. It is common practice for the seller and the seller’s agent to request to see the “Letter of Offer” when you are exercising the OTP to make sure that you have the support of the banks to purchase the HDB resale flat.
The fees that you have paid in the OTP process will be taken as part of the deposit that you have to pay for the HDB resale flat. Remember that if the purchase price exceeds the valuation price (which is common), you have to pay the difference in cash along with the deposit. Another common practice is for the HDB resale flat seller to provide you an official valuation report to give you an indication of what is the market price of the HDB resale flat in question.
2) Applying for HDB First Appointment
Once the OTP is exercised and the HDB bank loan offer has been accepted, you have to apply with HDB for a “First Appointment”. This will be held at the HDB headquarters with both the buyer and seller while HDB will determine the legality and eligibility of the HDB resale flat transaction between the involved parties.
Waiting time for the “First Appointment” can be between 8 to 10 weeks.
3) Engaging a Lawyer
You can find your own lawyer or engage HDB’s services for the legal work. Usually you will be using the lawyer appointed by the bank offering you the HDB bank loan because they will be subsidizing part of the fees to engage their specified lawyer. Note that although the legal fees are subsidised, it is your responsibility to pay the legal fees. Not the bank’s responsibility.
4) HDB First Appointment
On the First Appointment, you will have to sign a number of documents and set a “Second Appointment”. The Second Appointment is when the seller “hand over” the HDB resale flat. There will also be a waiting period of between 5 to 10 weeks for the Second Appointment.
If you have a property agent, he will probably expect his agent fees at this stage.
5) Meeting With Your Lawyer
Your lawyer will at this stage have already prepared all the necessary documents. They will also assist you on liaising with CPF if you are using your funds from CPF for the legal fees, deposit, and repaying the HDB bank loan.
6) HDB Second Appointment (Hand Over
Your lawyer can attend the Second Appointment on your behalf. The keys to the HDB resale flat will be handed over.