En-bloc sales aren’t always a pot of gold. For investors or homeowners who are well-prepared, it can be a smooth process; but homeowners, especially those who never intended to move, can find it an inconvenient headache.
One of the main timing issues involves the sale proceeds: it could be a while before you receive the money from the en-bloc, and in that time, you still need a new home.
We spoke to Mortgage Master , who are home loans specialists, about the key financing issues to address:
What’s the main financing issue when an en-bloc sale happens?
When the Cash Doesn’t Come Fast Enough: The En‑Bloc Surprise
Buying a property en‑bloc usually feels like a quick win—sign the papers, receive the money, and let your landlord do their thing. But sometimes the funds take a detour, stretching the deal into months or even a year. This can put a wrench in the gears of those who thought they’d settle right away.
Why a Developer Might Drag the Deadline
- Timing is everything: Launching a new project during a chaotic period—think the pandemic, economic downturns, or local market hiccups—can hurt sales. Developers prefer a smoother launch for better returns.
- Strategic patience: Commit to the buy, but wait for conditions to improve. A 12‑month delay may feel like a reasonable twist, not a snarl.
- Financing and approvals: Sometimes additional funding or regulatory approvals are needed before the developer can deliver the property.
Who Gets Hit the hardest?
Owners who moved into their new home expecting a quick turnover or those who recently put in some serious renovations can find themselves short on cash. If they’re planning to relocate, the postponed cash flow can leave them scrambling for a new place.
What can you do?
- Plan ahead: Understand the developer’s timeline and factor it into your moving budget.
- Set savings goals: Keep a separate reserve for the eventual payoff period.
- Stay flexible: Keep a shortlist of potential relocation spots ready, just in case.
In short, a delayed sale can feel like a twist, but with a little anticipation and strategic planning, you can keep your life on track—and maybe even snag a better deal while you wait.
The other issue is that, if you take on a new home loan while still paying the existing one, you could end up servicing two housing loans at once; even if you can afford to take such a loan, it could be a significant drain on your finances.
David Baey, CEO of Mortgage Master, gave us some potential workarounds:
Don’t end up paying two mortgages at once
Think Twice Before You Jump Into Your New House
Got your eyes on a shiny new pad? Just before you crunch out the cash, pause and ask yourself: when does my current mortgage get paid off?
- Betting on two mortgages at once can feel like juggling flaming swords—awkward and exhausting.
- One loan on the house you’re buying, the other on the home you’re still paying for.
Timing Is Your Best Friend
According to Baey, the sweet spot is waiting about six months after you get the proceeds from the en‑bloc sale. Only then do you swing into your next purchase and seal the deal.
Why That Matters
Getting the money but still clawing back two mortgage payments is a double‑whammy that can drain your wallet fast. By waiting a little, you keep one loan at a time, avoid those nasty cash drains, and keep your budget smiling.
On a related note, one of the issues often brought up here is the re-issue of the Option To Purchase (OTP).
When Condo Fees Became a Game of “Keep It on the Shelf”
Picture this: you’re eyeing your dream condo at a fresh launch, bagging that modest booking fee, and then, like a savvy chess player, you keep nudging the developer to renew that fee every time it wears out. Why? Because you’re holding the unit cards while waiting for your old house’s sale to roll in. It’s the old-school strategy of “reserve‑and‑wait.”
How It Worked—Step by Step
- Deposit the Initial Fee: You pay a small amount to lock the unit in place.
- Watch the Clock: The fee typically lapses after a set period.
- Renew The Fee: Reach out to the developer and say, “Let’s keep this slot.” They bump it again.
- Hold Tight: Keep repeating this until the sale from your previous property finally pays off.
So, in the past, condo developers played a slow‑pitch version of “keep it on your table,” letting buyers stash a potential home while their finances were still in the queue. It’s a gentle reminder that sometimes patience (and a bit of persistence) pays off—especially in the real estate jungle.
As of September 2020, this is no longer possible . Developers cannot repeatedly renew the OTP as soon as it lapses – the most they can do for you is to try and extend the OTP validity period to 12 weeks (up from a maximum of eight weeks previously). URA also has to approve such extensions.
This can make the timing issue more complex, so contact us if you need someone to walk you through it.
If you’re struggling to cover the down payment on your next property, consider a bridging loan
Bridging Loans: Your Quick‑Fix for Buying a Replacement
What’s the Rulebook on Cash Down?
A house buy usually starts with a five‑percent cash down—price or value, whichever is smaller. If you already have a mortgage, that penny can push up to 25 % of the price.
Why Homeowners Might Be Feeling the Pinch
When an en‑bloc sale is on the horizon, folks waiting for the flip suddenly find their wallets feeling lighter than usual.
Enter the Bridging Loan
- “It’s like a bridge over shaky water, but for your down‑payment,” says Baey.
- Typical rates? Somewhere between 4.25 % and 7 %. Keep those interest numbers on their toes.
