Buyers must get HDB Loan Eligibility Letter earlier to book flat

Requiring eligibility letter at point of booking helps them plan finances
By Janice Heng, The Straits Times, 12 Feb 2015

PUBLIC flat buyers who want a Housing Board loan now have to get their official loan eligibility letter at an earlier stage.

This is to avoid situations when buyers book a flat first but are then unable to get a sufficient loan for it, said the HDB in a statement yesterday.

From this month's Build-to-Order (BTO) exercise, buyers must produce the HDB Loan Eligibility letter when they book their flat.

Previously, they had to do so only when signing the Agreement for Lease, which takes place four months after booking a flat.

The letter indicates the size of the loan for which buyers are eligible, and the monthly instalments required.

The aim of asking for this letter earlier is "to help flat buyers better plan their finances and flat purchase", said the HDB.

Said R'ST Research director Ong Kah Seng: "This new move ensures higher efficiency in allocating the flat, and saves time on applicant dropouts and disqualified applicants who cannot get the required loan."

He does not expect the move to affect the resale market.

But ERA Realty key executive officer Eugene Lim thinks it could nudge some BTO buyers into considering resale flats. "Some may actually consider resale flats after obtaining the HDB Loan Eligibility letter, as they would know that they qualify for a higher loan quantum," he said.

As for new flats, experts said that, with this move, the subscription rate for BTO flats might fall.

This is because it stops buyers from booking flats that are beyond their means, said Mr Lim, who called the change "a rational move".

Subscription rates for some flats in the latest BTO exercise, which began yesterday, are still likely to be high.

This month's launch of 3,995 new flats is comparable to last year's launches of about 3,000 to more than 4,000 flats at a time.

But unlike recent years, with BTO exercises every other month, there will be only four such exercises this year as the Government continues scaling down after three years of bumper launches.

Some 16,900 BTO flats will be launched this year, down from 22,455 last year, as well as from the peak in 2011 to 2013, when more than 25,000 new flats were launched each year.

On offer this month are flats across five projects, with two projects each in the non-mature estates of Bukit Batok and Hougang, and one in the mature estate of Geylang. The units include studio apartments and two- to five-room units.

In West Rock @ Bukit Batok, there are also 58 three-generation, or 3Gen, flats on offer.

These larger flats of about 115 sq m are meant for multiple generations living under one roof.

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Submission of HDB Loan Eligibility Letter at Point of Flat Booking