Buying a house is probably one of the biggest financial decisions you will ever make. In Singapore, the vast majority of homeowners finance their housing through a Housing Development Board (HDB) loan. However, not everyone is eligible for an HDB loan, and even if you are eligible, there are still certain criteria you need to meet. If you’re planning to buy an HDB flat in Singapore, here’s what you need to know about HDB loan eligibility.
Before applying for an HDB loan, you’ll need to meet certain eligibility requirements. First and foremost, you must be a Singapore citizen or permanent resident. Additionally, you must be at least 21 years of age and not be undischarged bankrupts. You must also not have more than one existing housing loan. Lastly, your gross monthly household income must not exceed $14,000 for families, $21,000 for extended families, and $7,000 for singles.
Once you have established that you are eligible for an HDB loan, the next step is to determine how much you can borrow. The value of your loan depends on several factors such as the type of flat you’re buying, the remaining lease of the flat, and your income bracket. The maximum loan amount is 90% of your flat’s value, and you will need to come up with the remaining 10% as a downpayment.
Like any other loan, an HDB loan comes with repayment obligations. You will need to start making repayments only after you have taken possession of the flat. The loan repayment period is generally up to 25 years, and you can choose from several different ways to repay the loan, such as the fixed-rate or floating-rate repayment option.
In addition to the loan amount, there are several other costs associated with an HDB loan. These include administrative fees, such as the processing and late payment fee, and insurance premiums, such as mortgage insurance and fire insurance. You’ll also need to consider additional costs such as legal fees and stamp duty.
If you meet certain criteria, you may be eligible for special circumstances that can ease your HDB loan eligibility. For instance, if you’re a first-time homeowner, you may qualify for the Enhanced Housing Grant, which can provide you with up to $80,000 in subsidies. For those on a lower income, there are schemes such as the Additional CPF Housing Grant and the Special CPF Housing Grant, which can help cover some of the downpayment and fees.
Understanding HDB loan eligibility is a critical step towards buying an HDB flat in Singapore. Whether you’re a first-time buyer or you’re looking to upgrade your existing flat, it’s important to know the criteria, loan amount, repayment obligations, additional charges, and special circumstances involved. By staying informed and aware, you can make the most of the HDB loan and ensure that your housing investment is a wise decision.