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June 28, 2023
What are my financing options?
For most buyers, buying an HDB flat is a long-term financial commitment as they would be obtaining a housing loan to finance their purchase. Buyers should not only consider the immediate payments involved, but should also factor in the monthly instalments for housing (if applicable).
To work out a comprehensive financial plan, be sure to consider the following:
- Cash and CPF savings
- Housing loan
- CPF Housing Grant Scheme
Click on the FAQ below to find out more
You must use cash for the following payments:
- Deposit to seller (a maximum of $5,000, paid in 2 stages: the option fee, and the deposit)
- Part of the initial payment (if you take a bank loan, or have insufficient CPF savings)
- Amount not covered by CPF savings and eligible housing loan amount
- Cash proceeds from disposing the last flat if you are taking a second HDB loan*
*If you are taking a second HDB loan to buy the resale flat, you will need to set aside part of the cash proceeds from the disposal of the existing or previous flat. That amount will be used to right-size the loan amount for your second HDB loan.
You will also need to set aside cash savings for other expenses such as furnishings, renovation, and some other costs and fees payable .
If you need financing to buy a flat, you should secure a housing loan from HDB or a bank regulated by the Monetary Authority of Singapore (MAS) before you commit to the flat purchase. For a housing loan from a bank, please approach the banks to check on the loan amount you can obtain.
If you are taking an HDB Housing Loan, you need to have a valid HDB Loan Eligibility letter when you:
- Book a flat^ from HDB*#
- Obtain an Option to Purchase from a resale flat seller
- Apply to take over the ownership of a flat (by way of transfer)
The HDB housing loan amount will depend on the extent the remaining lease can cover the youngest buyer to the age of 95. Otherwise, the loan amount will be pro-rated from the 90% LTV limit, if the remaining lease does not cover the youngest buyer/ owner to the age of 95 and beyond at the point of the flat application+. HDB does not provide a housing loan if a flat has a remaining lease of 20 years or less at the time of the flat application+.
Please make use of the following online calculators to plan your budget before committing to buy a flat:
Notes:
^ There is no mortgage loan financing for the purchase of a 2-room Flexi flat on short lease. You will have to pay for the flat using your cash and/ or CPF savings.
* Eligible first-timer couples who are full-time students or National Servicemen, or have completed their studies or National Service in the last 12 months before their flat application may defer the income assessment for HDB housing loan and Additional Housing Grant/ Special CPF Housing Grant till just before key collection.
# Applicants without a valid HLE letter when they book a flat will not be eligible to apply for an HDB housing loan later on.
+ For flat applications received before 10 May 2019, the HDB housing loan may be reduced or disallowed if you are buying or taking over ownership of a flat with a remaining lease of less than 60 years.
Important notes on housing loans
A housing loan is a long-term financial commitment. The payment of monthly instalments can stretch up to 25 years, and this includes both the principal and interest amounts. It is important to exercise prudence by borrowing what you can pay back comfortably.
Do not overstretch your budget
While it may seem tempting to borrow as much as possible if you can afford the monthly instalments, this can be risky if, in the long run, you are unable to keep up with the monthly repayments. Instead, you should borrow as little as possible and give yourself more financial flexibility. Remember to budget for emergencies and future expenses as well.
Cater for future changes in income and expenses
There may be changes in the mortgage loan interest rates, CPF contribution rates, or allowable CPF usage if you have reached the CPF Valuation Limit or Withdrawal Limit. Additionally, your CPF Ordinary Account contributions may reduce as you grow older. This means that you may need to use more cash to meet the loan instalments.
Choose a shorter repayment period
A longer repayment period means that the mortgage loan amount will be cleared at a slower pace and more interests have to be paid. A shorter loan repayment period is more prudent as there is a shorter period of exposure to fluctuations in loan interest rates, income and expenses, etc. In addition, you can also save on the interest payments.
Be prepared for the unexpected
Unforeseen circumstances like retrenchment, business failure, or illness can lead to a reduction in income. Be prepared for these by setting aside some savings.
If you wish to get an HDB housing loan, you need to first apply for and obtain an HDB Loan Eligibility (HLE) letter. The HLE letter will inform you of the amount of loan you can get, based on your financial situation. As a good practice, obtain an HLE letter before you start searching for a flat, as knowing your housing loan amount will help you to calculate your budget to buy a flat.
If you take a housing loan from HDB, do note the following:-
- You will need to have a valid HDB Loan Eligibility (HLE) letter when you book a new flat from HDB, or obtain an Option to Purchase from a resale flat seller
- When you take a housing loan from HDB, you can later refinance your loan with another housing loan from a bank. However, if you take a housing loan from a bank, you will not be allowed to refinance your loan with a housing loan from HDB
- For a second HDB concessionary housing loan, the loan quantum will be right-sized by utilising the CPF monies refunded and some of the cash from the disposal of your current/ previous flat
- For resale flat applications submitted to HDB from 28 Aug 2018, flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer’s Ordinary Account (OA). The rest of the available CPF OA balance must be used to pay for the flat purchase.
