Answer
What Is an Option to Purchase (OTP)?
The OTP is the document that locks in your right to buy a property. Here's how it works for HDB and private.
Answer: An Option to Purchase (OTP) is a legal document giving the buyer the exclusive right to purchase a property within a fixed period — 21 days for HDB resale or 14 days for private property. The buyer pays a small option fee upfront ($1–$1K for HDB, typically 1% for private). If the buyer exercises the OTP, the sale proceeds. If not, the buyer forfeits the option fee.
OTP: HDB Resale vs Private Property
| Detail | HDB Resale | Private Property |
|---|---|---|
| Option fee | $1 – $1,000 (negotiable) | 1% of purchase price |
| Validity period | 21 calendar days | 14 days (extendable by agreement) |
| Exercise fee | None | 4% of purchase price |
| Total deposit on exercise | $1 – $1,000 | 5% of purchase price (option + exercise fee) |
| If buyer doesn't exercise | Forfeits option fee | Forfeits option fee (1%) |
| Stamp duty deadline | 14 days from exercise | 14 days from exercise |
How the OTP Process Works
Step 1: Negotiate price and terms
Buyer and seller agree on the purchase price. For HDB, they also agree on the option fee amount ($1–$1,000).
Step 2: Seller grants OTP
The seller signs the OTP and the buyer pays the option fee. For HDB, this is done through the HDB Resale Portal. For private, the seller's lawyer typically prepares the OTP document.
Step 3: Buyer's decision period
The buyer has 21 days (HDB) or 14 days (private) to decide. During this time, the buyer should secure financing, check eligibility, and do due diligence. The seller cannot sell to anyone else during this period.
Step 4: Exercise or let it lapse
If the buyer exercises the OTP, they sign the acceptance copy and pay the exercise fee (private only). The sale becomes binding. If the buyer doesn't exercise, the OTP expires and the option fee is forfeited.
Step 5: Completion
After exercising, the buyer has 14 days to pay stamp duty. Completion typically takes 8–10 weeks for private property and 8–12 weeks for HDB resale (including HDB's processing).
Private Property: The 5% Breakdown
For private property, the option fee + exercise fee together form your 5% deposit. Here's how it looks at different price points:
| Property Price | Option Fee (1%) | Exercise Fee (4%) | Total Deposit (5%) |
|---|---|---|---|
| $1,000,000 | $10,000 | $40,000 | $50,000 |
| $1,500,000 | $15,000 | $60,000 | $75,000 |
| $2,000,000 | $20,000 | $80,000 | $100,000 |
| $2,500,000 | $25,000 | $100,000 | $125,000 |
The 5% deposit is part of your down payment, not an extra cost. The remaining 20% (for 75% LTV) is paid at completion.
Key Things to Know
The option fee is your risk
If you change your mind, you lose the option fee. For a $1.5M condo, that's $15,000 gone. Make sure you've done your homework — loan in-principle approval, TDSR check, stamp duty calculation — before committing.
Stamp duty is due 14 days after exercise
Once you exercise the OTP, you must pay BSD (and ABSD if applicable) within 14 days. Late payment incurs penalties. Have your stamp duty funds ready before exercising.
HDB OTP is handled online
For HDB resale, the OTP process is done through the HDB Resale Portal. Both buyer and seller must have Singpass access. The portal guides you through each step.
About to exercise an OTP?
Make sure you know the exact stamp duty and cash you'll need before committing.
FAQ
How much is the option fee for an OTP?
For HDB resale flats, the option fee is between $1 and $1,000, negotiable between buyer and seller. For private properties, the option fee is typically 1% of the purchase price. For example, on a $1.5M condo, the option fee would be $15,000.
What happens if I don't exercise the OTP?
If you do not exercise the OTP within the validity period, the option lapses and you forfeit the option fee you paid. The seller keeps the option fee and is free to sell the property to someone else. You have no further obligation.
Can I extend the OTP validity period?
For HDB resale, the OTP validity is fixed at 21 calendar days and cannot be extended. For private properties, the standard 14-day validity can be extended if both buyer and seller agree — this should be negotiated before the OTP is granted.
What is the difference between option fee and exercise fee?
The option fee is paid upfront to secure the OTP (right to buy). The exercise fee is paid when you decide to exercise the OTP and commit to the purchase. For private properties, the option fee is typically 1% and the exercise fee is 4%, totaling 5% which forms your deposit. For HDB resale, there is no separate exercise fee.
Can the seller back out after granting the OTP?
No. Once the seller grants the OTP and accepts the option fee, they are legally bound for the validity period. They cannot sell to another buyer or withdraw the offer. If the seller refuses to complete the sale after the buyer exercises the OTP, the buyer can take legal action for breach of contract.
Related
- Sell HDB Buy Condo Timeline — where OTP fits in the upgrade journey
- Stamp Duty Calculator — know your BSD + ABSD before exercising
- Cash Needed to Buy a Condo
- Down Payment for First Condo
- Mortgage Calculator
Last updated Feb 2026. OTP process per HDB and general conveyancing practice. This is informational, not financial or legal advice.