Most families who move from one HDB flat to another face the same cash flow puzzle. The money for the next flat is locked up in the current one, and you cannot easily pay for one without first selling the other. The contra facility in HDB transactions is the arrangement designed for exactly this situation. It lets the proceeds of your sale be applied towards your purchase when both deals complete together.
This guide explains what a contra facility is, how it works in practice, what it can and cannot pay for, and the risks to plan for. It is general information, not legal or financial advice. HDB’s rules and procedures can change, so always confirm the current position with HDB and your lawyer or bank before you commit.
What a Contra Facility Actually Is
In everyday property talk, “contra” simply means offsetting one amount against another. When you sell your existing HDB flat and buy another resale flat at around the same time, a contra arrangement allows the money due to you from the sale to be used to pay for the purchase, instead of passing through your hands first.
In practice, this usually means:
- The sale of your current flat and the purchase of your next flat are scheduled to complete on the same day.
- The sale proceeds, after your outstanding housing loan is redeemed and the CPF amounts used for that flat are refunded to your CPF account, become available on completion.
- Those proceeds, both the CPF refund and any cash proceeds, are applied towards the price of the new flat, so you do not need to find the full amount separately.
Without a contra arrangement, you would generally have to either sell first and find temporary housing, or buy first and fund the purchase from savings or short-term financing until the sale goes through.
How It Fits Into the Resale Process
A contra facility does not replace the normal resale process. It runs on top of two parallel resale transactions that have to be lined up carefully. If you need a refresher on the individual steps, see our explainer on the HDB resale process.
A typical sequence looks like this:
- Plan your financing. Work out how much your current flat is likely to fetch, how much loan remains, how much CPF you used, and how much you can borrow for the next flat. Obtain an HDB Flat Eligibility (HFE) letter or a bank’s in-principle approval as required.
- Find a buyer and a flat. Grant an Option to Purchase (OTP) to your buyer, and obtain an OTP for the flat you are buying. Many sellers and buyers coordinate these within a short window so the two timelines can match.
- Submit both resale applications. Each transaction goes through HDB’s resale portal. When you submit, indicate that you intend to use the sale proceeds for the purchase, following the steps HDB sets out.
- Align the completion dates. HDB and the lawyers involved coordinate so that both transactions complete together, often at linked appointments on the same day.
- Completion. The sale completes, your loan is redeemed, CPF is refunded, and the proceeds are applied to the new purchase. You hand over your old keys and collect new ones.
Sale Then Buy: Comparing Your Options
Contra is one of several ways to handle a move. The right choice depends on your finances and how much risk you can tolerate.
| Approach | How it works | Main advantage | Main drawback |
|---|---|---|---|
| Contra facility | Sale and purchase complete together, proceeds applied directly | No need to fund the purchase separately, single move date | Both deals depend on each other, so a delay in one affects the other |
| Sell first, then buy | Complete the sale, rent or stay with family, then buy | Exact budget known before buying | Temporary housing costs and two moves |
| Buy first, then sell | Complete the purchase using savings or financing, sell later | Time to move in calmly | Needs strong cash flow and may involve short-term loan costs |
| Sell with extension of stay | Complete the sale but arrange with the buyer to stay on for a limited period | Time to settle the next home | Depends on the buyer agreeing, and HDB limits apply |
What the Proceeds Can and Cannot Cover
This is the part that surprises many households. A contra facility helps with the bulk of the price, but some costs fall due earlier than completion and still need ready money.
Usually needed upfront, before completion:
- The option fee when you obtain the OTP, paid in cash
- The exercise fee when you exercise the OTP
- Any Cash Over Valuation (COV), which is the amount by which the agreed price exceeds the HDB valuation and cannot be paid with CPF or an HDB loan. Our guide to HDB resale valuation and COV explains how this is worked out.
- Agent fees, if you appoint a property agent, and some legal fees, depending on timing
What the proceeds typically help with at completion:
- The balance of the purchase price, after your new loan
- Some or all of the downpayment that would otherwise come from your own funds
Exactly how cash and CPF proceeds can be applied, including whether they can reimburse or reduce cash you have already paid, depends on HDB’s procedures and your financing. Ask HDB and your lawyer to walk you through the figures for your case.
Risks and How to Manage Them
Linking two transactions saves money and stress, but it creates dependencies.
- Chain risk. If your buyer’s financing falls through or their own sale is delayed, your purchase can be affected, and the same applies the other way. Ask your agent whether your buyer is also relying on a sale.
- Valuation gaps. If your current flat values lower than expected, your sale proceeds shrink. If the new flat values lower than its price, your COV grows. Build a buffer rather than planning to the last dollar.
- Timeline mismatch. OTPs have fixed validity periods. If one side moves faster than the other, you may need to negotiate dates. Clear communication between both agents and lawyers matters.
- Eligibility issues. Your eligibility to buy depends on factors such as citizenship, household composition, income ceilings for grants and any minimum occupation period on your current flat. Check these before you sign anything. Our step-by-step guide to the HDB resale buying process covers the eligibility checks.
- Loan approval. Make sure your loan for the new flat is approved and valid for the completion date. A lapsed approval can derail both deals.
Questions to Ask Before You Commit
Before you grant or sign an OTP, run through these with HDB, your bank and your lawyer:
- Can my two transactions be completed together under a contra arrangement, and what do I need to indicate in the resale applications?
- After my loan is redeemed and CPF refunded, how much will be available to apply to the new flat?
- Which payments must I make in cash before completion, and when?
- What happens if either transaction is delayed or cancelled?
- Do I need to make temporary living arrangements just in case?
A contra facility is one of the most useful tools for HDB owners moving within the HDB market. Used with careful planning and a realistic buffer, it lets you move from one flat to the next with a single move date and far less cash tied up in between.
Frequently Asked Questions
Do both HDB flats have to complete on the same day for a contra? That is the usual idea. The sale and the purchase are scheduled to complete together, often at linked appointments, so the proceeds can be applied to the new flat. HDB and the lawyers coordinate this, so confirm the current procedure with them before you grant or sign any OTP.
What costs do I still need to pay in cash before completion? Typically the option fee and exercise fee for the OTP, any Cash Over Valuation, and agent and some legal fees, depending on timing. These fall due earlier than completion, so plan ready money. Ask HDB and your lawyer how your own figures work out.
What happens if my buyer’s financing falls through? Because the two deals depend on each other, a delay or failure on one side can affect the other. Ask your agent whether your buyer is also relying on a sale, build a buffer rather than planning to the last dollar, and have temporary housing in mind just in case.
Is a contra better than selling first and renting? It saves you funding the purchase separately and gives a single move date, but the deals are linked. Selling first gives you an exact budget but means temporary housing and two moves. The right choice depends on your finances and how much risk you can tolerate.
Can I stay on in my old flat after selling it? Some sellers arrange an extension of stay with the buyer, giving time to settle the next home, but it depends on the buyer agreeing and HDB limits apply. Check the current conditions with HDB and your lawyer before relying on it.
Official sources: HDB
Further reading: What Happens at Your HDB Resale Completion Appointment