Search for dream home turns into nightmare

Couple can't buy flat and may forfeit $8,000 in fees because they can't get housing loan

By Desmond Ng

May 21, 2008

AFTER several failed attempts to get a new HDB flat, he was ready to give up and pay more for a private property.

Then, home-buyer Dave Tan had a stroke of luck - or so it seemed. He found a new five-room HDB flat at City View @ Boon Keng.

This is the second public housing project to be built and sold by private developers. Hoi Hup Sunway Development is the developer.

Even though it cost a whopping $675,000 - not cheap for a new HDB flat - Mr Tan was okay with the price.

But his happiness was short-lived.

The 30-year-old and his fiancee, who are getting married next year, found out that they may not be able to finance their new home.


They are having difficulties securing a home loan and may even have to pay a penalty to give up the flat.

The couple's combined income is about $6,000, said Mr Tan.

They put up an option fee of about $33,000 for the flat two months ago.

But the Housing Development Board (HDB) rejected their loan application for 90 per cent of the cost of the flat last month.

This is because Mr Tan's director's fee can't be used for credit assessment, and his fiancee didn't have the pre-requisite three months of continuous employment for the same company.

Mr Tan runs a serviced office business.

His fiancee quit her last job in February and started work as a personal assistant last month.

Upon appeal, HDB said they will be willing to give the couple a loan of about $150,000, but rest will have to be paid in cash and out of their CPF.

Mr Tan said: 'Where can I find so much money to pay for the flat?

'We were very happy when we managed to get the flat. But with this loan issue, I really doubt we can afford to get the place now.'

The 714-unit condo-like development will be ready only in2011.

Mr Tan said he and his fiancee had tried balloting for a new flat three times last year.

On two occasions, the flats they wanted were already taken up. On another occasion, they didn't get a chance to choose a unit because all were taken up.

Mr Tan said he had approached afew banks for loans, but the maximum they would lend was about $400,000, still about $270,000 shy ofthe purchase price.

To make matters worse, if he defaults on this flat purchase, he'll have to pay a penalty of about $8,000 to the developer. This is about 25 per cent of the option fee which he paid for the place.

'The developer said that since the sale didn't go through, we have to forfeit part of the option fee,' he said.


'My girlfriend is so upset that she cried and lost so much sleep over the penalty. She said she has never lost so much money before in her life.'

The couple had borrowed the money to pay the option fee from their relatives.

A very frustrated Mr Tan thinks that it's unfair to be penalised because it wasn't a case of them not wanting to proceed with the deal.

Rather, they can't accept the deal now because of loan problems.

A spokesman for Hoi Hup said that in cases where the applicants do not meet the eligibility requirements for the flat, there will be a full refund of the option to purchase fee.

But if the withdrawal to buy the flat is due to other reasons, such as loan issues, the applicants face the prospect of forfeiting 25 per cent of their option fee.

The spokesman declined to comment on the above case and would only say they are reviewing MrTan's appeal to waive the penalty.