As you get older, the thought of moving homes may have occurred to you. Maybe living at your current residence is simply too unsustainable, maybe it’s an old building that will be torn down for new development, or maybe it’s just too much of a hassle to clean the whole house.
There are many reasons why seniors choose to downgrade their flats. For instance, Hoon Suan Tee, 53, downgraded to a 4-room flat in Sengkang in 2015 due to a $1.2 million debt incurred by her late husband. “My sons were shouldering it, but it came to a point we had to sell the house in hougang.”
However, even without the debt, Suan Tee would likely still have downsized as their house in Hougang was too big to clean, and she knew it would be challenging to continue walking up and down the stairs of their maisonette HDB flat as she aged.
According to a report published in 2019. Seniors above the age of 65 need an average of $1,379 to meet basic standards of living, which includes maintenance and bills. If this is too much for you, moving to a smaller flat may be a good option in allowing you to have more cash on hand and cutting down your monthly mortgage.
In that case, there are several ways you can look for a new home, and the bonuses that apply to you. There are also some ways that you can monetise your home if you want an additional source of income through your retirement.
Silver Housing Bonus
The Silver Housing Bonus is largely the surest and safest option if you choose to downgrade your flat.
To be eligible for this, you must be 55 and above, Singaporean, and have a combined household income of $14,000 or less. You must also downgrade to a flat that is 3-room or smaller, and you cannot own a second property elsewhere. If you live alone or with your spouse, this shouldn’t be much of a problem.
After selling your old flat, you can use the money to purchase a smaller unit from the HDB or resale market. You will then have to pay off the resale levy and refund to your CPF account. By then you will likely still have some cash left.
You can top up your CPF account, and for every $2 top up with SHB, you will get a $1 bonus. You can get a maximum of $30,000 for a $60,000 top up.
With the SHB your monthly lifelong payout will increase, and you will have more money to spend on yourself.
We wrote an article explaining the SBH. You can check it out here for yourself.
2-room flexi flats are meant for older Singaporeans. They are also much cheaper in general than standard flats, though on a shorter lease.
Note that shorter lease typically refers to leases lasting a few decades as opposed to the 99-year lease of a standard HDB.
The lease for a flexi flat is between 15 to 45 years for Singaporeans 55 and above, paid in 5-year increments, as long as it covers you until the age of 95.
To be eligible your monthly household income cannot exceed $12,000.
Lease Buyback Scheme
If you choose to remain in your current flat, you can apply for the Lease Buyback Scheme. With this scheme, you’ll be able to monetise your flat and receive a stream of income even through your retirement while still living in it.
The LBS works by selling a portion of the flat’s lease back to HDB. The proceeds with then go to your CPF Retirement Account, which can then be used to join CPF LIFE. This will allow you to receive a monthly income.
In order to apply, you must be 65 and above, Singaporean, and have a monthly household income of $14,000 or less, and do not own a second property. This applies to all flat types, except short-lease flats, HUDC, and Executive Condominium units. You must have lived in the flat for 5 years or more, and the minimum lease you can sell is 20 years.
Once you apply you will get a bonus of up to $20,000 for 3-room flats or smaller, $10,000 for 4-room flats, and $5,000 for 5-room flats cash upfront.
Renting Out a Spare Bedroom
You can also rent out a spare bedroom in your flat if you choose to remain in your current flat.
Say you have a bedroom your children lived in before they moved out, and is now being used as nothing more than an extra storage space. You may want to do something about it.
In that case you can rent it out.
Like above, you must have lived in your flat for a minimum of 5 years, or 3 years if your flat is non-subsidised and purchased before 30 August 2010. Note that you can only rent out a bedroom if you own a 3-room flat or bigger, and you must be a Singapore citizen.
If you are eligible, you’ll be able to rent out your flat and get the bonus of an additional source of income and be able to continue living in your current flat.