Buying a Resale HDB – Part 2: Financing

Australian expatriate and award-winning blogger, who wrote about his experience of living as a foreigner in a HDB in Woodlands here, Peter Breitkreutz, takes us through his own experience of buying a HDB flat as a Singapore Permanent Resident. In the last article, he looked at selecting a property, here he discusses how to finance the purchase of a property.

 (Sengkang Sculpture Park. Image courtesy of Singapore Tourism Board)

STEP 2: Financing Once you have decided on your budget, you may (or may not) require a loan from a financial institution to mortgage your property. Most banks and institutions in Singapore will offer up to 80% of the property value (or sale price, whichever is lower). The remainder will need to be paid by cash. It’s common sense, but the less you borrow and the more you pay upfront, the less you will pay in the long term.

Over Valuation
One feature of the Singapore property market is ‘over valuation’, where the seller may put a price on their property at a higher value than the one determined by HDB. If you end up securing a property that is ‘over valuation’ (e.g., valued by HDB at $450K, but you are buying for the seller’s valuation of $470K = ‘$20K over valuation’), the over valuation amount will also need to be paid in cash.

 Shop around to get the best deal, in terms of interest rates, length of repayment, etc. Make sure to look at all features of the mortgage deal on offer, for example, many banks will offer a subsidy off the legal fees that you will incur later in the process as part of the package.

After going through the process myself, I have my own bias as to which financial institutions offer the best packages and service – which I will not state this here for fear of risking passing my bias on. I will say that you should be broad with your scope and check out as many as you can.

Once you have determined your ‘preferred’ bank – and remember you are not locked in at this stage to any institution – get the bank to give you an ‘in-principal’ approval for your budgeted loan amount. (Unlike many other countries, once a bank gives you this ‘in principal’ agreement, it is highly likely that there will be no problems having the loan approved when the time comes). The bank will require a copy of your – and your partner’s – identity card, along with your CPF statement and transaction history. Both of these can be accessed online from the CPF website, using your SingPass, here.

Agents and Bankers When you have engaged an estate agent, and the sale is almost determined, the agent may well try and ‘push’ his or her own affiliated bankers on you, since they get a commission on this business. Once again, by all means check it out and compare to others – you may find that the ease of having the estate agent act on your behalf to organize everything is beneficial or convenient.

Now that you have the finances taken care of, lets discuss the whys and wherefores of engaging a property agent. Of course, many people may well engage a property agent before they deal with their finances, but this is the order that I found my property.

Read more of this series:

Part 1: Budget and Specifications
Part 3: Engaging A Property Agent
Part 4: Purchasing
Part 5: HDB, Legal and Taking Possession

Read more from this author…   Peter Breitkreutz is an Australian living and working in Singapore. To read more about him, check out his award-winning blog at

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