Growing Families
Upgrading your home
Reasons for upgrading
Growing family, better location (school zone or closer to extended family), lifestyle goals (better facilities, freehold and potential for asset appreciation).
Evaluate your financial health
Check that you have emergency funds of at least 6 months of expenses and the outstanding loans you have.
Check your property value
If you currently own a HDB, you can check the recently transacted prices of HDB flats in your area.
Check for eligibility to sell
Whether you have met the minimum occupation period (MOP), and whether you are eligible for the next purchase – BTO, resale, executive condominium or private.
Budget for your new property: set a price range based on sales proceeds, CPF and cash savings, and loan eligibility.
(a) Include all costs:
Option fee:
BTO flat: $2,000 for 4-room and larger flats , $1,000 for 3-room flats, and $500 for 2-room flexi flats.
Resale flat: Initial Option Fee payable to sellers who grant you an Option To Purchase (OTP) their flat is between $1 and $1,000. When you decide to exercise the OTP, you need to pay the seller an additional option exercise fee. The combined total of the option fee and option exercise fee is capped at $5,000. This forms the deposit of the purchase.
Private property: Ranges between 1% and 5% of the purchase price.
Buyer Stamp Duty
Computed based on the purchase price or market value of the property:
| Purchase price or market value of the property | Buyer Stamp Duty rates for residential properties |
|---|---|
| First $180,000 | 1% |
| Next $180,000 | 2% |
| Next $640,000 | 3% |
| Next $500,000 | 4% |
| Next $1,500,000 | 5% |
| Remaining amount | 6% |
So if you buy a HDB flat for $400,000, the stamp duty will be ($180,000 x 1%) + ($180,000 x 2%) + ($40,000 x 3%) = $6,600.
Legal fees
Also known as conveyancing fees, can range from a few hundred (HDB conveyance fees) to over $3,000 (if you engage a private lawyer).
(b) Total Debt Servicing Ratio
Check what your Total Debt Servicing Ratio (TDSR) would be after the new mortgage. TDSR is how much of your gross monthly income is used for debt repayment.
We recommend that you take a mortgage that allows your TDSR to be within <=35%.
(c) Loan Planning
Get an In-Principle Approval for bank loan.
(d) Use cash proceeds wisely
For renovation or reserve a portion for longer-term goals. Also plan for CPF refunds and the impact of accrued interest.
Our TDSR guideline of <=35% is more conservative than banks, which use a maximum 55% TDSR (based on a medium-term interest rate of 4% for the mortgage for modelling). This way, you have more buffer in case interest rates go up in future.
| HDB flat | Private property |
|---|---|
Price range generally lower – Housing grants available | Price range typically much higher – No housing grants available |
| Lower monthly maintenance cost | Higher monthly maintenance cost |
| May be able to choose between HDB loan and bank loan. | Only eligible for bank loan. |
| 99-year lease | 99-year lease or freehold |
| Communal facilities | Typically includes facilities such as security, pool, gym, BBQ |
| More restrictions in terms of selling and renting | Less restrictions in terms of selling and renting |
| May enjoy more subsidies from Government | Possibly receive lesser government subsidies and grants |
| Limited capital appreciation due to HDB policies | Higher potential for capital gain |
Review your financial situation before deciding to upgrade.
Optional Steps
If you sell first, there will be lower financial stress but you may need temporary accommodation before your new home is ready.
If you buy first, it will be a more comfortable move, but you may incur additional buyer stamp duty if you do not sell your first home within 6 months. You may also need a bridging loan to cover the gap between buying your new property and selling your existing one.
You can only choose a HDB loan if you are buying a HDB flat and your gross monthly household income does not exceed $14,000 for families.
MoneyOwl's guidance (2025): Choose HDB Loan
| HDB Loan | Bank Loan | |
|---|---|---|
| Interest rates | More stable rates (2.6% p.a.) | Offers fixed rates (limited period) and floating rates |
| Downpayment | 25% of purchase price. Can be fully paid by CPF OA. | 25% of purchase price. At least 5% must be in cash. |
| Maximum loan tenure* | 25 years | 30 years |
| Flexibility for early repayments | More flexible | May incur costs or penalties. |
It's natural to be excited to plan for the renovation of your new home.
But don't overspend: balance this spending with longer term goals such as for your children's tertiary education and also retirement.
Refer to MoneyOwl's rubrics on Paying Yourself First. Save or invest at least 15% of your gross salary for your longer-term goals.
With a new and potentially larger home loan, review your life insurance coverage to ensure that the sum assured is sufficient to cover the outstanding mortgage in case you pass away prematurely.
You can use our Insurance Needs Analyser to get an accurate calculation of the insurance coverage based on your needs.
Review your retirement savings in your CPF, cash, insurance policies, and Supplementary Retirement Scheme (SRS) to ensure that you are on track in terms of planning for your retirement finances. Be aware of how the new property will affect your cash savings for retirement.
(a) Joint Tenancy
If you and your spouse bought the new home under joint tenancy, then the right of survivorship applies. This means that when any joint owner passes away, their interest in the flat would be automatically passed on to the remaining co-owners.
(b) Tenancy-in-common
On the other hand, if you had bought the property under tenancy-in-common, each co-owner holds a separate and distinct share in the flat. When a co-owner passes away, their interest in the flat will be distributed according to their Will or to the beneficiaries in accordance with the provisions of the Intestate Succession Act.
Click below to download MoneyOwl's End-of-Life and Estate Planning e-book to learn the essentials of estate planning and how to ensure your assets are distributed according to your wishes.
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