How to Budget for An HDB Resale Flat: Plus, 4 Red Flags That May Increase Your Renovation Costs

Eugenia Liew
How to Budget for An HDB Resale Flat: Plus, 4 Red Flags That May Increase Your Renovation Costs
So, you’ve decided to pick an HDB resale flat over a Build-to-Order (BTO).
Perhaps you’ve come to realise that you don’t have the luxury of time to wait a couple of years for new home, or maybe you’ve just blown the income ceiling to qualify for a BTO (#happyproblem). But no worries, there’s still affordable public housing in the form of resale flats!
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Financing An HDB Resale Flat

When it comes to budgeting for a resale flat, there are some things to consider (as compared to a buying new flat directly from HDB). Here’s a quick overview:

Cash vs CPF for Resale Flat Payments

You must use cash for:
  • Deposit to seller (up to $5,000)
  • Part of downpayment (if you take bank loan or have insufficient CPF savings)
  • Cash proceeds from disposing the last flat (if you’re taking second HDB loan)
  • Resale application administrative fee ($40 or $80)
  • Processing fee for Request for Value ($120, if you intend to use CPF to finance your home)
  • Fire insurance
  • Administrative fee for Temporary Extension of Stay by flat sellers (if you agree to seller’s request to extend their stay in the flat)
  • Legal fees
  • The difference between the resale price and the market valuation (Cash Over Valuation)
You can use CPF for:
  • Downpayment in whole or part (depending on whether HDB loan or bank loan)
  • Partial or full payment during key collection
  • Monthly repayments of mortgage
Of course, CPF usage is dependent on your withdrawal limits. First-time buyers can retain up to $20,000 in each buyer’s CPF Ordinary Account. The rest must be used if taking an HDB loan.
Next, how much CPF savings you can use for your flat purchase and/or monthly mortgage depends on the remaining lease of the flat. You can read more about CPF usage here.

CPF Housing Grants for Resale Flats

Generally, there are more CPF Housing Grant schemes for resale flat purchases. Of course, you may not be eligible for them all, but the total maximum grant possible is higher. Relevant income ceilings and other eligibility conditions apply.
Family Grant
Enhanced CPF Housing Grant
Enhanced CPF Housing Grant (Singles)
Proximity Housing Grant
Half Housing Grant
Step-up Housing Grant (for second-timers)
More useful articles on CPF Housing Grants:
That’s a short summary on key things to note when budgeting for a resale HDB flat.
Another key difference between resale and new flats is that resale flats are ‘preloved’. And as with all things secondhand, the chances of finding one in pristine condition is slim.
Unless, of course, you decide to go for ‘new’ resale flats that recently fulfilled their Minimum Occupation Period (MOP) and are under 10 years old. These are typically the most expensive, but if you have the budget for it, here are 73 Freshly MOP-ed HDB Resale Flats in Singapore to Expect in 2021/2022.
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Beyond the Resale Flat Price: 4 Things That May Increase Your Renovation Costs

Whether it’s fixing damages from usual wear and tear or redoing the interior design to suit your personal preferences, most resale flats do require some extent of modifications or renovations. And depending on how much you intend to knock, hack, and rebuild, you could easily spend up to $35,000 or possibly more.
If you’re hoping to spend the bare minimum on renovation, read on to learn what you should be looking out for at your next resale flat viewing.

