Minister for National Development, Mr Mah Bow Tan, announced changes to HDB’s second concessionary loan policy in Parliament today. The changes support flat owners to right-size, as well as ensure that buyers exercise financial prudence.

2Currently, only households that are upgrading to a bigger flat type are eligible to apply for a second concessionary loan from HDB. This may have inadvertently encouraged some to upgrade even though it may not be prudent for them to do so.

3HDB will remove the condition that a buyer must upgrade to qualify for a second concessionary loan. This means that the second concessionary loan will be made available to all eligible households regardless whether they upgrade, downsize or move to the same flat type. This will benefit families that need to right-size to smaller flats but do not have sufficient proceeds from the sale of their existing flats. However, HDB flat buyers who have disposed of their private properties will remain ineligible for a second concessionary loan.

4To further encourage financial prudence, HDB will reduce the quantum of the second concessionary loan by the full CPF proceeds and part of the cash proceeds from the sale of the existing or immediate past HDB flats. Flat buyers can keep the greater of $25,000 or half of the cash proceeds (including the cash deposit received). HDB will take into account the remaining part of the cash proceeds when determining the quantum of the second loan to be granted.

5For those who buy the next flat after selling the existing one, they will have to use up to 50% cash proceeds from the sale of the immediate past HDB flat and all of the CPF balance to finance the purchase of the next flat. This will apply regardless of when the previous HDB flat was sold.

6For those who buy their next flat before selling the existing one, the proceeds from the sale of their existing flat would not have been realised when they first apply for an HDB loan. To help them buy a flat, HDB will first grant them a bigger loan at commercial interest rates The commercial interest rates are pegged to the 3-month average non-promotional interest rate for HDB flats offered by the 3 local banks. Currently, the rate is 3.82%. after they draw down their CPF balance. After the sale of their existing flat, they will have to redeem this loan with the full CPF refund from sale of the existing flat and part of the cash proceeds as described in paragraph 4. Upon redemption, the loan will be converted to a concessionary rate loan.

7The right-sizing of loan quantum will ensure that flat buyers do not take a larger second concessionary loan than necessary, and can help to reduce the likelihood of subsequent mortgage arrears. Please refer to the worked examples Annex A (PDF 16KB)

8The revised second loan policy is implemented with immediate effect as follows:

9For enquiries, the public can contact HDB through