Your Guide to HDB Concessionary Loan

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When buying a property in Singapore, you have two different home loans available to you - the HDB Loan or the Bank Loan. If you have not explored the differences and properly weighed the benefits of both, understand the differences between an HDB Loan and Bank Loan before you make your decision.

If you have already made a decision to apply for an HDB Concessionary Loan or decided that you want to understand this loan option better before you make your decision, continue reading.

Do You Qualify for an HDB Concessionary Loan?

HDB Loans are the safest home loans in Singapore. It is a loan that makes buying a home affordable for everyone. These loans are however only for those who really need it, hence the affluent and higher income bracket are unable to obtain these loans.

The maximum income bracket to obtaining a HDB Loan for singles is S$6,000, and a maximum monthly household income of S$12,000 for families and S$18,000 for extended families. The understanding is that while you have a maximum income bracket cap, you also need to show a strong credit history and financial credence to obtain a HDB Concessionary Loan.

To check if you meet the eligibility conditions to purchase a resale or BTO flat with the HDB housing loan, take this short questionnaire from HDB.

HDB Qualifying Criteria

Once you visit the above questionnaire, you will have a clear idea of whether you qualify for an HDB Concessionary Loan. If you qualify for an HDB Loan, do note that you will further need to fulfil the below criteria. You must:

  • Be a Singaporean citizen
  • Be 21 years of age and above
  • Not own a property or have owned a property or disposed of a property in the last 30 months of applying for an HDB Loan
  • Not own a market/hawker stall, or more than one commercial/industrial property
  • If you own any of the above, you must be operating them yourself and not have any other side income

The below, as officially declared by the Housing Development Board (HDB) are however not considered to be additional income or side income:

  • Alimony/maintenance fee
  • Bonuses
  • Claims/reimbursement/expenses
  • Director fees
  • Dividend income/interest from deposit accounts
  • Income from overtime work
  • National Service allowance
  • Occupier’s income
  • Rental income
  • Scholarship overseas allowance

In spite of the maximum income cap, the total amount that can be loaned to a borrower also depends on how much they are earning. The other criteria taken into account is the borrower’s financial standing and their current age.

 Applying for an HDB Concessionary Loan

When you reach this stage, providing the right documents is crucial to not getting your loan rejected. The general rule of thumb is that the higher your contribution to CPF is, the better HDB views your financial standing to be. The common supporting documents required are your last 3 months’ payslip from your employer, which must also certify your job designation, your job commencement date, and a record of your last 15 months’ CPF contributions.

But what happens if you are not a typical office worker? Below is hence a list of required documents for all the different walks of lives.

Required Documents for HDB Concessionary Loan

Employed Person 

  • Latest 3 months payslip OR
  • Letter from Employer stating the income for the last 3 months. The letter must include the:
    • Company’s letterhead/stamp
    • Certifying officer’s name, signature, and designation

* If income declared is inclusive of allowance, applicant must provide 12 months payslip

Self-Employed

  • Latest Notice of Assessment (NOA) from IRAS or Statement of Annual Accounts certified by an audit firm
  • Valid Accounting and Corporate Regulatory Authority (ACRA) or valid licence of trade
  • Statutory Declaration of last 12 months’ gross income

Commissioned based or part-time workers

  • Record of last 12 months’ commission statements/payslips
  • Credit bureau report
  • Employer letter stating last 12 months’ commission. The letter must include the:
    • Company’s letterhead/stamp
    • Certifying officer’s name, signature, and designation

Part-time worker 

  • Record of last 12 months’ statements/payslips
  • Employer letter stating the last 12 months’ income. The letter must include the:
    • Company’s letterhead/stamp
    • Certifying officer’s name, signature, and designation

Odd job workers

  • Latest Notice of Assessment (NOA) from IRAS OR Statement of Annual Accounts certified by an audit firm
  • Credit bureau report

Retired Pensioners

  • Record of last 12 months’ statements/payslips
  • Credit bureau report
  • Employer letter stating the last 12 months’ pension income. The letter must include the:
    • Company’s letterhead/stamp
    • Certifying officer’s name, signature, and designation

Unemployed

  • A Statutory Declaration declaring your unemployment status
  • If you are a student, you will need a Valid Student Pass from your education institution to confirm your student status
  • If unemployed for 3 months or more, please provide your
    • Proof of income from last employment and the last day of service
    • Latest 15 months CPF contribution receipt

Upon submitting the above documents, HDB will be able to tell you what is the maximum loan amount they can offer you - and whether you qualify for an HDB Concessionary Loan. If your application is rejected, backtrack the process and see where did you fall short.

To get an estimation of how much HDB will loan you, check out HDB’s loan calculator here.

Do however note that if you are purchasing a Built to Order HDB flat, you will be assessed twice - once during the initial application and the second time when the flat is close to completion. In this case, you will need to be consistent in your financial stability to avoid your HDB Loan getting pulled.

Singapore’s Credit Bureau Report

As stated above, commission based and part-time workers, odd job workers and retired pensioners have to provide their credit bureau report. The credit bureau report is a pool of your credit information from all the banks, which can give HDB a clear idea of your financial stability. Your maximum loan amount is also dependent on how good your record is. You can obtain your credit bureau report from the Credit Bureau of Singapore.

Steps to Applying for Your HDB Concessionary Loan

Applying for your HDB loan is easy, just fulfil the below steps:

  1. Request and fill up the HLE letter to obtain an HDB housing loan
  2. Upload all your HDB Loan documents onto the HDB portal

Once the above two steps are done, sit back and relax. HDB will contact you in approximately 14 days. If your application is successful, HDB will guide you to finalising the application.

If your application is successful, congratulations! You will now have an HDB Concessionary Loan with a fixed interest rate of 2.6%; a rate that has not changed in the last 15 years. However if your application fell through; backtrack, fix your records and try again. Good luck!

 

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