Help for First-time HDB BTO Flat Applicants Who Are Unable to Secure Sufficient Loan Quantum
Ministry of National DevelopmentSpeakers
Summary
This question concerns first-time 3-room and 4-room Build-To-Order flat applicants unable to secure sufficient HDB loans to complete their purchases. MP Murali Pillai inquired about the frequency of these cases, the reasons for loan shortfalls, and the take-up rate of available assistance measures. Minister for National Development Desmond Lee noted that between 2017 and 2021, roughly 0.4% of buyers were affected due to factors like retrenchment or over-budgeting. Minister for National Development Desmond Lee explained that HDB provides case-by-case assistance, such as waiving forfeitures or allowing switches to more affordable flats. About two-thirds of affected buyers utilized these measures, while Minister for National Development Desmond Lee urged all applicants to maintain financial prudence.
Transcript
39 Mr Murali Pillai asked the Minister for National Development in each of the past five years (a) how many first-time applicants purchasing 3-room and 4-room HDB BTO flats who fulfil the eligibility criteria for HDB Home Loan Eligibility, are nonetheless unable to secure sufficient loan quantum to complete the purchase of their flats; (b) what are the reasons for them not being able to secure the loans; and (c) what housing options are provided to them and what is the take-up rate of these options.
Mr Desmond Lee: New flat buyers who wish to take up an HDB housing loan for their flat purchase need to have a valid HDB Loan Eligibility (HLE) letter when they book the flat. The HLE letter informs buyers of the HDB housing loan amount that they are eligible for, so that they can size up their housing budget and book a flat that is within their budget.
When the keys to the new flat are ready for collection, HDB will review the flat buyers' financial situation and disburse the housing loan amount they are eligible for, based on their updated circumstances, for them to complete the flat purchase. This is to ensure that flat buyers have the means to service their housing loans. In addition to the housing loan, flat buyers can use their CPF and cash savings to complete their purchase.
From 2017 to 2021, about 0.4% of first-timer 3-room and 4-room Build-To-Order (BTO) flat buyers, or between 13 and 84 cases per year (Table 1), were unable to complete their flat purchase due to insufficient loans. These flat buyers could have experienced changes to their financial situation, such as retrenchment, reduction in income, bankruptcy or indebtedness, which resulted in them being unable to qualify for a loan of sufficient quantum to complete the flat purchase. Others may have booked a flat that was outside their budget and their incomes had not risen to levels that would allow them to complete the purchase.
For such cases, HDB assists them with various measures, on a case-by-case basis depending on their specific circumstances, such as a waiver of the financial forfeiture and the one-year wait-out period after cancellation of their flat booking or allowing them to switch to a flat that is within their budget. About two-thirds of home buyers in such cases have taken up these measures.
We encourage all flat buyers to exercise financial prudence and book a flat within their means.