What is HDB Enhanced Contra Facility and how to apply for it
Have you ever heard Seller agents use the terms “Seller doing Contra” or “Contra” while you are trying to purchase a Resale HDB? So what exactly is “Contra”? The HDB Enhanced Contra Facility (ECF), also known commonly in the market as simply just “Contra” is a program designed to facilitate the financial transition for existing flat owners from the sale of their current HDB flat to the purchase another one. This guide will specifically focus on the Enhanced Contra Facility (ECF) for resale flats.
The HDB Enhanced contra facility (ECF) allows you to offset the cost of your upcoming HDB flat purchase with the proceeds from the sale of your existing home. Here's a simple breakdown of how it works:
An Example of HDB’s Enhanced Contra Facility (ECF)
Suppose you are selling your existing 3-room flat to a buyer named Daron, and simultaneously, you are interested in purchasing a 4-room flat from another seller named Aaron. When you apply for the HDB Enhanced Contra Facility, the sales proceeds, including cash and refunded CPF money, from the sale of your 3-room flat to Daron will be directed towards the 4-room flat you are buying from Aaron.
You are required to submit 2 sets of resale applications concurrently in using HDB’s ECF
The Selling resale application to sell your Existing 3 Room Flat to Daron
The Buying resale Application to purchase your new flat from Aaron
The 2 resale applications will be submitted separately. In both applications, only YOU are required to state that you will beapplying for the ECF, and you will need to provide the addresses of the flats that you are selling and buying.
*All parties need to submit their respective resale applications and supporting documents within 7 days of each other
Benefits of HDB’s Enhanced Contra Facility (ECF)
Cashflow Management: The facility helps manage and possibly reduce the amount of cash you need to pay for your new HDB resale flat because the proceeds from the sale of your existing home are utilized for the cash portion of your resale home purchase.
Mortgage Reduction: The cash proceeds and refunded CPF money also contribute to reducing the mortgage amount, resulting in a lower monthly repayment for your home loan.
Important Points to Note for HDB’s Enhanced Contra Facility (ECF)
Limitations: The CPF refunded money cannot be used for certain fees, such as stamp duty and conveyancing costs. Additionally, there are some qualifying criteria that must be met before applying for the HDB contra facility.
Coordination Challenges: Due to the involvement of multiple parties and transactions, coordinating the process can be slightly more complex. Any misstep in the deal may jeopardize the entire transaction.
Loan Type: If you opt for HDB contra, you will need to take up an HDB home loan. Similarly, the unit you are selling needs to either be Fully Paid or on a HDB home loan.
Timing: Resale Application for Sale and Purchase must be done at the same time
Important Eligibility Criteria for HDB’s Enhanced Contra Facility (ECF)
The buyer of your existing flat and the seller of the resale flat you are buying must not have applied for similar contra facilities for their flats. This means only either the Seller or Buyer can execute Contra.
If you and your spouse are both PRs, neither of you can be an undischarged bankrupt or have any bankruptcy proceedings against you.
The sale of your existing flat must be completed before or on the same day as the completion of your purchase of the new resale flat.
You are not allowed to apply for HDB enhanced contra facility if you are taking a home loan from the bank.
If you are applying for ECF you need to engage HDB’s solicitor for purchasing
*View Full Terms and Conditions here.
How to Apply for HDB’s Enhanced Contra Facility (ECF) for Resale Flats
If you're interested in applying for the HDB contra facility, the process is straightforward. When submitting your Resale Application, indicate your preference for the HDB enhanced contra facility. Whether through the HDB resale portal or with the assistance of a property agent, make sure to communicate your choice during the Resale Application process.
By understanding the HDB Contra Facility and its application process, you can navigate the resale market more effectively, leveraging the benefits it offers for a smoother transition between HDB flats.
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