TODAY Online : Why you can't mortgage your flat

Why you can't mortgage your flat

05:55 AM Nov 26, 2009

Letter from Chan-Wong Jee Choo Lily Deputy Director (Policy and Property) Housing and Development Board (HDB)

WE REFER to "A home to call your own" (Nov 9) by Mr Conrad Raj and the letter "Too many risks" (Nov 12) by Ms Elise Lee. Mr Raj has proposed for HDB to ease its restrictions on using flats as collateral, while Ms Lee thinks that, by doing so, owners risk losing their flats in the event of a loan default.

As HDB flats are provided essentially to meet the housing needs of Singaporeans, we agree with Ms Lee that flat-owners should not be unduly exposed to financial risks that could result in the loss of their home.

Prior to Aug 1994, HDB flat-owners could mortgage their flats to banks for credit facilities. However, as the bulk of these loans were used for share speculation and other risky ventures, the Government decided to discontinue such mortgages, except to finance the purchase of the HDB flat.

For most Singaporeans, the HDB flat is the single most valuable asset they own. Today, there is already a comprehensive range of options available to flat-owners who are looking to unlock their flat's value to provide some supplementary income. They can sublet their flats, buy a smaller flat, move to studio apartments, or opt for the Lease Buyback Scheme.

We thank Mr Raj and Ms Lee for their invaluable feedback.