- Remember: you must pay out of pocket, the loan usually fades after about six months, and each bank has its own flavor—so snag the printed rates before you sign.
Reality Check: How to Legally Snatch One
You can’t hop onto a bridging loan as soon as you hear whispers of an en‑bloc. First, you need the sale order for the en‑bloc. Then apply for the bridge. Proof that the Strata Titles Board (STB) has approved the en‑bloc is a must—no bluffing allowed.
At this point in time, there are no bridging loans that will stretch beyond six months
Why a Slow En‑Bloc Sale Can Be a Real Party Pooper
Picture this: you’ve got a slick property deal on the table, but the developers decide it’s a good idea to drag out the money‑in‑hand for a whole year or two. Sounds like a broken record, right? Well, that’s exactly what can mess things up.
Timing Is the New Currency
It’s not enough to ask “How much?”; you also need to ask “When are you actually paying?” A 12‑ to 24‑month delay turns a shiny profit into a long‑term ball and chain.
Bring It Up at the Big Meetings
- Don’t wait on the sidelines.
- Raise the issue at an Extraordinary General Meeting (EGM).
- Make it clear: “We’re not here for a lottery ticket, we need the cash now.”
Developers love long waits; they say it’s a “strategic reserve.” But remember, the longer they hold the cash, the more it feels like a snoozefest for shareholders.
Let’s Keep It Simple, Keep It Honest
When we talk about en‑bloc sales, we’re talking about big numbers, but the real game‑changer is the dash‑box of payment dates. If the developers propose a 12‑month freeze, that’s a red flag. Make your voice heard, because nobody likes waiting for their hard‑earned money.
Another financing issue to consider is breaking your lock-in, should it be necessary
Some home loan packages have lock-in clauses, and prepayment penalties if you try to pay them early. One potential issue is if the en-bloc happens during the lock-in period – this could incur a prepayment penalty of up to 1.5 per cent of the amount redeemed.
Baey says that:
“There are always ways around it as banks handle these on a case-by-case basis. The simplest method would be to secure a home loan with a waiver of penalty due to sale if you expect an en-bloc soon.”
This sort of waiver will be indicated in the terms and conditions of the home loan.
Some home loans specify that there’s no penalty if the loan is redeemed early, due to a sale of the property (this applies to both en-bloc sales and “normal” sales).
There are also home loans that have a partial waiver (e.g., no penalty on the first $150,000 if you redeem the loan early). It’s better to get a loan package with a full waiver due to sale, however, if you’re expecting an en-bloc soon.
“Alternatively, when you want to take a loan for your next property purchase, get it from the same bank you’re currently on”, Baey says, “But request for a discount or a waiver of the penalty for your current loan.”
If the stars align, the bank you’re currently with will also be offering reasonable loans at the time. However, there’s a chance that your existing bank is offering only expensive loan packages. In these cases, it may not be worth the waiver. It’s advisable to get a mortgage broker to crunch the numbers for you before deciding.
In addition, don’t stop refinancing to a cheaper loan if you can, just because of en-bloc attempts
Revisiting Refinancing: Is It Worth the $2,500‑$3,000?
Think refinancing costs you about $2,500 to $3,000 and you’re tempted to skip the whole deal if your neighborhood is in a big group negotiation? Ha! That’s not the whole story.
Why the Jump‑In Matter?
- High rates? Chip it down. If you’re paying 2.5% now, you could slash that to 1.25% by re‑mixing the numbers.
- Penalty waivers are the secret sauce. Many banks will sweeten the deal by covering early‑exit fees if you surrender the house.
Bottom Line
Don’t shy away just because it sounds pricey. If your current interest is way above the market average, refinancing could save you more than you’ll lose in upfront costs. It’s all about getting the right package—one that’s friendly to early sales and keeps your cash flow smooth.
Start looking into the timeline for buying a new home, when the en-bloc attempts begin
Ready or Not, Here Comes the Move
Whether that “en‑bloc” deal pulls off the trick or not, you’ll want to be stuck on your feet. If you snag the 80 % majority, the clock already ticks the green—your relocation is a done‑deal.
The Smart Budget Story
Early bottoms-up budgeting is a game‑changer. Some homeowners start crunching numbers well before their move and manage to land a fresh property without even a bridging loan in their corner. Make a plan that’s as solid as a brick wall!
Know the Seller’s Stamp Duty (SSD) Trap
- SSD applies to en‑bloc sales if you cross the street within the first three years of buying.
- It’s a sliding scale: 12 % in year one, 8 % in year two, and 4 % in year three.
- Factor that into your next home budget—don’t get blindsided.
Got Fears?
If the constant juggling of en‑bloc attempts keeps you up at night, reach out. We’re ready to help you brace for that transition without a hitch.
This is a quick note from Stackedhomes, all about the personal‑finance side of property moves.
