Published December 24, 2008


Home buyers already subject to financial checks

IN the letter, 'Risk profiling for home buyers?' (BT, Dec 17), Mr Ee Teck Siew suggested that the government and industry associations consider implementing a 'fact finding process' to ensure that potential home buyers buy properties they can afford, based on their abilities to service mortgage loans.

Most home buyers would need to obtain a bank loan upfront. The home buyers would therefore be subject to credit screening by the banks, which will ensure that the home buyers can afford the properties they intend to buy. In the credit checks, the banks would typically take into consideration the home buyer's income, age and other debt commitments.

HDB flat buyers taking HDB concessionary loans are required to obtain an HDB Loan Eligibility (HLE) letter before committing to the flat purchase. The HLE letter similarly takes into account the flat buyers' age, income and other financial commitments to calculate the maximum loan quantum and the expected monthly instalments to ensure that the flat buyer is not financially overstretched.

We thank Mr Ee for his feedback.

Lim Yuin Chien
Deputy director (corporate communications)
for permanent secretary
Ministry of National Development