http://www.straitstimes.com/archive/...ssues-20150221

Buyers cancel flat bookings due to loan issues

Published on Feb 21, 2015 12:52 AM

By Yeo Sam Jo


FINANCIAL difficulties caused a number of flat buyers to give up their new Housing Board flats over the past three years.

Some 2,000 new flat applications were cancelled from 2012 to 2014, said the HDB.

A number of these cancellations were because flat buyers were not able to obtain sufficient loans for the purchase.

But these numbers have more or less remained stable, hovering at around 3 per cent of the total number of new flat bookings in 2012 and 2013, the HDB added.

The cancellations were made after the buyers booked their flat but before they signed the Agreement for Lease.

These numbers were behind the reasons for the policy change announced last week, where buyers now have to present their HDB Loan Eligibility letters for new flats earlier at the point of booking.

Previously, they needed to show the letter, which indicates the size of the loan for which buyers are eligible, only when signing the Agreement for Lease four months later.

The HDB said asking for the letter earlier is intended to help flat buyers better plan their finances and flat purchase.

"(This) will minimise the disappointment of having to cancel a flat application arising from insufficient loan," said an HDB spokesman.

Last week, Minister of State for National Development Desmond Lee said another 51 buyers could not take possession of their new flats in 2013 and 2014, after the HDB's second credit assessment.

This assessment checks that flat buyers are still able to service their monthly mortgage instalments before the HDB disburses a housing loan to them.

If a flat buyer does not proceed with a flat purchase after signing the Agreement for Lease, 5 per cent of the purchase price will be forfeited to the HDB.

Presenting their HDB Loan Eligibility letters earlier would help more buyers make wiser financial decisions, said Mr Alfred Chia, chief executive of financial advisory firm SingCapital.

"This would be a very good trigger for them to look at their financial state. Some don't realise that their credit record is not that good... Buying that property might put them under greater financial strain."

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