- For resale flat applications submitted to HDB on or after 10 May 2019:
- Buyers who buy a flat with a remaining lease that can cover the youngest buyer till the age of 95 and above, the HDB housing loan amount that they may take will be up to 90% of the lower of the flat’s purchase price or value (“90% loan-to-value”).
- Buyers who buy a flat with a remaining lease that does not cover the youngest buyer till the age of 95, the HDB housing loan amount that they may take will be pro-rated from the 90% loan-to-value limit.
- You can click on the following links to use the online calculators to compute the allowable CPF usage and the HDB housing loan:
- HDB housing loan (Resale flat)
- Buyers of flats with less than 20 years remaining on the lease are not eligible for an HDB housing loan
Information on the remaining lease of an HDB block is available on the HDB Map Services under “Housing”.
For more details, please refer to Housing Loan from HDB.
Servicing your HDB housing loan
Your instalment payments are due on the first day of the month and can be paid by cash and/ or CPF savings. For partial capital repayment or redemption of the HDB loan, please give us a written notice of at least one month in advance.
Repayment
Payment of the first monthly instalment will start on the first day of the second month, following the month in which the housing loan is disbursed. Thereafter, it will be due and payable on the first day of every month, until the loan is fully redeemed. You can use your cash and/ or CPF savings to pay the monthly instalments, subject to the prevailing rules of the CPF Board.
A late payment charge will be imposed on any outstanding instalment at the end of the month. Any payment received subsequently will first be used to settle any outstanding late payment charges, followed by other outstanding charges and interests.
The balance will then be applied towards the payment of the loan instalment. Payments made using CPF savings will be deducted automatically. You can use set up a GIRO arrangement to deduct the instalments from your bank account.
Partial capital repayment and redemption of loan
During the loan tenure, you can make partial or full capital repayment of the loan by using your CPF and/ or cash savings.
You can submit an application to your HDB branch to make a partial capital repayment of the housing loan. The proposed date for partial or full capital repayment of the loan will be scheduled one month from the date your HDB branch has received your application. Full payment must be received by the date.
To fully redeem the housing loan, you have to pay the whole of the principal sum and all other monies due to HDB, including interest up to the date of HDB’s receipt of the payment. HDB reserves the right not to accept any such payment, or to accept such payments only if it meets the minimum sum that is determined by HDB.
You can refer to Servicing Your HDB Loan for more details
Insurance for HDB housing loans
You will have to purchase these insurance policies when you take an HDB housing loan. These will help to protect you and your loved ones in the case of unforeseen circumstances.
If you take an HDB housing loan to buy or take over ownership of a flat, you will have to purchase these insurance policies:
- HDB Fire Insurance Policy
- Home Protection Scheme (if you are using your CPF savings to pay your monthly loan instalments)
The Home Protection Scheme is a mortgage-reducing insurance scheme administered by the CPF Board. It insures CPF members and their families against losing their home, should the policy holder become permanently incapacitated or pass away before the housing loan is paid up.
The Home Protection Scheme is administered by CPF Board. It is a mortgage reducing insurance that protects you and your family against losing your home should you become physically/mentally incapacitated or pass away before your housing loans are paid up.
You can estimate the premium for the HPS by visiting the CPF Board website.
You can choose to finance your flat with a housing loan from the Financial Institutions (FIs) regulated by the Monetary Authority of Singapore (MAS).
You can choose to finance your flat with a housing loan from the Financial Institutions (FIs) regulated by the Monetary Authority of Singapore (MAS). If you take a housing loan from an FI, you will not be allowed to refinance your loan with a housing loan from HDB.
When choosing a housing loan from an FI, assess the different housing loan packages offered by the FIs thoroughly and weigh your options carefully. Some key terms and conditions to look out for include lock-in periods, interest rates, and other financial considerations.
If you take a housing loan from an FI, do note the following:-
- You must have a valid Letter of Offer before you exercise the Option to Purchase for the HDB resale flat
- You will not be allowed to refinance your loan with a housing loan from HDB
For more details, please refer to Housing Loan from Banks.
Comparison Table Between HDB vs Bank Loan
HDB Loan | Bank Loan | |
|---|---|---|
| Interest Rate | Currently 2.6% ( 0.1% above the CPF Ordinary Account interest rate.) | Currently 1.3% – 2.4% (Depends on the bank and benchmark, interest rates fluctuates) |
| Downpayment | CPF/Cash | At least 5% in cash The rest using CPF OA savings |
| Maximum Loan | New flats: 90% of the purchase price. Resale flats: 90% of the resale price or market valuation, whichever is lower. | 75% of the purchase price. |
| Late Payment Penalty | Currently 7.5% per annum | Depends on individual banks. Usually less lenient than HDB. |
To Be Eligible For HDB Loan
- At least 1 buyer is a Singapore citizen
- Have not taken 2 or more housing loans from HDB previously
- Average gross monthly household income is less than $12,000
- Average gross monthly household income is less than $6,000 for singles buying 5-room or smaller resale flat, or 2-room new flat in a non-mature estate
- Must not own or have disposed of any private residential property in the past 30 months before the date of application for a HDB Loan Eligibility letter.
