Facts and Fiction of HDB

Loan
We
all know what a HDB flat is, but are we familiar with the terms and conditions for the

September 2016 Issue

purchase of a flat? Lets take a deeper look at some of the facts and fiction first before you buy
your HDB flat!
Most of us are familiar with this if you are opting for a HDB Concessionary Loan for a BTO:

HDB. SERIOUSLY?

Suppose you want to buy a 4rm BTO flat

that costs $400,000. You and your
partner have $60,000 CPF-OA money
combined. That means you only need to
downpay $40,000 (10%) and can keep
the balance of $20,000, right?

FICTION!

COMEX 2016

REALITY:
You need to wipe out^1 your CPF-OA before you can take up a loan from HDB!
But is that really the best option when a HDB loan can stretch up to 25yrs?

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a) What if at some point in time, you or your spouse choose to stop work first to experience
parenthood until your children are old enough to go kindergarten?
b) What if at some point in time, you or your spouse decide to have a career switch and the
starting pay of the new job is much lower?
c) What if at some point in time, you lose your job and am unable to find a new one
immediately?
d) What if your spouse is injured or unwell and unable to work for the moment?
The monthly mortgage instalment and number of years of the loan are both decided based on
our financial status at the point of purchase. But what if some years down the road, we have to
extend our loan repayment due to financial constraints, is it possible?

It Depends!

REALITY:
HDB has various financial assistance measures in place to assist some groups of flat owners who
face loan servicing difficulties. But they may also recommend you to down-size to a smaller flat
instead (e.g. from a 4rm flat to a 3rm flat), for you to have a more affordable monthly instalment
as a long-term solution. Is that something you would be able to accept?

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Suppose 10 years down the road, you or your spouse decides to stop work first to take care of
your elderly parents who are now too old to take care of themselves. You already wiped out your
OA in the beginning and now have to repay the monthly instalments partially with cash. Then
your know-it-all colleague tells you that you can use your Special Account (SA) to repay your loan.
Is it true?

FICTION!

REALITY:
The use of your CPF-SA is allowed^4 to help repay your HDB ONLY IF you fulfil both these
conditions:
1. You bought your property BEFORE 2003; and
2. You used up your savings in your OA.
Given all these potential real life issues, and terms & conditions of a HDB loan, most Singaporeans
prefer to keep a buffer of CPF-OA money as a safety net. Have you done the same and set aside
some CPF-OA money first before you take the leap to buy your HDB flat? If you have not and you
are unsure how to, simply drop me a text to find out how. Its really as easy as ABC!
1. https://www.cpf.gov.sg/Members/Schemes/schemes/housing/public-housing-scheme
2. http://www.hdb.gov.sg/cs/infoweb/residential/servicing-your-hdb-loan/mortgage-loan/repayment-period
3. http://www.hdb.gov.sg/cs/infoweb/residential/servicing-your-hdb-loan/mortgage-loan/payment
4. https://www.cpf.gov.sg/Members/Schemes/schemes/housing/public-housing-scheme

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