Inherit Old HDB - Sell or keep?

[copp3r]

I read somewhere that banks require a minimum remaining HDB lease of 30 years at the end of a mortgage.

So if HDB is built in year 1970,
99 year lease ends in 2069,
bank mortgage (DBS / UOB / etc.) needs to end by 2039

Is the 30-year thing true?

If yes, to get a 15-year mortgage,
the latest to apply such mortgage for this flat = 45 years before lease ends = 2024

Is this correct?

 

[BBCWatcher]

I read somewhere that banks require a minimum remaining HDB lease of 30 years at the end of a mortgage.

Do you remember where you read that? Although there probably isn't much outstanding bank mortgage debt on HDB flats with fewer than 30 years of leasehold remaining, I don't think that's actually true.

A short remaining leasehold means the "V" (Value) in the Loan To Value (LTV) calculation is relatively low and getting lower faster. The lender will take these realities into account, and the MAS requires lenders to do so. But hypothetically a borrower could obtain a mortgage based not only on the HDB flat but on other assets. Hypothetically a billionaire could buy a HDB resale flat with a short remaining leasehold, use a tiny fraction of his/her wealth as collateral, and obtain a mortgage. I don't think there's any regulation prohibiting this scenario.

There are (other) rules limiting how many CPF Ordinary Account dollars you can use toward your down payment on a HDB resale flat when it has a "short" remaining leasehold.

 

[copp3r]

Do you remember where you read that? Although there probably isn't much outstanding bank mortgage debt on HDB flats with fewer than 30 years of leasehold remaining, I don't think that's actually true.

A short remaining leasehold means the "V" (Value) in the Loan To Value (LTV) calculation is relatively low and getting lower faster. The lender will take these realities into account, and the MAS requires lenders to do so. But hypothetically a borrower could obtain a mortgage based not only on the HDB flat but on other assets. Hypothetically a billionaire could buy a HDB resale flat with a short remaining leasehold, use a tiny fraction of his/her wealth as collateral, and obtain a mortgage. I don't think there's any regulation prohibiting this scenario.

There are (other) rules limiting how many CPF Ordinary Account dollars you can use toward your down payment on a HDB resale flat when it has a "short" remaining leasehold.

Found it here:
https://www.vivianchong.sg/post/should-you-keep-or-sell-your-ageing-hdb-flat

"Banks require a balance lease of 30 years at the end of the loan tenure. It also has a minimum loan tenure of 5 years. With balance lease less than 35 years, buyers will not be able to secure a bank loan."

Thanks for highlighting the V on LTV !
I guess even if the requirement doesn't exist, banks will try to be conservative as it gets really close to lease-expiry, the LTV or Loan to Price ratio will be much lower than newer HDBs.

 

[henrylbh]

Do you remember where you read that? Although there probably isn't much outstanding bank mortgage debt on HDB flats with fewer than 30 years of leasehold remaining, I don't think that's actually true.

A short remaining leasehold means the "V" (Value) in the Loan To Value (LTV) calculation is relatively low and getting lower faster. The lender will take these realities into account, and the MAS requires lenders to do so. But hypothetically a borrower could obtain a mortgage based not only on the HDB flat but on other assets. Hypothetically a billionaire could buy a HDB resale flat with a short remaining leasehold, use a tiny fraction of his/her wealth as collateral, and obtain a mortgage. I don't think there's any regulation prohibiting this scenario.

There are (other) rules limiting how many CPF Ordinary Account dollars you can use toward your down payment on a HDB resale flat when it has a "short" remaining leasehold.

I dare say that the banks' policy of not extending loan on property that's has lease of less than 30 years was in place long before you started working here.

 

[copp3r]

I read somewhere that banks require a minimum remaining HDB lease of 30 years at the end of a mortgage.

So if HDB is built in year 1970,
99 year lease ends in 2069,
bank mortgage (DBS / UOB / etc.) needs to end by 2039

Is the 30-year thing true?

If yes, to get a 15-year mortgage,
the latest to apply such mortgage for this flat = 45 years before lease ends = 2024

Is this correct?