To Be Eligible For Bank Loan
- Good pay master (good credit assessment).
- working for the pass 6 months.
You make the initial payment after acknowledging the resale documents in the HDB Resale Portal. The amount is based on the resale price or market valuation of the flat, whichever is lower, as well as whether you are:
- Taking an HDB housing loan
- Not taking any housing loan
- Taking a bank loan
You can applying for an HDB Loan by applying for a HDB Loan Eligibility (HLE) Letter here.
You can check the status of your HLE application here
It takes about 5 working days or less.
Resale application administrative fee
Buyers and sellers will each pay an administrative fee (inclusive of GST) of $40 or $80, depending on the flat type.
*Fees paid are non-refundable and include GST. If you are using the HDB Resale Portal, payments can be made via credit card (Visa/MasterCard) or by scanning the QR code using any of the supporting mobile payment apps such as NETSPay, DBS PayLah!, POSBANK/DBS Digibank, UOB Mighty and OCBC Pay Anyone. If you are using the Estate Agent Toolkit, payments can be made via GIRO.
Processing fee for Request for Value
Buyers must submit a request to HDB to determine the flat’s value if they intend to buy a resale flat using their CPF monies and/ or a housing loan.
If you intend to buy a resale flat using your CPF money and/ or a housing loan, you must submit a request to HDB to confirm the flat’s value. The value will form the basis for determining your CPF usage and/ or the housing loan from HDB or bank/ financial institution, unless otherwise advised by a bank/ financial institution.
You will need to pay a processing fee* of $120.
*Fees paid are non-refundable and include GST. If you are using the HDB Resale Portal, payments can be made via credit card (Visa/MasterCard) or by scanning the QR code using any of the supporting mobile payment apps such as NETSPay, DBS PayLah!, POSBANK/DBS Digibank, UOB Mighty and OCBC Pay Anyone. If you are using the Estate Agent Toolkit, payments can be made via GIRO.
Fire Insurance
If you are taking a housing loan from HDB, you will have to purchase a fire insurance policy from our appointed insurer, FWD Singapore Pte Ltd.
If you are taking a housing loan from HDB, you must purchase a fire insurance policy from our appointed insurer, FWD Singapore Pte Ltd (FWD).
A valid Certificate of Insurance issued by FWD must be produced on the date you complete the purchase of your resale flat.
For more details about the HDB Fire Insurance, you may call FWD’s enquiry line at 6820-8888, or visit FWD’s website.
Administrative fee for Temporary Extension of Stay by flat sellers
An administrative fee will be payable to HDB if you agree to the seller’s request to extend their stay temporarily in the resale flat.
If you agree to the seller’s request to extend their stay temporarily in the resale flat, an administrative fee of $20 (inclusive of GST) will be payable to HDB.
Legal fees
The legal fees to be paid depend on the solicitor you appoint to act for you.
The legal fees to be paid depend on the solicitor you appoint to act for you. If you engage HDB to act for you in the purchase, you can get an estimate of the cost using our Legal Fees Enquiry e-Service. More information on the breakdown of legal fees is detailed below.
Breakdown of legal fees payable
When buying an HDB resale flat, the various legal fees can be paid using CPF savings, cashier’s order, or NETS. However, Caveat and Title Search fees are only payable by cashier’s order and/ or NETS.
The Conveyancing, Caveat, and Title Search fees are paid after acknowledging the resale documents in the HDB Resale Portal. If you do not have enough CPF to pay the Stamp Duty in full, you will have to pay the balance on the Resale Completion date by cashier’s order and/ or NETS.
Singapore Permanent Resident households buying their first HDB resale flat are required to pay Additional Buyer Stamp Duty (ABSD) on top of the existing Buyer’s Stamp Duty (BSD). It can be paid by CPF savings, cashier’s order and/ or NETS, and is due within 10 days from the First Appointment date. The amount due is 5% of the purchase price or market valuation, whichever is higher. Please refer to IRAS’ website for more information on the ABSD.
Legal fees : If HDB’s solicitor is acting for you
The cash payment for balance purchase price only needs to be paid when the resale price is higher than the market valuation.
You can estimate the total budget for your flat purchase by adding up the following:
- Available cash savings
- Available CPF Ordinary Account (OA) savings (you may retain up to $20,000)
- CPF Housing Grant amount (if eligible)
- You may apply for CPF Housing Grants for the purchase of new flat or resale flat
- Housing loan amount
- How much you can borrow from HDB or a bank is determined by your age, income, and financial standing. For a housing loan from HDB, please apply for an HDB Loan Eligibility letter or work out an estimated loan assessment using our Enquiry on Loan Estimate e-Service
Be sure to also set aside for the related costs when buying a new flat or resale flat .