Tuesday, December 05, 2006
[RealEdge] TodayOnline : Why a need for new loan?
 This story was printed from TODAYonline | |
 | |
| Why a need for new loan? Know this, before you register for an HDB flat with your parents ... Tuesday ? December 5, 2006 Letter from Leong Sze Hian I refer to the Housing Board's policy on the withdrawal of fractional ownership of a HDB flat. For example, a son who purchases a HDB flat with his parents may subsequently wish to withdraw his name to purchase his own flat when he gets married. In such situations, the HDB requires the parents to take up a new loan to pay off the existing loan balance and return the Central Provident Fund (CPF), plus accrued interest paid by the son to the son's CPF account. I know of someone in a predicament because the HDB requires his parents to take up a new loan with a bank, as they are deemed to have used up the two HDB subsidised loans allowed. Their existing HDB subsidised loan monthly repayment is $562, but the new bank loan's repayment is about $1,200 ? the bank was prepared to give only a 14-year loan because of their age. The total amount the parents have to borrow is about $160,000, much more than the current outstanding HDB loan balance of $104,000. There are also issues such as giving first charge on the flat to the bank and probably higher fluctuating loan interest rates than HDB's 2.6 per cent. Currently, the HDB bank loan rate is around 3.75 per cent. There may be other Singaporeans in this situation, particularly those with older parents. Those with parents who are retired, unemployed, with poor credit records, and so on, may not even be able to get a bank loan or be required to get a guarantor. Before HDB bank loans were allowed on Jan 1, 2003, I understand this problem was not so pronounced, as HDB market rate loans followed HDB loan policies, different from today's bank loan criteria, policies, terms and conditions. According to the HDB, for a change of ownership of the flat, the existing loan must be discharged. I believe that not many people are aware of this, when they put their name with their parents in a HDB flat. And if your parents upgrade just once to a bigger flat, you as the child will no longer be eligible for an HDB subsidised loan. Why does the HDB require a new loan to be taken out? Why not just let the existing loan continue? If the son does not mind, why not allow his CPF to be returned later to his CPF account, instead of requiring a new loan now to return it? | |
| Copyright MediaCorp Press Ltd. All rights reserved. | |
Real Estate News Provided Freely
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
SPONSORED LINKS
.
__,_._,___
// posted by Shajahan @ 5:10 PM 