HDB Contra 2024 | Useful Scheme for HDB Second Time Buyers
Looking to downgrade or upgrade your HDB to another HDB in 2024 and wondering how to go about doing it?
Not to worry, we are here to share some useful tips that can help you in this process – specifically this HDB Contra Scheme.
Many second-time home buyers face similar concerns too.
Here’s a list of the most common questions we hear from our clients all the time:
- How do you sell an existing HDB flat in 2024 and buy a new one?
- Should I sell my HDB flat first or buy first?
- How long is the process of selling and buying HDB flats?
Since selling off an existing flat and purchasing a new one involves a potential buyer, a potential seller and yourself, it is a much more complicated process than when you first bought your first home.
Table of Contents
What is the HDB Contra Scheme about?
The HDB Contra Scheme, otherwise known as the Enhanced Contra Facility, is a useful but little-known scheme to help second-time home buyers.
A joint effort by HDB and the CPF board, it allows sellers to sell their existing HDB flat and concurrently buy another HDB resale flat using the proceeds (as well as the refunded CPF monies).
What does that mean for you (the seller and second-time home buyer)?
It means you will need to pay a much lesser amount of cash upfront for your new HDB flat and get a reduced mortgage loan for the new flat.
Why? Because the proceeds from your old home will be used automatically to pay for the new home including the insurance premiums for the CPF Home Protection Scheme.
However, do note that the CPF refunded monies cannot be used for the payment of fees like stamp duty and conveyancing fees.
How does the HDB Contra Scheme work in real life?
Still unclear about how it works? No problem. We’ll use a simple case study to illustrate how the HDB Contra Scheme can work for you.
Parties involved:
- Group A – David (Potential Buyer): Wants to buy your existing HDB flat
- Group B – You (Seller of existing HDB and buyer of next HDB): Wants to buy Jane’s HDB flat
- Group C – Jane : Wants to sell her HDB flat to you
You will apply for HDB Contra Scheme.
If approved, your sale proceeds and refunded CPF monies from your sold HDB flat to David, will be channeled to making the purchase of Jane’s place.
However, amongst the three groups, only one group is eligible to apply for the scheme at any one time.
Conditions for applying Enhanced Contra Facility
Like all government schemes and grants, there are conditions for applying.
Do remember to check if you fulfil these necessary conditions before going ahead with this.
- You can apply for the ECF (Enhanced Contra Facility) if you are selling your existing HDB flat and buying an HDB resale flat. However, the buyer of your flat and the seller of your new flat cannot apply for this same scheme.
- You cannot be an undischarged bankrupt or have any bankruptcy proceedings against you. HDB may not approve the ECF application if any of the following apply:
- There is a mortgage in favour of a financial institution
- There is a CPF mortgage/ charge on Flat A and/ or Flat B
- Private solicitors must be engaged
- ECF is not available for the following types of resale applications:
- Conversion Scheme
- Sale of part-share of an existing flat
- Contra party buys another resale flat using a housing loan from a bank
- The resale of Flat A must be completed before or on the same day as the completion of the resale of Flat B
Step by step guide to apply for HDB Contra
Fulfilled the conditions above, completed your HDB MOP completion and ready to apply for the Enhanced Contra Facility? Let us guide you step by step:
1) Log in to My Flat Dashboard and register your HFE and Intent to Sell.
2) Starts marketing your HDB flat for sale.
It can be done either DIY or by engaging a real estate agent to facilitate the two-way negotiations.
3) Upon successfully finding a Buyer (Group A), you can grant the Buyer (Group A) an Option To Purchase (OTP).
Must use the HDB prescribed (OTP) Option to Purchase as the form of contract in resale transactions. Do note, the Option Period for the (OTP) Option to Purchase is 21 days.
Buyer must exercise the OTP within that period, if not the deposit will be forfeited.
4) Following that you should register an Intent to Buy in the HDB Resale Portal and start looking for next HDB flat.