1. Check for Defects (Yes, Even in Resale Flats!)

Okay, so it’s a great flat – the view’s excellent, and it’s only been around for less than 10 years! But be mindful that paying closer attention to details will help you from spending more in the future.
When it comes to flooring, look out for scratches, chips and stains on the tiles. While these may seem like minor issues now, they could prove to be costly later on. For instance, stains could be indicative of water seepage. For vinyl/laminated flooring, make sure that there are no uneven spots which could indicate poor workmanship. Sure, you may be able to use some household products to quickly patch up small scratches. But over time, if the condition worsens, you may end up having to replace the flooring in its entirety which is not only cumbersome once you’re nicely settled in, it’s also costly.
Ceramic tiling ranges from about $9 to $12 per square feet inclusive of labour, which would amount to about $10,175 for a standard 4-room flat (about 90 sqm, or 969 sq ft). A slightly more affordable option, vinyl flooring might set you back by about $4,845 for a similar sized home.
Learn more about flooring prices and choices in this article: Popular Flooring Types in Singapore: Vinyl, Marble Laminate… Which is the Best?
You should also inspect the pipes for leaks, mould or cracks, and also check metal piping for signs of corrosion which could cause problems later on. The cost to repair leaking pipes could range between $80 to $200+ for apartments and flats, while fixing pipes in landed homes is pricier at $250+.
Cracks on walls and ceilings could also indicate problems with the foundation or structure of the building, while stains could be a sign of water seepage from the home of an upstairs neighbour. Unfortunately, in these scenarios, there’s not much you can really do about things other than quick DIY patches for your walls and trying to engage your neighbour in a discussion to sort out the water seepage problem. It may otherwise be a long and cumbersome process, unless of course you decide to eventually… just purchase a new home elsewhere.
For a more comprehensive list of defects you should pay attention to, check out our Defect Inspection Checklist for New BTO, EC and Condo Home Owners. Although defects checking is typically for new home buyers – since the developer or HDB may be liable for the repairs – the same checklist is helpful for resale buyers too.

2. Pay Attention to Your Resale Flat Direction

“It’s bad luck to buy a house that faces south!” is something you may have heard your elders say. But fengshui and other beliefs aside, there are some more logical considerations you should keep in mind when it comes to the direction your potential dream home is facing.
For instance, North-South facing homes are said to be the most desirable in Singapore because they not only avoid direct sunlight during the day, but also benefit from the wind’s current keeping them well-ventilated and cool.
In contrast, East-West units face the full force of the afternoon sun all year around, which means not only will your home feel warm and humid, but the heat could also cause the colour of your furniture to fade, and make your leather décor peel.
For more tips on choosing homes based on direction, read this article: What’s the Best House-Facing Direction in Singapore? The Good, the Not So Good, and the Bad
Should you decide to purchase a home with less than desirable conditions, you could end up having to purchase new fans, air-conditioning units, or even forking out a little extra for better blinds and curtains.
A new aircon system (if the current owner’s ones aren’t in great working condition) with four units could set you back about $3,000 to $4,000, while venetian blinds could cost you just over $1,000 depending on supplier.

3. Check the Built-in Carpentry

Another thing to look out for when you’re at that resale flat viewing is built-in fixtures such as wardrobes, shelving and cabinets. Built-in furniture is harder to fix and replace because they require hacking. Not only is this time-consuming and messy, but it is also expensive.
Don’t feel awkward about asking the owner or agent if you can inspect the furniture. Sometimes, these fixtures look fine on the outside but are actually in poor condition.
Check wooden fixtures for signs of bugs or termites. Open up cabinets and doors, pull out those drawers and check for signs of wear and tear. Pay particular attention to cabinets under the sink or near pipes to ensure that there are no signs of mould.
Also consider if the built-in furniture is practical and useful for your family’s needs. Even if they’re not damaged, if the storage space is not suitable, you’ll end up needing to replace it anyway.
Hacking off the fixtures could cost anywhere between $100 (light hacking work) to $6,000 (more extensive projects). Then, further carpentry costs to install your new cabinets could amount to up to $15,000, depending on type and selection of fixtures.

4. Remember that Age Matters

Perhaps a frequent point of discussion about housing in Singapore is the question of whether you should purchase an older home which has been around for say, 30 to 40 years. While there some that have been renovated to look brand new, keep in mind that there are structural elements that can’t be fixed with a new coat of paint.
For one, most older homes come will typically require more renovation and maintenance. Things like ageing toilet pipes, odd stains, low water pressure because of leaks, are common complaints that tenants have about older homes. And of course, these things translate to higher maintenance costs too (see above point on defects).
But most importantly, should you decide to sell the home in future, it might prove to be a challenge. For homes with 30 years or less left on its lease, buyers would not be able to use their CPF to finance the cost. This considerably lessens your pool of potential buyers as interested parties would have to find other ways to cover the cost of the home.

Anything Else I Should Keep in Mind?

We hope this guide was helpful in sharing a little bit more about what to consider when buying a resale flat. Beyond budgeting for how much cash and CPF savings you need, it’s pretty clear that viewings go beyond just getting a “feel” of the home.
If you need help in planning for your finances for an HDB resale flat – or any other property, really – PropertyGuru Finance is here to help. Reach out to any of our home loan advisors for a free consultation, where they can lend their expert advice and offer personalised recommendations and solutions to you.
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