How to get a loan from HDB

The HDB home loan market is one that is not ignored by financial institutions and banks in general, with an estimated value of $63 billion. As of January 1, 2003, the option of obtaining a mortgage loan from a commercial bank to purchase a flat from HDB has generated fierce competition among financial institutions. As a mortgagee, of course, the bank has a claim on the flat, so if the borrower defaults for any reason, the bank has the right to seize and sell the flat to recover the amount lent to the borrower. However, most banks do not make such drastic decisions, unless the borrower completely defaults.

So what are the steps you need to take to get a bank loan for a HDB flat?

After deciding which flat you like and are interested in buying, you must first research the market and choose a bank or financial institution to apply for a loan. It is recommended that you do this after setting an interest rate type, and also a reference rate to link your package. In Singapore there are two daily reference rates: the Singapore Interbank Offered Rate (SIBOR) and the Swap Offered Rate (SOR). These two are established by the Singapore Banking Association and follow the trends of each other. For your loan package you can choose a fixed interest rate, which offers more stability and less risk, or a variable interest rate, which will follow SIBOR or SOR trends.

At the same time, you will need to decide which lawyer to appoint for the transaction. It is very important to get good references when it comes to lawyers, so if you have a real estate agent, you can ask them for suggestions. Before the appointment, you must sign a Warrant To Act in the presence of your attorney. The attorney must also obtain confirmation from the Housing and Development Board (HDB) to attest that they are acting on behalf of you and the bank. During the first appointment, you will need to present the attorney’s letter to the HDB resale officer. After that, it will take approximately two weeks for HDB to approve the transaction and issue an approval notice. During the second appointment, the attorney will pick up the keys from the seller at HDB on her behalf. It is estimated that this entire process will take between six and eight weeks.

If what you are interested in is refinancing, the process is simpler: after choosing the bank with which you want to refinance your current loan, the bank will contact the lawyer you have appointed. The lawyer will ask you to sign all the documents that need your signature and will carry out other actions, which will take about six weeks.