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More Information on Your HDB Housing Loan

More Information on Your HDB Housing Loan

You may find the additional information on the HDB housing loan useful when planning your finances. 

 

Details on your HDB housing loan

We will assess your income, age, and financial situation to determine the eligible loan amount. 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  housing loan amount 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 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.

^ The applicant must be employed in the month of application and remain gainfully employed before the HDB housing loan is disbursed.

Loan quantum

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

  • 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 HDB loan amount 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 you are buying may affect the HDB housing loan applied for.

Remaining Lease

HDB Housing Loan

60 years or more

Allowed

30 to 59 years

Allowed, if remaining lease can cover 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 can cover 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

If you are taking an HDB housing loan to buy or take over ownership of a flat, you are allowed to first set aside your savings in the CPF Ordinary Account to pay stamp, registration, and conveyancing fees, and premium for the CPF Home Protection Insurance. You also have the option of retaining up to $20,000 in your CPF Ordinary Account. The rest of the available CPF Ordinary Account balance must be used for the flat purchase or taking over, before an HDB housing loan is granted. If you buy or take over ownership of a flat with a remaining lease of less than 60 years, certain limits on CPF usage may apply.

Use of CPF savings

If you take an HDB housing loan to buy or take over ownership of a flat, you may retain up to $20,000 in your CPF Ordinary Account and use the rest of the available CPF Ordinary Account balance for the flat purchase or taking over, before an HDB housing loan is granted. This is also subject to the CPF withdrawal limits for properties with a remaining lease of less than 60 years.

If you choose to, you can first set aside the amount required to pay stamp, registration, and conveyancing fees and premium for the CPF Home Protection Insurance (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. If there is still an outstanding loan amount when your CPF withdrawals have reached the VL, you may use the savings in the CPF Ordinary Account to pay for the 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 utilising the CPF monies refunded 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 before buying a flat with a second HDB housing loan, you will first be granted a loan at commercial interest rate. The interest rate will be converted to concessionary rate when you have disposed of the current flat, and have used the CPF monies refunded and some of the cash proceeds from the disposal to repay the housing loan for the next flat purchase.

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 CPF monies refunded and up to 50% 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 of a flat includes the sale, transfer or surrender of a flat, or by any other method under the Housing and Development Act or any other written law.

HDB reserves the right to determine the amount of proceeds to be used, either by taking into account the manner of holding of the existing/ previously owned HDB flat, or according to any court order that provides for the disposal/ division of the flat. 

Generally, flat buyers can keep the greater of $25,000 or 50% 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 up to 50% of the cash proceeds from the disposal of the existing HDB flat.  You may retain up to $20,000 in your CPF Ordinary Account and use the rest of the available CPF Ordinary Account balance to buy the next flat.

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

You will be charged commercial interest rate (pegged to the 3-month average non-promotional interest rate for HDB flats offered by the 3 local banks) for the housing loan to buy the next flat.

The interest rate will be converted to concessionary rate when you have disposed of the existing flat, and have used the CPF monies refunded and up to 50% of the cash proceeds from the disposal to repay the housing loan for the next flat purchase. From the CPF monies refunded, you may retain up to $20,000 in your CPF Ordinary Account.

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 issued. 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 repayment period, you can make partial or full capital repayment of the loan over and above the monthly instalments.

You can submit an application to your HDB branch 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.

Please give your HDB branch a written notice of at least one month in advance and make the capital repayment by using your CPF savings and/ or cash. To fully redeem the housing loan, you have to pay the whole of the principal sum and all other monies due to the HDB, including interest up to the date of receipt of payment.

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:

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.