Reuben and Ryan

EP. 6 10 OCT 2020 | 27:13

Upgrading from a HDB Flat to a New Launch Condo

We're back with another episode for the month of October! Previously, we sat down with Ryan Huang from Money FM 89.3 to talk about certain showflat tricks that we should avoid when hunting for New Launch units here in Singapore (

This time round, Ryan's agreed to join us to talk about his recent home purchase journey. Through the episode, we discuss some of the hidden fees that come with upgrading from a HDB unit to a New Launch Condo - as well, as the perks/drawbacks of switching over to Bank Loans early on in your HDB tenure and ways you can get the most out of your additional purchase fees.

In Ryan's words, "These are things that they don't teach you at school!". For those interested in learning more about the transition process, this one's for you.

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RDReuben is the producer and talkshow host of the Stacked Podcast Series.


RHA business and tech geek, Ryan Huang loves exploring innovation, finance, and the occasional quirky story. Always on the quest to learn something new. He previously reported and edited news across TV, radio, print and online platforms such as CNA and ZDNet.


Reuben  0:00  
On today's episode,

Ryan  0:03  
When you buy a house, sometimes you expect, hey, I will just move from A to B. But there is actually a window between A and B that you had to figure out. Where do I go?

Reuben  0:27  
You're At Home, with Stacked.

Hey guys, welcome back to another episode of at home with Stacked today's topic, what actually happens when you move from a HDB unit to a new launch condo?

The hidden fees that you might face in the process, as well as the age old dilemma for those looking for a HDB flat of their own? Do I go for a bank loan?

Or do I simply get funding from HDB? answering our questions today is none other than Mr. Ryan Huang, presenter at Money FM 89.3. And in very recent times, a proud new homeowner himself. Now if you like what you listen to, you can always hop on to for more of us right after the show.

Ryan, welcome to the show.

Ryan  1:26  
Hey, Reuben, thanks for having me on.

Reuben  1:28  
Hey, thanks for joining us. Now. I think the first time we met we were actually doing an interview on Money FM 89.3 about showflat tricks, things to look out for in a showroom. The next thing I know

Ryan  1:42  
I actually had to go through a showflat myself.

Reuben  1:44  
Exactly right. Next thing I know you you've gone over, you've got this place. And in fact, at that point, I remember that you're actually shifting out of your current unit. Right. So there was a lot of things going on. Out of curiosity, where do you buy this place that man,

Ryan  1:58  
So I am moving to Eunos. And this is a a condo under construction that you might be familiar with is called Parc Esta. So it's right next to the unit Eunos MRT station, really convenient. And I'm looking forward to that.

Reuben  2:13  
Any reasons why you you went with Parc Esta?

Ryan  2:16  
Yeah, there is a backstory to this. So for quite some time, my parents who have been nagging me, I guess, to move closer to them. And because they're getting on with age and other reasons.

And my kid, you know, could help with could use some of their help in terms of babysitting. So that all comes together as part of the decision making, right? So we were just keeping keeping feelers out for a place, you could move too close to them. And this is in their neighbourhood. So this also is near a MRT station, so I don't drive. So it fits that criteria, those two criteria and everything else was a bonus right?

Reuben  3:02  
Oh very nice. So basically convenience, transport convenience and location near to your parents. Man, that's, that's a great way to choose a home and out of curiosity, right, you Okay, so. And I think a lot of Singaporeans, a lot of people who are buying their homes in Singapore phase this, it's when you buy a new launch unit. And because you're getting this unit unit, which isn't already built yet, you have to sell your current unit. So you're not text with maybe a 12% ABSD fee, which is it's a tonne, right, it's a hefty fee.

So in between the period where you sell your home, and two, you actually move in during the TOP period, which by the way, has now been pushed back because of like COVID, construction issues... you have maybe like two years, two and a half years. Where that's once the during this two years what happens then?

Ryan  3:52  
Yeah, so it is quite an interesting situation. You don't really prepare for this, right? When you buy a house, sometimes you expect, Hey, I'll just move from A to B but there is actually a window between A and B that you had to figure out. Where do I go. And for me this is renting a place right now is near eunos. So that works out for me. So you also when you buy a new house had to always a house under construction have to think about these things down the road. So something to keep in mind if you are thinking about moving out

Reuben  4:27  
Any chance that you might fall in love with this place more than your previous home?

