Computation of HDB Loan Eligibility Based on Higher Incomes Prior to COVID-19 Effect
Ministry of National DevelopmentSpeakers
Summary
This question concerns whether HDB housing loan eligibility can be computed using applicants' higher pre-pandemic incomes and re-adjusted before key collection, as raised by Ms Denise Phua Lay Peng. Minister for National Development Desmond Lee stated that loan amounts are based on current income to provide realistic budgets and prevent over-commitment. He explained that basing loans on higher past incomes could lead to purchase failures if incomes do not recover by key collection. Home seekers are encouraged to plan based on current capacity, though HDB assesses extenuating circumstances on a case-by-case basis. This policy ensures financial prudence while offering targeted assistance to help buyers complete their home purchases.
Transcript
9 Ms Denise Phua Lay Peng asked the Minister for National Development whether HDB housing loan eligibility can be computed based on applicants’ higher income prior to their being affected by the COVID-19 pandemic and re-adjusted, if need be, prior to their key collection.
Mr Desmond Lee: New flat buyers who wish to take up an HDB housing loan must have a valid HDB Loan Eligibility (HLE) letter before they book a flat. The HLE letter provides them with key information to plan their housing budget, such as the maximum loan amount they are eligible for, the interest rate, repayment period, as well as the monthly instalment payable.
The maximum loan amount is derived based on flat buyers’ current income to provide flat buyers with a realistic indication of their housing budget, and to prevent them from over-committing on their flat purchase. While we empathise with flat buyers who have experienced income losses, it would not be to their benefit for HDB to grant them a larger loan amount based on their higher income levels before COVID-19, but subsequently reducing the loan quantum if their incomes have not recovered by key collection. This may result in flat buyers being unable to complete their flat purchase.
For financial prudence, home seekers should confirm their financing plan based on their current income before committing to a flat purchase and choose a flat that meets their needs and housing budget. For applicants with extenuating circumstances who may need further assistance to complete their flat purchase, HDB can assess their situation on a case-by-case basis and see how best to help them.