Dream home chase turns bad

Buyer loses unit & savings after mistake in loan application

By Elysa Chen

October 05, 2008

HE wanted to upgrade from a four-room HDB flat in Hougang to a new condominium unit near the city.

Now Mr Thomas Ng, 49, may end up losing his life savings, all because of a mistake in his loan application.

He wanted to buy a $630,000 one-bedroom studio apartment in the Mackenzie 88 at Mackenzie Road, near Little India, under the Deferred Payment Scheme.

Under this scheme, buyers have to pay the stamp duty and 10 per cent down payment upfront and settle the remaining 90 per cent when their apartments are ready in 2010.

For Mr Ng, that would have been $78,000.

But when he signed the option to purchase, Mr Ng claimed, a property agent ticked the Normal Payment Scheme in his loan application.

This means that Mr Ng has to pay a 20 per cent down payment, and then make progressive payments as the condo is being completed in phases.

To add to his woes, the bank later would only offer him a 70 per cent loan instead of 80 per cent.

In all, he had to pay the developer a total of $202,000 by June this year.

Mr Ng, who earns about $5,000 a month as a self-employed salesman, could not afford this amount.

Wrong option

He could now lose the $140,000 he had paid up so far, after the developer told him in July this year that it was going to annul their agreement.

Mr Ng told The New Paper: 'What can I do now? I've lost everything and my wife told me that she wants a divorce.'

The unit which he reserved has since been sold.

Mr Ng claimed his problem started because one of the property agents in charge of marketing the project had ticked on the wrong loan option, perhaps because of his rush in handling a long queue of buyers.

Without checking, Mr Ng signed the document and passed it to his lawyer.

He assumed that everything was correct and that his lawyer would notify him if there were any mistakes.

He only realised the error some time in April or May this year when his lawyer asked him for a 10 per cent progressive payment.

Mr Ng found it strange since he had already paid 20 per cent of the purchase price and stamp duty in June last year.

Asked why he paid a 20 per cent down payment when in the deferred payment scheme, he just had to pay 10 per cent, he said he paid up because he could afford it, and did not question the discrepancy at that time.

He said: 'I know that I am partly to blame for not checking the documents, but I was not the one who ticked the wrong option. It's so much money to be paying for someone else's mistake,' he said.

OCBC bank withdrew its 80 per cent loan offer to Mr Ng and approved a loan for 70 per cent of the purchase price.

Under banking confidential rules, Mr Gregory Chan, head of Consumer Secured Lending at OCBC Bank, could not comment specifically on this case.

But he said: 'Typically, banks assess and approve each loan application on the basis of the customer's credit-worthiness which takes into consideration factors such as income level, credit history and repayment ability, among others.'

To make the 10 per cent progressive payment, Mr Ng tried to secure a bridging loan close to the July deadline.

He sold his flat for $355,000, so OCBC approved a loan of $63,000 to him in August.

But it was too late, Mr Ng said, because his payment deadline was already over by then.

He said: 'My house was sold, the bank had offered me a bridging loan, everything was ready. But I was told that the developer was confiscating my money because I missed the deadline, and the deal was over.'

Mr Kenneth Liu, 28, a relationship manager who specialises in mortgages, said Mr Ng should have got an Approval in Principle, valid for one to three months, to qualify for a loan of a certain sum even before he views a property or commit to buying it.

He said: 'He should have made sure his loan would be approved before shopping around for his house, instead of going the other way round.'

Mr Ng has tried to meet the condo developer at least twice to see if it could work out an arrangement for him to buy another unit at Mackenzie 88 or in its other developments.

He claimed that when he went to the developer's office the first time, the secretary told him the person in charge was out of town.

The second time, Mr Ng was told to deal with the developer's lawyer instead.

Mr Ng said: 'The property market now is bad, why not let me proceed with buying the unit? I am a sincere buyer, and I've tried everything to meet the developer, but it still wants to confiscate my money?'

When contacted, the condo developer declined to comment, but it is understood that it had sent Mr Ng several reminders to pay up.

As he failed to do so, he was deemed to have breached the agreement, which in turn led to the forfeiture.

Mr Ng plans to consult a lawyer on how he can recover his money.

He said: 'I have nothing to lose. I might have to downgrade from my current four-room flat, but at least I will have a roof over my head.'