Ryan  4:31  
Yeah, so this is a question that came up a lot when I was selling my house now. I invested so much time so much effort, doing a decor, changing the tiles, renovating the bathrooms, finding new materials for the tables, so everything you know hard and blind tears went to the first home and to just sell it on is almost like saying goodbye to something with a lot of memories attached to it. So it's quite a sentimental move or something that has a lot of sentimental value.

So that is something that I had to overcome or learn to overcome by talking to a lot of people who have gone through the process, and he pretty much told me the same message, you will get over it. And you will love your new home. And so far, after a few months, I think I have managed to get over in fact, I'm quite comfortable my rental home now. And I am going to go be a bit emo once I move up my rental home into my new home. So I think just all part of the process of just letting go and add recently new,

Reuben  5:41  
You know, right, it kind of reminds me of relationships to a certain point, you spend five years perusing of the relationship and then you move on to a rental relationship.

Ryan  5:50  
I guess life changes, right. So I need to move on with your changes, and your family might get bigger, or your parents might get older. Things like that might change your priority.

Reuben  6:04  
I mean, speaking of family planning, right, let's move perhaps to the financial aspect of things. And I, you know, I apologise in advance to listeners, if it gets a little bit too nitty gritty, but we're, you know, let's talk a little bit about your loans. So I believe you actually had two loans during your HDB tenure, right? So you initially went into the HDB, HDB loan, and halfway through you actually switch to a bank loan. What's your reason for this?

Ryan  6:36  
Yeah, that's right. So let's start things with the I guess backstory, right? So let's do that first HDB home, most people would have to face this path that fox out, do you go into HDB alone? Or do you go into a private bank loan, and the difference, of course, is interest rates with the HDB loan, it will be around 2.6%. And then if you go to a private bank loan, it will be SIBOR plus spread. So it's floating and reflect the current market sentiment.

So for me, starting out in life and career, I was a bit more conservative, and I wanted more certainty and predictability when it comes to rates and also as a factor as well, I was a bit worried that, hey, maybe something bad might happen down the road. And I want someone who's going to be more lenient when things go bad. And, of course, HDB has more leeway to give than a commercial entity. So that all swayed my thinking towards going towards a HDB loan.

But three years down the road, when I got more comfortable in my career, when I saw how the Federal Reserve would be keeping rates for so lower for longer, I started to realise the opportunity costs of not moving to a bank loan. So I started talking to more people, and it just kind of makes sense for me to take the jump

Reuben  8:08  
Very, very nicely, I think, yeah, that's one issue as well, a lot of people don't they choose not to refinance on two avenues. So firstly, perhaps is apathy. Right? So they're like, Ah, you know, I have really been doing this for a couple of years. I'm just gonna be loyal to these guys. Right? I'm not gonna go and look for a new loan. Why? Why all the hassle? Why so leh chey? Right. And then, on the other hand, you have people who, I guess are kind of afraid of, as you mentioned, right, of perhaps interest rates rising and all the time that you have to spend into understanding these loan interest rates and stuff, but really, it's just a half an hour call away with your bank to understand a little bit more about that.

And if you can do that earlier, you know, the earlier you do that in your your home buying to newer then the chances are you're gonna save a lot more money because this adds on down the road. If you talk about compounding that's gonna call to thousands, hundreds of thousands of dollars perhaps. It's, it's really great advice. I think, for listeners, have a look at your current interest rates if you already have bought a house or if you're going to buy a house. Just read up a little bit, right learn about certain things. Like, for example, lock in periods and clawback, which kind of brings me on to my next question, Ryan. So you initially I am guessing that you probably changed this HDB loan to a bank loan back in 2017.

Right, so maybe that's halfway through? Hmm, that's right. And to my knowledge, you don't actually get locked in periods right for HDB loans, but you do get it for bank loans. What was it like for you?

