What happens to my mortgage if I sell my property?

When you sell your property, the outstanding mortgage must be fully repaid as part of the sale process. The mechanics of this are handled by your solicitor in coordination with the bank. Note that most banks require advance notice of one to three months for mortgage redemption. Check your loan terms early to avoid unexpected interest charges during the notice period.

Upon completion of the sale, the proceeds are disbursed in a specific order. First, the outstanding mortgage balance is repaid to the bank, along with any accrued interest up to the redemption date. Second, if you used CPF funds for the purchase, the principal amount used plus accrued interest at 2.5% per annum is refunded to your CPF OA. Third, any applicable Seller's Stamp Duty and legal fees are settled. Fourth, the remaining proceeds are paid to you. Agent commissions are typically paid separately by the seller around the time of completion.

If you sell during the lock-in period, an early repayment penalty applies, typically 0.75% to 1.5% of the outstanding loan balance at the time of redemption. Any clawback of bank incentives such as legal fee subsidies will also apply.

If you are buying a new property simultaneously, you may need a bridging loan to cover the gap between the purchase of the new property and the receipt of sale proceeds from the existing one. Bridging loans are short-term facilities, typically up to six months, though this can vary by lender, available from most banks at higher interest rates than standard home loans.

If the sale proceeds are insufficient to cover the outstanding mortgage, a situation known as negative equity, you remain personally liable for the shortfall. This is uncommon but can occur if property values have declined since your purchase.

Singapore does not impose capital gains tax on property sales. However, Seller's Stamp Duty applies if you sell within the relevant holding period, and this should be factored into your net proceeds calculation.

Cashew helps sellers understand the full financial implications of their sale, including the impact on CPF, penalties, stamp duty, and the net cash proceeds they can expect.