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Wednesday August 8th 2018

New BTO flat owner needs to pay $84,147 before collecting house keys

A new HDB BTO flat owner, Liza, got a rude shock of her life before collecting her 4-room house keys  – the family needs to pay $84, 147 in cold hard cash upfront after minusing all the CPF and loans they have. This massive cash outlay – days prior to the collection of HDB BTO flat keys – may have inconvenience hundreds if not thousands of new flat applicants.

Moreover, there is no early warning of the massive cash cough-out even though they have called HDB regularly regarding the home loans which raises question mark on the HDB loan department’s efficiency.

She reveals to us that she is currently working full-time but her husband is working as a porter on a part-time basis – the main subsequent reason given by HDB for the massive cash outlay as the HLE loan approved may be very minimal based on one person’s income.

The HDB Home Loan Eligibility (HLE)  procedure is a intricate process itself and it will basically calculate how much you can borrow based on your current income, age and whether it is a first or second HDB home loan application.

The HDB concessionary housing home loan interest rate is pegged at 0.1% above the CPF Ordinary account interest rate making it a affordable way to borrow money to purchase your dream home but it will never truly reveal to you how much you can borrow until the final days prior to collection of the house keys.

However, the way HDB mysteriously omit out the loan details for many BTO flat owners have caused heartache for many new flat owners as no one can raise so much cash few days before getting the house keys effectively turning a happy occasion into a nightmarish experience.

In fact, in our earlier article on the same matter, a couple has divorced due to the incident and the single-mum family with two kids is currently living in a HDB 2-room rental flat. They have forego the new BTO HDB flat in the process.

As for Liza, she has asked to downgrade her flat to a 3-room one in view of the cash outlay but she has told us that the HDB officer informed her now they will place her flat on hold for a few months until her husband could get a full-time job.

How HDB operates nowadays is a mystery and as more people apply for new BTO flats which can cost up to $200,000 for a 3-room flat in a remote area, one can only hope that the HDB HLE loan department is transparent and upfront on the way it approves housing loan so that new flat owners won’t receive a heart-attack days before their happiness turn into a nightmarish dream.

Written by: Gilbert Goh

Number of View: 27

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2 Responses to “New BTO flat owner needs to pay $84,147 before collecting house keys”

  1. Anonymous says:

    If she had made an effort to calculate before getting a flat, she wouldn’t have to go through this problem.

    You can see that the location of the house is at Tenteram Peak which is a central area. The property there is relatively pricier as it is a mature estate.

    Area at Kallang/Whampoa is going from $433,000 for a 4-room flat. Downpayment required for the flat would start from at least $43,300. Assuming that the household income is $4,600, their HLE should be $304,100. Therefore, calculating the shortage would be around the required cash outlay in addition to the assumption that the downpayment will be paid by CPF and they are a young couple who just started working.

    Let’s say their HLE is $304,100, are they going to blame HDB once they have to pay $321.86 in cash per month as the salary assumption of $4,600 will only have $1,058.14 in CPF OA account when the repayment to HDB is $1,380?

    The amount required to be paid is transparent. The purchaser should do their homework. Then what will happen if both are not working, can they continue paying the $1,380 payment to HDB in cash on a monthly basis?

    I am not supporting anyone or any organisation in particular. Let’s put in a simple example. You want to buy a $10 chocolate. You have $5 which includes of your savings and cash in hand. Maybe your mum can only sponsor you $3. Can you then blame the shop for asking for additional $2 cash – when the price is clearly stated that the chocolate is $10?

    There’s no use complaining. Perhaps they should consider an alternative – to either forfeit the house or get an affordable house. Perhaps consider choosing non-mature estate like Sembawang?

  2. xyz says:

    Both sides got fault.

    HDB obviously can monitor & keep track of applicant’s loan eligibility & quantum in order to (1) prevent people from applying for too expensive flats in the first place, and (2) ensure that the family’s income hasn’t dropped significantly during the 3-4 years of construction before key collection.

    However this will require more resources: staff, time, effort, reprogramming of IT systems to flag alerts & reminders, system for staff to check with applicants and CPF for ongoing income status etc. All these cost extra $$$$$ and obviously is low priority for HDB since applicants bear the end risks.

    As for applicants, they are told that there will be a 2nd HLE or income assessment closer to key collection — in order to make sure they can still pay for the loan, or to “right size” the loan amount. HLE is only valid for 6 months. This is a problem for applicants who lose their jobs or suffer big pay cuts during the 3-4 years waiting time.

    If you’ve suffered a loss of income during the waiting time & not able to get another job with same pay, you should (1) get new HLE and (2) may need to inform HDB to downgrade smaller flat using the new HLE as guide.

    I know some people are very “house proud” and are willing to max out everything to get the biggest & best place possible. But people need to realise that homes are VERY overpriced in S’pore, even for BTO — this is based on international guidelines using price-to-annual salary ratio. Anything above 4 is unaffordable.

    And in S’pore, the very important rule of thumb is that you must be able to fully pay up your home by the time you are 40-45 yrs old.

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