Ryan  9:49  
Yeah, that's right. So with HDB loan, there isn't a lock-in but with a commercial bank, you will face likely a lock-in clause. So what this means is you can't change or refinance your loan without attracting a penalty. So this typically would be around 1.5%. So the we would sometimes fix this if you maybe decide to sell your house or just want to change your loan package. So this is when the fee kicks in. Fortunately, for me, I was able to wait out the lockup period. Because also because of my HDP, MOP period. So all that allowed me to just write out the waiting times and but it is quite an important thing to know. Because one by 5% of anything gets hefty man, it's huge, huge is going to be half the

Reuben  10:47  
Yeah, it's gonna be crazy. And I mean, speaking, not just of lock-in as well, I you know, clawback fees, that's another one that a lot of people don't really look at, will be able to avoid clawback fees during this period as well. Yeah,

Ryan  10:57  
So there wasn't a clawback fee. So just for context, the banks sometimes offer you a subsidy for the law firms that you need to engage to execute the loan, sometimes as a subsidy. And if you change the terms of your contract, or refinance or move your loan somewhere else, this effectively compromises the contract, and they are able to take back some of that subsidy. So that is a clawback clause, you need to be mindful of if you are prematurely moving your loan situation.

Reuben  11:35  
Very nice. And so in that sense, they both were in tandem with each other. So I'm guessing two years from now or back two years for locking. And you essentially just kind of wrote it out. And perhaps immediately after that, you then decided to get your unit in December 2019. At Parc Esta right, so you I guess you did the ballot and everything you submitted the blank cheque. And then how was the process like then? So let's begin perhaps with the selling process, or, you know, what was the timeline during this period between your HDB flat on one end, and the new launch unit purchase and the other?

Ryan  12:13  
Yeah, like with many things, right, it pays off to do homework early, or just to start planning early. And I had a bit of an idea before the five years was up that I wanted to do this. So I started to market my flat before MOP and put it out to just reach out, see what the market appetite was. So when the time came, this was done at a much faster pace than if I didn't. So that helped to some extent. So looking at the calendar, I sold my order I was looking around for new places. Also, I came across Parc Esta in December 2019. So put down my deposit for that. So that gave me effectively, six months on paper for me to sell my previous home to avoid ABSD. So that all worked out. In the end, I managed to sell my HDB within the six months.

Reuben  13:12  
And I you know, that's that's the thing as well, I think a lot of people because you have been marketing your unit before even before that, right? So you've been doing for about a year. So naturally, your chances of getting that out within the six months period was increased. But you know, oftentimes, I think you hear of HDB upgrade is the DC this new launch unit, and they're like, "Oh man, I really like this place, I really want to buy this place" - and then they go in put under deposits, and they have six months. And then they try and they try and they try to market the unit but maybe perhaps don't want to bring down the prices too much. And then that six months drag to 789. And then fairly maybe this sell that he should be unit on the 10th month.

And I guess because it's HDB right, they're not all there to kind of earn your money, I've heard a couple of scenarios where HDB is lenient enough to give back the ABSD. So ABSD remission, the 12%, you don't end up paying for that.

Ryan  14:08  
It is a case by case basis. So you can have the avenue for you to appeal to HDB to extend the window for you to sort this out. So of course we do a whole new OTP clamp down, they also may take this into account.

Reuben  14:29  
Right. What do you do any OTP reissues by the way during the six months? Yeah,

Ryan  14:33  
So I think it was quite common back then, when everyone has to have an agreement of a developer to reissue OTP maybe a few times so they can sort out your previous homes sale. So that was helpful for me because it really gave me some kind of certainty that hey, I have a bit of a longer runway for me to sort things out. So of course now things have changed and you have to work within the parameters.

Reuben  15:00  
Definitely, it's a lot more. I guess it makes the figures a lot clearer like the transaction figures and you are a rightful. So for example, say like oh for the August for the month of August, you saw 300 units, and it's actually 300 units, not like maybe 200 units ever sold and hundred there were, you know, re-issued OTP. So that's, in essence, I guess, to the benefit of it. But, you know, more pressingly, and just, I guess, out of my personal curiosity, do you have any hidden fees, like extra fees that you had to pay when you sold your HDB? unit?

