Saturday, October 14, 2006
[RealEdge] TodayOnline : Can you afford that loan?
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| Can you afford that loan? HDB flat buyers need loan eligibility letter before purchase Weekend ? October 14, 2006 Lee U-Wen u-wen@mediacorp. THE Housing and Development Board (HDB) is introducing a new procedure to ensure that flat buyers have sound financial planning first. From Jan 1, those who want to apply for a housing loan will first need to obtain a loan eligibility letter before they can commit to buying a new flat. The criteria for receiving a loan from the HDB, however, remains unchanged. Among the requirements: One has to be between 21 and 65 years old, have a monthly household income not exceeding $8,000, and have taken no more than two HDB concessionary loans previously. The letter will clearly state the maximum loan amount the flat-buyer is eligible for, as well as the repayment period and monthly instalments he would have to pay. Currently, new flat buyers are only told of their loan amount when they collect their keys, while resale buyers are informed during the first resale appointment. Most flat buyers today choose to finance their homes with loans which they pay back monthly over a lengthy period of time. This means they have to budget their expenses carefully so they can cope with the financial burden. The new procedure will apply to the purchase of new or resale HDB flats, the transfer of ownership, purchase of replacement flats under the Selective En-bloc Redevelopment Scheme and purchase of flats under the Design, Build and Sell Scheme. In an email response, the HDB said buying a flat is a "long-term financial commitment" and encouraged the public to buy only within their means. A spokesman said: "As part of our public education and credit counselling efforts, HDB would advise those obtaining HDB mortgage loans to be mindful of their other financial commitments and daily living expenses in deciding on the type of flat, price and financial ability to meet the long-term mortgage payments." The letter has to be obtained before buyers can exercise the option to purchase, which is a legal contract prescribed under the Housing and Development Act. Resale buyers must also get the letter before they send in their application papers. All buyers have to comply in order to be granted an HDB mortgage loan to complete the flat purchase, said the HDB on Friday. Those buying flats with bank loans will have to obtain a letter of offer from the bank before exercising the option to purchase. Meanwhile, those who do not require a home loan will only have to produce some documentary proof to show they have the means to buy. For those who are ineligible for the HDB concessionary loans, such as permanent residents and private property owners, they can obtain mortgage financing from banks and financial institutions. Flat buyers who want to take on a HDB loan can apply online for the letter at www.hdb.gov. | |
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// posted by Shajahan @ 9:41 PM 