No thanks to growing property prices, a housing loan is needed for most people buying a Housing Development Board (HDB) flat. You could opt for a bank loan, or go with HDB’s own loan scheme – both have its advantages and disadvantages.
If you do pick a HDB loan (for its fixed interest rates), then you need to get your Housing Loan Eligibility (HLE) letter ready before buying an HDB flat.
Here’s why the HLE is so important:
HLE tells you the amount of your HDB home loan
HDB requires all potential flat buyers and transferees who wish to get an HDB concessionary loan to first obtain an HLE before they commit to any flat purchase.
During the application, you’ll be required to submit income details, which will in turn be used to evaluate your ability to service a loan. These are influenced by Monetary Authority of Singapore restrictions such as the Mortgage Servicing Ratio.
Once you receive the HLE, it makes your home search that much easier because you’ll instantly know which units are within your financial reach. Just put the expensive homes aside and focus your time to view other units.
HLE letter is needed for the seller to grant OTP
If the seller accepts your offer for his/her flat, he/she will grant you an Option-To-Purchase (OTP). You’ll need a valid HLE when that happens, if you intend to get an HDB loan.
You must have the HLE letter to select a BTO flat
You need to produce a valid HLE at the point of flat selection for a Built-to-Order (BTO) flat. Other personal documents are needed as well, but since HDB may take up to 14 days to process an HLE application, it’s wise to have it done early on.
If your HLE is expiring in seven days, you must submit a new application, together with the supporting documents for the Board’s review.
The good news, though, is that HLE letters are valid for 6 months. So even if you apply early, the chances of it expiring within 7 days of your flat selection are low.
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