Ryan  15:34  
Yeah. So there are a couple of things that surprised me when I sold my house, I think more more people would be familiar with buying the house, even though you're going to these things, not knowing what to expect, because you don't learn in school, you have to learn on the on the go. And when it comes to selling the property is not as familiar processes buying a property. So when you sell a property, there are a couple of things to buy, I think I wish I knew before I did it, so one of the things that I realised was, when you sell your HDB flat, and you have a private bank loan tied to it, you actually need a law firm to execute the termination of the loan. So you have to set aside some budget for that, that typically works out to between two to $3,000.

So that's one, there was another point when it comes to law firms, or whether the technical legal part of it right, when you have a private loan, you need to give notice of three months typically, for the termination. So when you want to fully redeem or surrender your loan, you need to tell your bank, hey, I want to move on, and you need three months. But the catch is when you start a paperwork, part of the paperwork that requires a section that requests for your expected completion date of your HDB flat sale.

And that date is supplied by the HDB. And the catch comes when they HDB gives you the date it is T+2 months, typically, okay? Okay, so two months falls within or falls short of the three month notice. So this effectively subjects to subjects a lot of people to paying interest in lieu because they can meet the three months notice for sorting out the sale. So in retrospect, if I knew this in advance, I would try to talk to my property agent to see if this completion date could be pushed beyond the three months, maybe by private arrangement of my buyer, or with HDB. So there's something Keep in mind, that might surprise a few property sellers.

Reuben  17:56  
Right. Okay. So So basically, just to kind of, I guess, clear the air, these hidden fees, were things that you did not expect, right? Obviously, no one tells you about it. You mentioned earlier, you don't learn about it in school, and not many people are talking about it until you actually go through the process. So to kind of recap what you just said. Essentially, you if you were to terminate a loan, right, so to cancel a loan, or rather to to pay back the loan, assuming that you finished locked in period. And you didn't have clawback, you had to give the bank three months notice, right, so in advance of that three months, you have to be like, Okay, I'm selling my home, blah, blah. But HDB only tells you two months after and two months is short of three months.

So technically, you can't tell the bank in advance, unless perhaps you reach an agreement with the potential buyer that Hey, tell you what, let's just move the transaction date further. So I don't get charged...

Ryan  18:50  
So the HDB sales process is typically an eight week process. And there's going to be a bit of back and forth with the paperwork. So HDB gives you in advance the expected transaction completion date. So that typically is T+8 weeks.

Reuben  19:08  
Right? I mean, I'm sure that that's a workaround. So definitely very important to speak to an agent on this. Out of curiosity, how much did you end up paying in the end for this?

Ryan  19:16  
Right, right. So interest in view. So that worked out to be a one month worth of interest? I believe it was around $1,000. So something to keep note off.

Reuben  19:28  
Very nice. Okay. Thanks for thanks for the heads up on that one. So just to pull it back, just so I know you were in that thought process.

So I didn't really want to interrupt you but out of curiosity when you spoke about how you would have to pay $2000 to $3,000 to get a law firm to help you with the selling process. Right. My question was, because you're selling and then you're buying which means when you're buying you also get to you need to get another law firm will be able to tie in like a discount or bargain instead of paying like two And then 2K, which is up to 4K, maybe be like 3K or something.

Ryan  20:03  
Yeah, so he's a bit of a tip, I guess, if you are selling your first home, I mean buying your second home, it might work out for you to use the same agent.

So that could give economies of scale, they could give you a discount on both sides or one side. So typically, your commission fee is about 2%. So maybe, because of them, working with you on two deals, two separate deals, they could give you a better rate. So that's something to keep in mind to use the same agent, like if you're selling your property, or HDB property, bring the agent along to shop for a private launch, or vice versa. If you're going to a showflat and you are quite happy if the agent has service to you, you can maybe think about using them to sell your HDB. So that is something that could look out for you.

Reuben  20:56  
Very nice. And this is with regards to agents, right agent fees, which is typically I believe, 2% Commission? Right?

Ryan  21:03  
That is the market rate. So something that could work out for you, if you try to just talk talk to them. And if you're, if you're lucky enough, maybe sometimes to throw in a few goodies for you.

