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Here are 4 reasons why you should upgrade your HDB flat to a private property.

Updated: Nov 6, 2020


Image by Cedric Yong from Pixabay.


In this article, we’re not trying to convince you to make any decision. Instead, we hope to provide you a guide so that you can calculate your affordability, identify the pro & cons and prepare for the pitfalls of selling vs keeping your HDB before upgrading to a condo. By the end of this article, hope you can determine some pointers for yourself.

1. HDB flat can tie-up your entire money

One thing about HDB flat is that regardless of the millions of profits generated from it, you cannot withdraw these funds. The only way to access the money is by selling the flat. As a result, there is no joy in having a flat that gets you non withdrawal profit. Very often, you will still end up selling the flat to access your funds.


Nevertheless, if your HDB flat is worth that high, wouldn’t it be great if you sell it now and purchase a higher property that will generate accessible profit?

That is why you should consider giving it up for the private property. With private property, you can process a refinancing and take any profit you have gotten from the property.

But such refinancing can never occur with an HDB flat.

2. With HDB flat, you will continuously pay CPF accrued interest

Little did you know that the CPF accrued interest alone can clear whatever profit you think you have made.

For example, you bought a property at the rate of $350,000, and now it is worth $600,000. You have made a profit of $250,000. Unfortunately, you cannot access the cash.

Why? Because you have to pay the interest on your CPF using that cash. Such interest is about 2.5% per year (compounding interest).

Hence, the more you own the HDB, the lesser your chances of accessing the cash. In the end, if you decide to sell the flat, the cash-at-hand may be drastically affected.

In 20 years, except the worth of your property does not decline, it will be very difficult for it to compete with new government buildings that spring within this period.

So, it is better to sell them when it still has a high worth and purchase private property.

3. 30% of your income is for the MSR

The mortgage servicing ratio was established by the HDB. It can regulate the price of your HDB flat.

For example, your family earns $12,000, and you take an HDB loan at an annual interest of 2.6% for 25 years. The highest monthly instalment MSR allows you to pay is $3,600.

With a $3,600 monthly instalment fee, you can only purchase a property with a maximum price of $950,000.

Flats with such prices will likely be cited in the best places within the city. So, if yours isn’t at such location, it means you’ll sell at a lower price, and possibly lower MSR.

This can harm the potential of your property price.

4. Permanent residents in Singapore cannot buy an HDB flat until after 3 years

Can you compare the increase in the population of Singapore annually? What’s the percentage of citizens to permanent residents?


Therefore, only a limited number of people can purchase your HDB flat. Besides, do you see the cost of the flat increasing higher than a private property?

With the criteria set by HDB those who are not eligible can only go for private property. So, which do you think is better? Of course, it is private property.

Do you want to find out more about this? Contact me today, and I will clarify all your concerns immediately.

William Lee / Eileen Au

emailidealhome@gmail.com

Ideal Home is well-liked by both local and international clients for their friendly yet professional approach in the way it goes about helping them with their real estate goals in Singapore. They welcome the opportunity to have a no-obligation chat with you to see how they can help you to achieve your real estate goals in Singapore.

Contact us today @ +65 8666 4333 (William) or +65 8686 4333 (Eileen).

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William Lee & Eileen Au are a licensed realtor with OrangeTee & Tie.
CEA Licence No.: L3009250K / R030163B / R028271I

William 8666 4333 / Eileen 8686 4333

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