Most mid tier successful folks I know would rent out their HDBs to generate passive income and buy a private using savings and finance it via salary + rental income.

Using very rough figures lets assume you can fetch 2500 per month rental nett. If you rent out for say 10 years that would give you 300K, 20 years is 600K which is already what you selling it for. I am assuming your lease balance should at least be 50 years? You can discount 20% or 30% from the above figures but you should know where I am coming from.

1.2M loan for 25 years at 2.5% interest is about 4.3K per month, + the MCST and property tax etc lets say 5K total. Some of that can be offset from the rental, if you worried about the future perhaps you can lower the loan term to 15 years?

Question really is how much rental can you get from your HDB and is it in a area with high rental demand (i.e economically resistant)

I suggest this approach since you already paid up your HDB so you can buy private at 20% downpayment. Also if everything turns bad you can always sell the condo and move back to HDB? But if everything does turn out well. you will have a condo to enjoy and some passive income when you're older.

Personally I would never sell a HDB unless I was forced too, the returns are just too damn good

Your choice