If you have not sold your current HDB flat before buying another flat with a second HDB housing loan, you will first be granted a loan at commercial interest rates. After your existing flat is sold, you must use the CPF refund and a portion of the cash proceeds from that sale to repay the housing loan for the new flat. Once that is done, your loan interest rate will be converted to the concessionary rate. This ensures that part of the original loan is right-sized based on the sale proceeds of your existing flat.
