Securing of Credit

If you need financing to buy a flat, you should secure a housing loan from HDB or a bank regulated by the Monetary Authority of Singapore (MAS) before you commit to the flat purchase. For a housing loan from a bank, please approach the banks to check on the loan amount you can obtain.

If you are taking an HDB Housing Loan, you need to have a valid HDB Loan Eligibility letter when you:

  • Book a flat^ from HDB*#
  • Obtain an Option to Purchase from a resale flat seller and submit a resale flat application
  • Apply to take over the ownership of a flat (by way of transfer)

The HDB housing loan amount will depend on the extent the remaining lease can cover the youngest buyer to the age of 95. Otherwise, the loan amount will be pro-rated from the 90% LTV limit, if the remaining lease does not cover the youngest buyer/ owner to the age of 95 and beyond at the point of the flat application+. HDB does not provide a housing loan if a flat has a remaining lease of 20 years or less at the time of the flat application+.

Please make use of the following online calculators to plan your budget before committing to buy a flat:

^ There is no mortgage loan financing for the purchase of a 2-room Flexi flat on short lease. You will have to pay for the flat using your cash and/ or CPF savings.

* Eligible first-timer couples who are full-time students or National Servicemen, or have completed their studies or National Service in the last 12 months before their flat application may defer the income assessment for HDB housing loan and Additional Housing Grant/ Special CPF Housing Grant till just before key collection. 

# Applicants without a valid HLE letter when they book a flat will not be eligible to apply for an HDB housing loan later on.

+ For flat applications received before 10 May 2019, the HDB housing loan may be reduced or disallowed if you are buying or taking over ownership of a flat with a remaining lease of less than 60 years.

Important notes on housing loans

A housing loan is a long-term financial commitment. The payment of monthly instalments can stretch up to 25 years, and this includes both the principal and interest amounts. It is important to exercise prudence by borrowing what you can pay back comfortably. 

Do not overstretch your budget

While it may seem tempting to borrow as much as possible if you can afford the monthly instalments, this can be risky if, in the long run, you are unable to keep up with the monthly repayments. Instead, you should borrow as little as possible and give yourself more financial flexibility. Remember to budget for emergencies and future expenses as well.

Cater for future changes in income and expenses

There may be changes in the mortgage loan interest rates, CPF contribution rates, or allowable CPF usage if you have reached the CPF Valuation Limit or Withdrawal Limit. Additionally, your CPF Ordinary Account contributions may reduce as you grow older. This means that you may need to use more cash to meet the loan instalments. 

Choose a shorter repayment period

A longer repayment period means that the mortgage loan amount will be cleared at a slower pace and more interests have to be paid. A shorter loan repayment period is more prudent as there is a shorter period of exposure to fluctuations in loan interest rates, income and expenses, etc. In addition, you can also save on the interest payments.

Be prepared for the unexpected

Unforeseen circumstances like retrenchment, business failure, or illness can lead to a reduction in income. Be prepared for these by setting aside some savings.