Debated in Parliament on 20 Oct 2022.
Mr Gerald Giam Yean Song asked the Minister for National Development (a) whether HDB requires flat buyers to obtain an HDB Loan Eligibility (HLE) letter or an approved bank loan before booking a new flat, obtaining an option-to-purchase to buy a resale flat or placing the downpayment for a flat; (b) in each year since 2016, how many flat buyers have booked a flat before obtaining an HLE letter or approved bank loan; and (c) how does HDB ensure that prospective flat buyers are able to afford the necessary payments for the flat before processing the sale.
Buying a home is a major financial commitment. To help home seekers plan their finances for their flat purchase, those taking an HDB housing loan will need to have a valid HDB Loan Eligibility (HLE) letter before they book a new flat or obtain an Option to Purchase (OTP) from a resale flat seller. Those taking a housing loan from the financial institutions (FIs) regulated by MAS are required to obtain a Letter of Offer from the FIs before they sign the Agreement for Lease for their booked flat, or before they exercise the OTP for a resale flat.
Since 2016, on average, more than seven in 10 new flat buyers who planned to finance their flat purchase with an HDB housing loan obtained an HLE letter before booking a flat. Those who were not able to do so due to extenuating reasons, such as needing more time to obtain supporting documents, were required to obtain an HLE letter before they signed the Agreement for Lease and made the down payment.
HDB advises home seekers through various avenues to exercise financial prudence and buy a flat that is within their budget. For buyers who require further guidance, HDB conducts financial counselling to advise and work out their budgets based on the estimated HDB housing loan amount available to them. HDB also works in partnership with tertiary institutions and other agencies to reach out to prospective buyers and provide them with information to guide their housing and financing decisions.
When flat buyers book a flat, HDB officers go through a financial plan with them and explain the required payments for the flat purchase. Flat buyers sign on the financial plan to acknowledge the commitment that they have made. This further ensures that they are fully aware of the financial commitments for the flat purchase.
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