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More Information on Your HDB Loan

More Information on Your HDB Loan

Here is useful information on the HDB loan, which includes the interest rate, the use of CPF savings and required insurance policies.

 

Details on your HDB housing loan

We will assess your income, age, and financial situation to decide the maximum loan that you are eligible for. The HDB concessionary housing loan interest rate is pegged at 0.1% above the CPF Ordinary Account interest rate. If you buy or take over a flat with a remaining lease of less than 60 years, the HDB housing loan may be reduced or disallowed.

Credit assessment

The maximum housing loan that can be offered will depend on the buyers’ age, monthly income and financial situation.

If you are buying an uncompleted flat directly from HDB, we will review your financial position nearer the completion of the flat for housing loan disbursement. This is to confirm that there is no change in your financial ability to service the housing loan. 

You can check our income guidelines to find out about the types of income we assess, and the documents to provide for credit assessment.

Maximum loan quantum

The maximum loan amount that may be offered depends on the following:

  • Maximum repayment period

This is capped at 25 years, or up till the buyer is 65 years old, whichever is shorter. 

  • Applicable interest rate

The computation of the maximum loan is based on the prevailing interest rate, which may be revised from time to time. The interest on the HDB housing loan is computed on a monthly basis or such other basis as HDB may decide.  

The HDB concessionary housing loan interest rate is pegged at 0.1% above the CPF Ordinary Account interest rate. It is revised in January, April, July and October, in line with the revision of CPF interest rates.

  • Monthly instalments

This is capped at 30% of the applicants' monthly income.

  • Loan ceiling

For new flats, the loan ceiling is 90% of the purchase price. For resale flats, it is 90% of the resale price or market valuation, whichever is lower.

Flat with balance lease of less than 60 years – Implications on HDB housing loan

The table below explains how the balance lease of a flat that you are buying may affect the HDB housing loan.

Remaining Lease

HDB Housing Loan

60 years or more

Allowed

30 to 59 years

Allowed, if remaining lease covers the buyer* up to the age of at least 80.

The loan tenure will be the shortest of:

  • 25 years;
  • 65 years minus the average age of the buyers; or
  • Balance lease at the point of purchase, minus 20 years

20 to 29 years

Allowed, if remaining lease covers the buyer* up to the age of at least 80.

The loan tenure will be the shortest of:

  • 25 years;
  • 65  years minus the average age of the buyers; or
  • Balance lease at the point of purchase, minus 20 years

Less than 20 years

Not allowed

* Based on the average age if there is more than one buyer

 

Using your CPF savings

All CPF Ordinary Account savings must first be used to pay for the flat before an HDB loan is granted. However, you are allowed to first set aside your Ordinary Account savings to pay for the stamp, registration, and conveyancing fees, as well as the CPF HPS premium. If you are buying a flat with less than 60 years of lease remaining, certain CPF usage limits may apply.

Use of CPF savings

You must use all of the available savings in your CPF Ordinary Account for the purchase or transfer of the flat, before a housing loan from HDB is granted for the remaining amount. This is subject to the CPF withdrawal limits for properties with less than 60 years of lease remaining.

If you choose to, you can first set aside CPF Ordinary Account savings for the amount payable for the stamp, registration, and conveyancing fees, as well as the CPF HPS premium (if applicable), before using all of the remaining available savings.

Your CPF Ordinary Account savings can be used to pay up to 100% of the Valuation Limit (VL) of the flat. The VL is the purchase price or value of the flat at the time of purchase, whichever is lower. Should you still have an outstanding loan amount when your withdrawals have reached the VL, you may only use your CPF Ordinary Account savings to pay for your flat if you have set aside the prevailing CPF Minimum Sum cash component.

More information on the use of CPF savings can be found on the CPF Board website.

Flat with balance lease of less than 60 years – Implications on the use of CPF funds

The table below explains how the balance lease of a flat that you are buying may affect the use of CPF funds.

Remaining Lease

Use of CPF Funds

60 years or more Allowed

30 to 59 years

Allowed, if remaining lease covers the buyer up to the age of at least 80.

The total CPF usage allowed will be a pro-rated VL, calculated as such:

Ratio of remaining lease when the youngest buyer who can use CPF turns 55, to the lease at the point of purchase.

20 to 29 years

Not allowed

Less than 20 years

Not allowed

When yours is a second HDB concessionary housing loan

For a second HDB concessionary housing loan, your loan quantum will be right-sized by deducting the CPF proceeds and some of the cash proceeds obtained from the disposal of the previous HDB flat. If you have yet to dispose of your existing HDB flat and you take a second HDB loan to buy another flat, you will first be granted a loan at commercial interest rates, which you can redeem using you flat's cash proceeds and CPF refund.

Right-sizing the quantum for a second HDB concessionary housing loan

The quantum for the second HDB concessionary housing loan will be reduced by the full CPF proceeds and part of the cash proceeds from the disposal of the existing or previously owned HDB flat. This facilitates financial prudence and prevents over-borrowing.  

The manner of disposal can be by way of sale, transfer, surrender, or compulsory acquisition.

HDB reserves the right to determine the amount of proceeds to be deducted, depending on the existing/ past flat’s manner of holding, or the provisions of any court order relating to the disposal/ division of the flat. 

Generally, flat buyers can keep the greater of $25,000 or half of the cash proceeds (including the cash deposit received), and HDB will take into account the remaining part of the cash proceeds when determining the quantum of the second HDB concessionary housing loan.

If you buy an HDB flat after disposing of the existing one

You and the essential occupier will have to use part of the cash proceeds from the disposal of the existing HDB flat, and all of your CPF balance to finance the purchase of the new flat.

If you buy an HDB flat before disposing of the existing one

You will first be granted a housing loan at commercial interest rates (pegged to the 3-month average non-promotional interest rate for HDB flats offered by the 3 local banks) after you have drawn down your CPF balance.

After the disposal of your existing flat, you and the essential occupier will have to redeem this loan using the full CPF refund and part of the cash proceeds from the disposal of the existing flat. Subsequently, the commercial interest rate will be converted to the concessionary interest rate.

 

Servicing your HDB loan

Your instalment payments are due on the first of the month and can be paid by using CPF and/ or cash. For partial capital repayment or full redemption of the HDB loan, please give us 1 month’s advance notice.

Repayment

You can use your CPF Ordinary Account savings and/or cash to pay the monthly instalments of your housing loan. The monthly instalments are payable on the first day of each month.
 
A late payment charge will be imposed on any outstanding instalment as at the end of the month. Any payment received will first be used to settle any outstanding late payment charges.
 
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

You can submit an application to us to make a partial capital repayment of the housing loan. The payment must be made within 1 month from the date of receipt of your application. 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 also fully redeem the loan by giving us 1 month’s written notice. For redemption after the loan is fully disbursed, you should first pay the whole of the principal sum and all other monies due, inclusive of the interest up to the date of redemption.

You can refer to Servicing Your HDB Loan for more details.

 

Insurance for HDB loans

You will have to purchase these insurance policies when you take an HDB loan. These will help to protect you and your loved ones in the case of unforeseen circumstances.

You will have to purchase these insurance policies when you take an HDB loan:

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.