Reuben  21:18  
Such as.

Ryan  21:20  
So, such as I've heard some agents have been competitive enough to offer subsidising legal fees for customers, right. So maybe these people are just hungrier. Or for other reasons, something to keep track of, or keep note of. And this is something I picked up as in social media groups like Telegram Facebook chats, when you buy a property, they typically have pages set up for this chat group set up for this, it pays off to just find out what people are talking about. Sometimes there's issues around the property, you might not know off some tips around the neighbourhood, even referrals for law firms for good rates or agents with good rates. So all that is a bit of a treasure trove.

Reuben  22:16  
That's really good. That's really good advice, man. I you know, personally, I think the issue is a lot of people because we are born with the drive to go and find out about housing laws and all that kind of things. So the first step would be to kind of understand things like, you know, the term locking period, clawback, all that kind of things are what is ebsd? I think gradually, as you mentioned earlier, because interest rates are always changing, right? If you talk about the SIBOR and the spread, those things are changing.

Law firm packages are changing agent commissions, you know, it's not always a fixed price. So then, obviously, as you alluded to, to join these Telegram groups to get in touch with people who have had the experience of buying, selling, not necessarily agents, right, friends, families, you know, that kind of things.

And it's really incredible advice, Ryan, huh. Now, one final thing, just before we wrap up today's podcast, Ryan, and it's mainly because you are essentially a new homeowner, or at least, you haven't moved in yet. But you're recently involved in the entire home buying process. And it's not your first home. In fact, it's your second one. And there are many Singaporeans out there I feel who are perhaps on their second or third home. And they have been working for some time now.

Right? So naturally, they have a little bit of CPF. Here, they have some cash here. And so what is your take when it comes to paying either two loans or mortgages? Would you prefer to do that by CPF? Or by cash?

Ryan  23:49  
Yeah, so when you have, I guess, a few years under your belt, when you have a career, you have built up a sizable CPF savings portion. So you will then have also after selling your first house, have all those proceeds going into your CPF. And on top of that you have your cash savings, that that you hopefully I've been squirrelling away for last few years. So you know, I have two sources of potential funding for your new house. Do you use your CPF?

Or do you use your cash, so there is going to be a decision when it comes to opportunity costs. So if you use your CPF you have to be mindful of the fact that down the road, you need to pay back into your CPF accounts with accrued interest of around 2.5%. Okay, so that is something you need to calculate if that works out for you. On the flip side, if you have enough cash, then sometimes it might work out for you to just use cash and then you leave your CPF in your CPF account to attract the 2.5% interest to grow and compound So you don't have to be back down the road. So you have to make a decision, what will be more able to pay off for you down the road? Or you will use it on cash to grow the 2.5% from CPF.

Reuben  25:14  
Right. It's all about financial prudence and financial planning in advance. So that's a very important aspect of buying a home. Ryan, design curiosity, what are your plans? With your current home? Once you move in?

Ryan  25:28  
Yeah, so Oh, this is a tough one, right? If every home you have so many dreams, or, in fact, I'm thinking about my first home where I would spend hours shopping on top our buying parts for it lighting, stables furniture, there was so much invested in the first time. So going into my second home, I am just going to be a bit more easygoing, and that's going to flow I want to be able to step into it and just experience the vibe energy, how the light comes in, before I am able to visualise how many plants and you're in a corner, or what shape does the table need to be? So I'm just gonna take a bit slower this time. Cool.

Reuben  26:12  
All right. Once again, thank you so much for your time today for your incredible advice. And, you know, on behalf of everyone in Stacked, we want to wish you and your family all the very best as you move in to your new home. Looking forward to getting this podcast out. Thanks for joining us again.

Ryan  26:28  
All right thanks Reuben, I'm looking forward to it too!

Reuben  26:34  
Once again that was Mr. Ryan Huang, presenter at Money FM 89.3. Now if you liked what you listen to today, you can always hop on to for more quality real estate content. If you have any comments, queries or suggestions, feel free to drop me an email at Once again, my name is Reuben Dhanaraj. Thanks for joining me today and I'll see you the next podcast.

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