5) Upon successfully finding a flat you would like to purchase, Seller of the new house (Group C), will need to grant an Option to Purchase (OTP) to you.
6) All Groups, Sellers and Buyers, will submit a Resale Application within a previously agreed timeframe. Group B will indicate in Resale Application that he/she is applying for ECF.
7) Upon approval (HDB’s Approval Letter is posted in the HDB resale portal), the buyers and sellers will be notified via SMS or E-mail.
8) HDB completion normally is scheduled after 8 weeks from the date of Acceptance of the resale application after the required documents are submitted successfully.
HDB contra timeline
This is the timeline for selling or buying a HDB.
You can use this as a reference to plan for HDB contra timeline.
Usually 3 month extension is required for selling and buying of another HDB.
HDB Financial Calculator
We provide Free Monthly Transactions Notification for our readers.
Key in your Name, Postal code and contact details.
We will update you monthly.
If you come across any difficulties in the process, please feel free to contact me for a non-obligatory discussion on your needs.
Bonus for my readers
In conclusion, HDB contra is an innovative and cost-saving solution for homeowners who are looking to sell and buy HDB.
By leveraging the value of their existing HDB flat, they can avoid the need for a large down payment and reduce their overall cash outlay.
Most HDB owners often require a thorough discussion about their options and the procedure involved before they can confidently plan their next move.
Here are some common topics we cover during these discussions:
- Can I use HDB contra if I already have a housing loan?
- Can I use HDB contra if I still have outstanding CPF payments?
- Is HDB contra applicable to any type of HDB flat or only specific ones?
- Are there any restrictions or limitations to be aware of when considering HDB contra?
- What are the potential risks associated with HDB contra?
- What benefits can I expect from using HDB contra?
If you have similar questions or doubts, I encourage you to connect up for a friendly discussion without any obligation on your part.
Let’s address your concerns and explore the possibilities.
Who should apply?
Existing HDB homeowners who are considering upgrading to a larger flat or downsizing to a smaller one.
Real estate agents who want to advise their clients on the various financing options available for HDB flats.
Anyone interested in the Singapore real estate market and the unique features of HDB housing.
Awards and Accolades
Testimonials
I have successfully helped hundreds of homeowners just like you since 2010
Have you learned something New Today? Please help to share.
Self Introduction
Greetings! My name is Rick Long, and I am proud to serve as the Associate Division Director of Huttons Asia Pte Ltd, with over a decade of experience in the real estate industry.
My passion for helping clients find their dream homes has grown exponentially during my tenure in the field. As a graduate of Singapore Polytechnic, I have always valued the importance of hard work and determination.
My prior experience serving in the airforce instilled in me the value of teamwork, perseverance, and discipline.
Over the years, I have been privileged to receive several accolades for providing exceptional service and dedication to my clients.
My ultimate goal is to ensure that each individual I work with has the best possible experience, whether they are buying or selling a property.
One of the most rewarding aspects of my work is receiving glowing five-star reviews from satisfied clients.
Knowing that I have positively impacted someone’s life is truly humbling, and it motivates me to continue striving for excellence every day.
When I am not working, I enjoy spending quality time with my loved ones, indulging my passion for sports, and exploring the rich and diverse culinary landscape of Singapore.
Amidst the bustling pace of life, I relish moments of calm by immersing myself in the art of tea-brewing and teapot appreciation.
Thank you for taking the time to learn a little more about me. I look forward to the opportunity to work with you.
Additionally, Rick is a proud fur daddy to two rescue kitties and loves spending his free time with his wife and furbabies. He believes in giving back to the community and volunteers his time to animal welfare causes whenever possible.
Related Articles:
Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)
Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)
Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)
What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)
Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)
Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)
What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)
Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)
Buying EC before selling your HDB? – Read more (Upgrade to EC before selling your HDB)
Should you sell your EC after 5 years? – Read more (Selling EC)
