Use of Liquidatable Financial Investments as Equivalent to Bank Savings to Meet Home Loan Eligibility Criteria

Mr Kwek Hian Chuan Henry asked the Minister for National Development whether HDB will consider allowing self-employed persons to use their liquidatable financial investments, such as stocks and bonds, as an equivalent to bank savings to meet the Home Loan Eligibility criteria, as many young Singaporeans invest in stocks and bonds instead of low-yielding savings deposits.

HDB conducts credit assessment to gauge the financial ability of a loan applicant to service mortgage instalments every month based on their income. Unlike employed persons who generally have monthly CPF contributions from work that can be used for mortgage instalments, self-employed persons typically service their mortgage instalments in cash.

In the application for an HDB loan, employed persons are, hence, required to provide CPF statements to HDB as proof of their income, whilst self-employed persons are asked to provide bank statements to show that they have been able to sustain a positive cash flow from their earned income over a period of time and, therefore, have adequate cash surpluses every month to pay their mortgage instalments.

Stocks and bonds can be freely traded on the stock exchanges and could have been purchased at any time. Such investments might not, therefore, reflect the latest income and cashflow situation of an individual seeking an HDB loan, and it would be less prudent from a credit assessment perspective to rely on financial investment holdings at the point of application to assess loan eligibility as the values of financial investments are dynamic and market-dependent.

Nonetheless, for those unable to meet HDB’s credit assessment guidelines, HDB will look into their individual circumstances on a case-by-case basis and will exercise flexibility where feasible to assist them with their homeownership aspirations.