How You Can Upgrade By Doing A HDB Contra!

Last updated on April 3rd, 2018 at 12:02 am


My wife and I bought a new play mat for my little boy. It took us quite awhile to squeeze out a little corner to lay it down for him. And of course …. I had to move some of my things away again! Our 3room HDB flat is nice and cosy but because it is small, we are running out of space. Can’t imagine what to do with the space if number 2 comes along now!


Out of curiosity, I went to look into HDB’s website to learn more about the HDB resale of flat process. Conditions for ‘Resale levy” and “HDB Contra” came up and it was hard to read the pages of legal words there.  Then came “HDB concessionary loan” qualifying criteria and bank mortgage loan calculations… all of which made it SOoo difficult to get a clear picture!

There are 2 ways when upgrading to a bigger HDB flat. This post is to share what I understand now.

Buying new BTO/SERS may attract resale levy


The first way is to buy a subsidised flat from HDB through BTO (Build To Order) or SERS (Selective En Bloc Redevelopment Scheme). If you had previously bought a BTO or SERS, you are deemed to be a “second timer”. While you may still apply, you will be subjected to pay the HDB resale levy if your current flat had been previously subsidised.

Attached is the resale levy amount based on your current HDB flat type. You can pay this resale levy with cash or with proceeds from your current house at the point of sale. I personally feel that it is not a good idea to upgrade with a new HDB flat.

Buying resale flat by doing a “HDB contra”

The second way is to upgrade with a resale HDB flat through the “HDB Contra” facility. Doing a “HDB Contra” is basically to sell your current HDB flat right after taking ownership of your new HDB flat.

This is a great option because you can renovate and move in to your new flat first while being in the process of selling your existing flat. The “HDB Contra” facility also arranges for the sales proceeds from the current HDB flat to directly offset your new total mortgage loan.

How does a HDB “Contra” work?

Firstly, you will need to apply for a temporary housing loan from HDB to cover 90% of the house price.

In this example, lets assume you upgrade to a $600,000 house.

The downpayment needed will be $60,000 (10% of flat value) and the temporary housing loan to qualify will be the remaining $540,000.

After you have sold your current flat, the proceeds will be used to offset the temporary housing loan amount. Lets assume that there is a $120,000 in net proceeds.

This $120,000 will be used to further reduce the $540,000 “qualified amount” to become your “new housing loan” amount  which is at $420,000.



To do a “HDB contra”, make sure you have 

1) Basic eligibility to sell the house. For example, fulfilment of  “Minimum occupancy period”for 5year.

2) Family income of less than $12,000 to qualify for HDB loan.
Note: If your family’s monthly income is more than $12,000, you will have to take a bank loan and the mortgage criteria are similar to buying a condo/EC.

3) Saved up enough for the 10% downpayment of the new flat and the stamp duty. In the example, you will need $60,000 for deposit and $12,600 for stamp fee (calculated as 3% – $5,400) for the $600,000 purchase price of the new home.

4) Ensure that your family’s total income can qualify for at least the “new housing loan” amount, which is $420,000 in this example.

5) Booked the new HDB flat and have submitted the applications to sell your existing flat


*Please speak to a qualified property adviser familiar with HDB rulings or contact HDB directly.

The Astute Parent

A parent who has a sharp acumen on sieving through 'alien' financial jargon to dish out bite size financial tips from a parent's perspective.

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