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Singapore Home Loans: Taking a Bank Loan

Home loans can prove to be extremely beneficial for residential property buyers, seeing as they not only assist in the process of buying the dream house, but also help with saving up on taxes. However, it is crucial to choose the right home loan to suit certain needs and incomes. Buying a Housing and Development Board (HDB) flat is a financial commitment that can very well extend to a period of more than 20 years. Because of this, the HDB provides financial planning to potential buyers of HDB flats, in order to assist them in making the right choices.

In the case of buying an HDB or a DBSS (Design, Build and Sell Scheme) flat and lack of eligibility for an HDB concessionary loan, a flat buyer-to-be will need to apply for a bank loan.

A buyer is no longer eligible for an HDB loan when he/she:

  • has already taken two or more HDB concessionary interest rate loans. This applies for loans taken to purchase flats both from the HDB and from the open market.
  • has already taken one HDB concessionary interest rate loan and one housing subsidy (for instance: Additional CPF Housing Grant, Special CPF Housing Grant, CPF Housing Grant for Family), and the property last disposed of is a private residential property.
  • is owner of two or more owner-operated hawker/market stalls or industrial/commercial properties within Singapore or abroad.
  • is owner of one owner-operated hawker/market stalls or industrial/commercial property, but does not operate the business himself/herself.

If the applicant’s average gross monthly household income exceeds S$ 8,000 and the potential buyer is applying for a DBSS flat from the developer, the buyer will have to take out a bank loan.

Executive Condominium (EC) buyers will also have to get loans from banks or other FIs (Financial Institutions), seeing as the HDB does not provide concessionary loans for the purchase of ECs.

Beginning with 28 August 2013, the repayment period for bank loans to finance the purchase of both HDB and DBSS flats is capped at 30 years.

Potential buyers who obtain another housing loan for the purchase of an HDB flat will not be subjected to a lower loan ceiling if they are capable of providing the financial institution providing the loan (e.g. the bank) a copy of the signed undertaking to the Housing and Development Board committing to finish the sale of the buyer’s sole existing property within the time period mentioned in the undertaking.

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