Over the past two years, you might have heard property agents, friends and relatives mention of upgrading their HDBs to Private Condominiums with “zero cash” involved. While some homeowners celebrate their successful transactions, others have opposing views. In my experience, it is technically impossible to upgrade from a HDB to a Private Condominium with no cash involved.

The “zero cash” term came about as an upgrader would finance their new condominiums using the sale proceeds of their HDBs. Technically, you are still using cash proceeds from your sale, but the term “zero cash” was coined because one doesn’t have to fund their new property using their savings.

Do you think upgrading to a private condominium with zero cash is feasible?

Let me walk you through a scenario of a couple. For their privacy, let’s call them Mr and Mrs Su. Both Mr and Mrs Su are 35 years old and both monthly incomes are about $6000 each.

Years ago, Mr and Mrs Su bought a new BTO flat at 265A Punggol Way with a purchase price of S$258,000. After 5 long years, they met the Minimum Occupation Period (MOP) in 2019.

After working out their financials, we recommended to sell their HDB flat and to purchase a 2 room flat at Riversails for their stay and purchase a new launch of 1 bedroom unit at Riverfront Residences for investment. Their HDB flat was placed on sale which transacted for $670,000.

The sale of their HDB in Punggol allowed them to fund the downpayment of both condominiums with ease. With creative financial planning, we were able to minimize the cost of the fund during the acquisition of both condominiums.

Today, Mr and Mrs are comfortably living in Hougang, and we will be visiting them in 3 to 5 years for a review on their property portfolio again to see if there a need to adjust their investments. The process of this asset progression was not straight forward. However, I’m sure that they didn’t regret their decision to have a plan for their property portfolio.

Mr and Mrs Su leveraged on the sale proceeds and this was highly dependent on the capital appreciation of their flat in Punggol. You might think, this may put a strain on my lifestyle. You might think, the longer I stay in my flat, the better the capital appreciation of my flat. While you’re thinking, maybe think about seeking a specialist to get a better understanding?

My name is Jen Tan, don’t be afraid to pop me any questions! I would love to hear from you soon.