HDB Loan Eligibility (HLE) and Financing Options for your BTO Flat
HDB Loan Eligibility (HLE):
Yes, you still need to apply for a Housing Loan Eligibility (HLE) letter from HDB, even if you plan to use sales proceeds from your current flat for your new BTO purchase. The HLE letter is crucial because:
It confirms your eligibility for a HDB loan based on your income and CPF contributions.
It specifies the maximum loan amount you can qualify for from HDB.
Temporary Loan vs. Contra Facility:
Here's a breakdown of Temporary Loan and Contra Facility to help you decide which might be a better choice:
Temporary Loan:
Short-term loan: Provides temporary financing for the down payment and initial expenses of your new BTO flat.
Repayment: You'll need to repay the temporary loan in full, with interest, usually within 6 months of collecting your keys for the new flat. The funds from selling your existing flat are then used to settle the temporary loan.
Suitable for: This option might be suitable if you need some extra time to bridge the gap between buying your BTO flat and selling your current flat.
Contra Facility:
Convenience: HDB facilitates the direct deduction of your down payment and initial expenses from the sales proceeds of your existing flat.
No separate loan application: No need to apply for a separate temporary loan.
Sales proceeds requirement: You'll need enough sales proceeds from your current flat to cover the down payment and initial expenses for the new BTO flat.
Unsold flat risk: If your current flat isn't sold by the time you need to collect your keys for the new BTO flat, it can lead to complications.
Choosing the Right Option:
Financial situation: Consider your current financial situation and how comfortable you are with managing a temporary loan.
Selling timeline: If you're confident your current flat will sell quickly, the Contra Facility might be simpler. But if there's uncertainty, a Temporary Loan offers more flexibility.
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