Why can’t HDB grant me a bigger loan to buy the flat of my choice?

Posted on 21 Feb 2014 |

HDB provides housing loans with a concessionary interest rate to help flat buyers pay for their flat in manageable monthly instalments, and to sustain homeownership in the long run. The maximum loan amount that can be granted to a flat buyer depends on several factors, such as the applicant’s financial standing, age, monthly household income, and other financial commitments. This is to guard against flat buyers purchasing a unit priced beyond their current financial capabilities, which might mean that they risk losing their flat should they default on payments subsequently. Flat buyers are advised to consider their options before proceeding with the purchase, and to be aware of these key points when taking a loan:

Are you eligible?

HDB Loan Eligibility
As not everyone is eligible for an HDB concessionary loan, it is advisable to check on your loan eligibility as early as possible. This will help you work out a housing budget and enable you to make an informed decision when purchasing a flat. More details on the criteria for an HDB concessionary loan can be found on the HDB InfoWEB.

Credit Assessment
HDB requires relevant documents such as your payslip, CPF and bank statements and Credit Bureau reports to assess your credit position. For non-salaried workers, you would need to have an established employment record, and a regularly built-up pool of savings.

On 27 August 2013, HDB also introduced revised mortgage loan terms that are in line with the credit policy of the Monetary Authority of Singapore. These measures also encourage greater financial prudence among borrowers, and impress upon buyers the importance of choosing a flat within their financial means. It also prevents them from overleveraging the current low interest rate environment and overstretching themselves in the long-run.

How much loan can you take now?

Monthly Instalments
The monthly instalments of an HDB concessionary loan are capped at 30% of joint applicants’ monthly income. In some cases, the percentage is lower because of the family’s financial commitments. This prevents buyers from over committing to housing at the expense of other living costs.

Repayment Period
This is capped at 65 years minus the buyer’s age, or 25 years, whichever is shorter.

Mortgage Insurance:
If you are using your CPF savings to pay your monthly housing loan instalments, you have to apply for the Home Protection Scheme. This is an insurance scheme administered by the CPF Board. It insures CPF members and their families against losing their homes should members become permanently incapacitated or pass away before their housing loans are paid up. Find out more from the CPF Board.