Mr Dennis Tan Lip Fong asked the Minister for National Development (a) what is the information on job, business or income which HDB will require from a person who is making a housing loan application and what is the time period required for such information; and (b) whether there is any distinction between the information required for (i) employed persons and (ii) self-employed persons.
The Senior Minister of State for National Development (Mr Tan Kiat How) (for the Minister for National Development): Sir, the Housing and Development Board (HDB) conducts credit assessments to gauge the financial ability of loan applicants to service monthly mortgage instalments, based on the applicant’s income. The assessment is carried out when the applicant applies for an HDB Flat Eligibility (HFE) letter and is based on the applicant’s average monthly income over a period of 12 months.
All applicants, regardless of the nature of their employment, are required to provide their CPF contribution history and latest Notice of Assessment for income tax, through Myinfo. HDB will reach out to applicants if further supporting documents are needed.
Unlike employed persons who generally receive monthly CPF contributions from work that can be used to pay mortgage instalments, self-employed persons typically pay their mortgage instalments fully in cash. Hence, they are required to provide their Credit Bureau Report and bank statements for an assessment of their financial position and their ability to pay their mortgage instalments every month.
Mr Speaker: Mr Tan.
Mr Dennis Tan Lip Fong (Hougang): I thank the Senior Minister of State for the answer. Does and will the HDB give different considerations in their assessment of the income of the self-employed to take into account that the business owner or the self-employed may not pay themselves regularly? For example, would the HDB take into account the annual income as declared to the Inland Revenue Authority of Singapore (IRAS)?
Number two, where the business income may vary. For example, even in a short period of time where a self-employed’s business income trajectory increases considerably, can the HDB exercise some flexibility to look at the uptrend of the income at the time of the application?
Mr Tan Kiat How: Sir, the short answer to the Member’s question is, that HDB will review on case-by-case basis if the applicant has some specific circumstances. The underlying principle is to make sure that whoever is buying a flat, applying for HDB flat, can service the monthly mortgage payments.
That is why, there is an income assessment criteria, looking at eligibility of the different incomes – the details are on HDB’s website – what form of income will be considered, the IRAS statements and the CPF contributions. These are all taken in totality. So, if the Member comes across cases where the applicant requires certain flexibility or case-by-case review, please flag them to HDB and we will take a look.
Ministry of National Development
3 April 2024
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Office of the Leader of the Opposition 