Explaining the Advantages of HDB Loans Versus Bank Loans (An Abridged Version)

Well before 1 January 2003, people buying a HDB (Housing Production Board) flat have to finance it either with a HDB Concessionary Rate Loan or a HDB market rate loan product. But since then the HDB market rate loan was supplanted by home mortgage from financing institutions, which are gazetted by way of the Monetary Authority of Singapore.

HDB Concessionary Rate Loan product

Compared to a home loan from a financing institution, a HDB refinancce mortgage loan has more stringent eligibility requirements. The below slip covers most of them.

Eligibility Criteria:

For HDB flats only (resale or direct purchase from HDB)
At least one buyer must be a good Singapore citizen
Must have a gross monthly income possibly not exceeding $10, 000 (or $15, 000 for longer families)
For DBSS flat the income ceiling is certainly $8, 000 (or $10, 000 for extended families)
For applicants under the Single Singapore Citizen (SSC) scam, the income ceiling is $5, 000
Must not have any private residence (in Singapore or abroad), together with HUDC and executive condominium
Must not have sold a private residential property within 30 months and taken a HDB loan before
Must not have previously obtained a HDB financial loan within 30 months
Must not have taken more than two old HDB loans
Must not own more any market and hawker stalls or commercial / industrial property (Except if you operate the business yourself, have no other source of income, and only own one market / hawker stall or advertisement / industrial property)
From July 2013, HDB personal loan will not be granted for flats with less than 20 years for lease. In addition , for flats with lease between 15 and 59 years, loan approval and tenure might be subjected to certain conditions.

Given the many restrictions of a HDB loan, why then do Singaporeans still want to take an individual? We delve further into the pros of this loan on the following sections.

1 . Higher CPF (Central Provident Fund) withdrawal limit

For financing by bank loans, the CPF Ordinary Account withdrawal cap is up to 100% of the worth limit (VL), which is the lower of the purchase price or appraisal at the time of purchase. If the loan is still outstanding when the limit is breached, the housing withdrawal limit will be increased to 120% VL provided that half (entire) belonging to the prevailing Minimum Sum is set aside for borrowers down the page 55 (55 and above). This housing withdrawal relieve varies with the purchase date of the flat, for expenses from 2008 onwards it is 120%.

With an HDB concessionary loan, however, you can enjoy a higher withdrawal limit.

Just for direct purchase from HDB, there is no limit to the saving in the Typical Account you can use.

For resale HDB flats, there is no limit to your saving in the Ordinary Account you can use, after you have set aside half of the prevailing Minimum Sum.