When you’re promoting your own home for the primary time, there are some issues that you just could be unaware of. One widespread query you would possibly ask your self is, “what occurs to my mortgage once I promote my home?” For these upgrading from a flat to a condominium or EC, you may also surprise how a lot of your HDB sale proceeds you’ll have the ability to get.
Don’t fear, we’re right here that will help you determine it out!
Are you able to promote your own home earlier than paying off your mortgage?
Sure, you may. Nonetheless, you’ll nonetheless have to repay your excellent mortgage earlier than the property is transferred to the client.
Your sale proceeds might be used to repay your mortgage
When promoting your own home, you’ll obtain lower than its sale worth as you could issue within the remaining mortgage, CPF refund and grants, commissions and different admin funds. Right here are some things to pay attention to.
Pay your excellent house mortgage
The primary order of enterprise is to repay your excellent house mortgage, whether or not it’s an HDB housing mortgage or a financial institution mortgage. The excellent quantity might be deducted out of your sale proceeds.
Refund your CPF monies
When you had used funds out of your CPF Peculiar Account (OA) to pay for your own home, you’d must refund the principal quantity, together with accrued curiosity again to your CPF account. This might have been used to finance your downpayments, month-to-month loans and purchaser’s stamp obligation. For many who had obtained any housing grant, you’d additionally must return it to your CPF OA.
You’d must bear in mind the accrued curiosity for the entire above. That is the curiosity that the principal quantity would have earned if it was sitting in your CPF OA as a substitute of getting used to pay for your own home. Presently, the CPF OA rate of interest is 2.5% every year.
We’ve carried out a step-by-step breakdown of calculations in this text. Alternatively, you may log in to your CPF account or use HDB’s sale proceeds calculator.
It would really feel like lots might be taken out of your sale proceeds, however to not fear, the quantity you refund to your CPF account can be utilized to finance your subsequent house.
Miscellaneous charges – agent fee, resale levy and so forth
Your sale proceeds may even be used for different miscellaneous charges, together with agent fee, authorized charges and resale levy (if relevant).
Agent commissions are negotiable, however the widespread apply is about 2% of your own home’s promoting worth. You’ll even be subjected to a resale levy you probably have purchased a subsidised flat and are planning to purchase your subsequent flat with subsidies.
Must you pay your present mortgage upfront should you’re ready for the completion of your new EC?
When you’re upgrading from an HDB to an EC, what’s nice is that you just received’t have to promote your present house till 6 months after the gathering of keys to your new EC. You additionally received’t be topic to Further Purchaser’s Stamp Obligation (ABSD).
Some sellers could be contemplating if it’s higher to repay their mortgage mortgage upfront or proceed with month-to-month mortgage funds till they ultimately promote their home.
This can rely in your present money circulation and the financing choices accessible to you. You’ll have to ask your self you probably have sufficient cash for residing bills should you end paying your mortgage. You’ll additionally want sufficient funds to pay the downpayment to your EC, authorized charges, BSD and resale levy (if wanted).
Nonetheless, there’s no urgency so that you can repay your mortgage upfront as a result of whenever you promote your property, the sale proceeds can be utilized to your remaining mortgage. Plus, it’s all the time higher to have more cash within the financial institution for emergency funds or put your cash in investments with increased returns.
In the end, you’ll must weigh the professionals and cons of every possibility.
Exemption of present property mortgage from TDSR
The excellent news is that you would be able to get a second property mortgage even you probably have an present one.
For example, should you intend to promote your HDB flat to improve to a brand new property, your present month-to-month mortgage received’t be factored into the Whole Debt Servicing Ratio (TDSR). So, it received’t have an effect on the utmost mortgage quantity you will get to your new property. However you’ll want to offer paperwork equivalent to a duplicate of the approval letter from HDB and a duplicate of a letter of enterprise to finish the sale of your HDB flat.
For these promoting an EC (after MOP) or personal property, you may exclude your month-to-month mortgage repayments from TDSR. That is carried out by offering a sale and buy settlement (signed by each you and the client) and a certificates from IRAS to point out that the stamp obligation has been paid on the settlement.
Resale properties on the market
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