How to get an HDB loan
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 buy a flat from HDB has generated fierce competition among financial institutions. As the mortgagee, of course, the bank has a right to the apartment, so if the borrower defaults for any reason, the bank has the right to take and sell the apartment to recover the amount loaned to the borrower. However, most banks do not make such drastic decisions, unless the borrower defaults completely.
So what are the steps you need to follow to get a bank loan for a HDB flat?
After deciding which apartment 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 establishing an interest rate type, and also a reference rate to link your package. There are two daily reference rates in Singapore: 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 the SIBOR or SOR trends.
At the same time, you will need to decide which attorney 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 lawyer must also obtain confirmation from the Housing and Development Board (HDB) to attest that he is acting on your behalf and that of 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 collect the keys from the vendor at HDB on her behalf. This entire process is estimated to take between six and eight weeks.
If you are interested in 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 designated. 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.