Posts Tagged ‘housing grant’

Now that I’m married, can we get a top-up grant and refinance to HDB loan?

Friday, July 31st, 2009

[note]In summary:

– I bought a hdb flat under singles scheme.
– Not eligible for HDB loan. Took up a bank loan
– I got married after.
– We’re eligible for Top-up Grant and for HDB loan too.
– I can transfer to HDB loan by redeeming my bank loan.
– We now own our existing flat with a HDB loan. [/note]

(Part of “The Almost Complete Goondu’s Guide to Buying a HDB Flat in Singapore” series.)

These days, Singaporeans are spending more time pursuing their careers, and as a result, getting married at a later age. So what would happen if you’ve already bought a flat with a bank loan under the Singles Scheme (35 years or older) and just happen to meet and marry your spouse 2 years later?

You cannot sell off the flat and get another one with your spouse for another 3 more years, since minimum occupation period (MOP) for resale HDB flats bought with grant is 5 years. If you and your spouse’s combined income is still $8k or less, and your spouse has never taken a grant before, you can apply for a Top-up grant. This could mean an addition of $19k-$29k depending on whether your existing flat is near either of your parents. To learn how Top-up grants are calculated, check out the examples on HDB’s website.

If you wish to include your spouse as co-owner of your flat, things get a little complicated. On the legal front, the addition of a name into an existing mortgage lease is the equivalent of redeeming your existing loan, and taking out a new loan under both your names. This involves legal costs, some stamp fees, and your interest rate might change, depending on the prevailing interest rates offered. On HDB side, you would have to fill out a transfer of ownership application too.

Image by martywindle

Why then would you want to go through all this hassle? If you are planning to sell off your flat after 5 years, than maybe it’s not worth going through all the hassle. However, if you plan to keep it for the long term, it saves the legal complication that would be necessary, if something were to happen to you.

But there is another perk really, to adding your spouse to your flat. If you already qualify for a top-up grant, this means that it is likely that you qualify too for a HDB loan. With HDB loan interest rates pegged at 0.1% higher than CPF-OA’s interest rates, this means your interest rate is only 2.6% p.a., and more likely than not, it would remain that for the term of your loan.

For the long term, this is the lowest interest rates you can probably get, and its stable interest rates means you won’t suddenly be forced to fork out cash, which you would when bank variable loan interest rates start rising. Peace of mind.

To find out if you’re eligible for a HDB loan, fill out the HLE application form.

[tip]Fun Fact

Some people are tempted to finance their HDB flats with bank loan, even though they qualify for HDB loans. This is because with most bank loans pegged to SIBOR, and with SIBOR being really low due to the recession, starting loan interest rates are currently lower than HDB’s.

However, when the recession is over and the economy recovers, there is a high chance that SIBOR will rise and all SIBOR pegged home loans will have interest rates higher than that of HDB’s. In this case, even if you earned $8k or less, you cannot go back to HDB and say ‘hey can I refinance with a HDB loan?‘, because HDB does not allow.

In normal situations, you cannot take a HDB loan once you have taken out a Bank loan. The only situation I’ve come to learn of, where taking out a HDB loan to refinance a Bank loan is possible, is in the situation listed at the beginning of this post![/tip]

Housing Subsidies

Friday, April 24th, 2009

(Part of “The Almost Complete Goondu’s Guide to Buying a HDB Flat in Singapore” series.)

In order to make home ownership more affordable for Singaporeans, HDB flats are subsidised through various schemes.

CPF Housing Grant Scheme

Through the CPF Housing Grant Scheme, the government provides eligible buyers of resale flats with a range of subsidies that cater to families and people who are single.

Under the Family Grant, a subsidy of $30,000 in the form of CPF money is given to first-time applicants who have not enjoyed housing subsidies before, and whose household income is not more than $8,000.

Married couples who meet the first-timer prerequisite, and are purchasing a unit near their parents’ or married children’s residential property, are entitled to a higher-tier grant of $40,000. To qualify for this subsidy, the applicants’ flat must either be in the same town as their parents’ or married children’s property, or within a two-kilometre radius if they are in different towns. The income limit of $8,000 applies in this case as well.

The Singles Grant, as its nomenclature suggests, is meant to assist those who are unmarried. To qualify for this grant, the applicant has to be a Singaporean citizen above 35 years old, and must not have previously enjoyed any housing subsidy from the HDB. If the applicant is living on his or her own, he or she can get a grant of $11,000, whereas joint applicants (ranging between two to four people) can obtain a subsidy of $22,000.

Singles who will be living with their parents are eligible for a higher-tier grant of $20,000. As with the Family Grant, the Singles Grant is for people buying resale flats in the open market.

Top-up Grant

The Top-up Grant is essentially for people who have previously applied and qualified for the Singles Grant. Such a grant recipient can subsequently apply for more subsidies if he or she meets either of the following conditions:

    – The recipient marries someone who is a Singapore citizen and satisfies the first-time criterion, or someone who is likewise a Singles Grant recipient.

    – The recipient’s non-citizen spouse or child has become a Singapore citizen or permanent resident (applicable to those who have bought resale flats under the Non-citizen Spouse Scheme).

Applicants can apply for the Top-up Grant either for their existing flat or when they purchase another resale flat. The top-up amount is the difference between the prevailing Family Grant and the collective Singles Grant amount which the applicants previously received.

For example, based on a basic-tier Family Grant rate of $30,000, if both spouses each received $11,000 under the Singles Grant (thereby making a total of $22,000), the top-up amount will be the difference between $30,000 and $22,000, which is $8,000.

Buyers who are eligible for the Top-Up Grant can also apply for the Additional Housing Grant.

The applicant will have to meet a number of eligibility conditions before he or she can qualify for the Top-up Grant.

Additional CPF Housing Grant

The Additional CPF Housing Grant (AHG) made its debut in March 2006. It is meant to give extra financial assistance to people in lower-income brackets. It was enhanced in 2007 to make it easier for first-time applicants to purchase a flat, especially in these difficult times. The latest revisions to the AHG are as follows:

    – Increase in income ceiling from $4,000 to $5,000.
    – Increase in maximum grant amount from $30,000 to $40,000
    – Reduction of the two-years continuous employment prerequisite to one year.

The changes are intended to let more first-timers qualify for the AHG. Applicants have to meet a number of eligibility conditions before they can apply for the grant, including these:

    – Applicants must meet all the prevailing conditions for the CPF Housing Grant for Family or CPF Housing Top-up Grant (whichever is applicable).
    – At least one applicant must have worked continuously for at least one year before the time of application.
    – The average monthly household income over this one year period must not exceed $5,000.

Grant money can be used to offset the purchase price of the flat, thereby reducing the mortgage amount a buyer needs to secure. It can also be used as capital payment for the purchase. The money can only be used for the initial payment: the balance, if any will have to be used to reduce the mortgage loan. Upon subsequent sale of the flat, the AHG (and the CPF Housing Grant) will be refunded to the recipient’s CPF account, according to prevailing CPF rules.

For more details, check out the HDB Infoweb.

(via The Straits Times, 24th April 2009)