Spoke to a property-agent friend.
He said the requirement of minimum remaining HDB lease does exist, with varying duration per bank :

• DBS = 20 years
• OCBC = 30 years

If you guys have info on other banks, please share too.

With this in mind, I'd probably sell my HDB 35 years before its lease expires (latest), to allow the buyer to get 15-year mortgage at DBS.

 

[BBCWatcher]

That information may be correct if the sole collateral is the HDB leasehold. But the MAS allows mortgage lenders to accept other forms of collateral, subject to some evaluation criteria. Uncommon with HDB flats but hypothetically possible AFAIK.

On edit: Yes, this makes sense in terms of individual lender requirements when they evaluate types of collateral. HDB leaseholds must have a certain minimum length remaining for the lender to treat it as valid collateral. But they're not the only form of collateral. If for example you have a fixed deposit lodged with the bank then that's perfectly fine collateral (if you're willing to pledge it).

 

[DevilPlate]

Spoke to a property-agent friend.
He said the requirement of minimum remaining HDB lease does exist, with varying duration per bank :

• DBS = 20 years
• OCBC = 30 years

If you guys have info on other banks, please share too.

With this in mind, I'd probably sell my HDB 35 years before its lease expires (latest), to allow the buyer to get 15-year mortgage at DBS.

Why would u want to wait till left bal lease of 35yo to sell?
Prices would have fallen off the cliff already and possibly stagnate once hit ~50yo. (Your only target buyers are elderly in their 60-70s buying their last mile home in full cash anyway)

 

[Nofear40]

Policy change

https://www.hdb.gov.sg/residential/living-in-an-hdb-flat/changing-owners-occupiers/change-in-ownership/change-in-flat-ownership/eligibility#:~:text=Owners of private property or,owners is a Singapore Citizen

they seem to have removed the cutoff date?

 

[ahnyaahnya]

Seeking advice on the above - I have the chance to inherit a 45 year old HDB from my late parents. Presently staying in private property. Thinking if I should keep it for rental after MOP of 5 years? Or sell it now?

Are you allowed to keep the HDB?

 

[Nofear40]

Are you allowed to keep the HDB?

Yes.
Please see the link
https://www.hdb.gov.sg/residential/...ate property or,owners is a Singapore Citizen

used to be that the hdb needs to be purchased before Aug 2010 then you will be allowed to keep it you own a Pte

Seems that they have removed the restriction

 

[van123]

Yes.
Please see the link
https://www.hdb.gov.sg/residential/living-in-an-hdb-flat/changing-owners-occupiers/change-in-ownership/change-in-flat-ownership/eligibility#:~:text=Owners of private property or,owners is a Singapore Citizen

used to be that the hdb needs to be purchased before Aug 2010 then you will be allowed to keep it you own a Pte

Seems that they have removed the restriction

Think still must dispose off Pte property first then can own the HDB according to what is stated in the link

 

[Nofear40]

Think still must dispose off Pte property first then can own the HDB according to what is stated in the link

Sorry.. which part?
It says “private property owners Or owners who have disposed private properties Within 15 months..,”

 

[ahnyaahnya]

Yes.
Please see the link
https://www.hdb.gov.sg/residential/living-in-an-hdb-flat/changing-owners-occupiers/change-in-ownership/change-in-flat-ownership/eligibility#:~:text=Owners of private property or,owners is a Singapore Citizen

used to be that the hdb needs to be purchased before Aug 2010 then you will be allowed to keep it you own a Pte

Seems that they have removed the restriction

Doesn't look like it to me.

The part about private property owners being able to inherit HDB still says that the private property has to be disposed of. The only exemption is that they don't have to wait for 15 months, unlike those who sell of their private property to buy HDB

 

[ahnyaahnya]

On edit: Yes, this makes sense in terms of individual lender requirements when they evaluate types of collateral. HDB leaseholds must have a certain minimum length remaining for the lender to treat it as valid collateral. But they're not the only form of collateral. If for example you have a fixed deposit lodged with the bank then that's perfectly fine collateral (if you're willing to pledge it).

I think Cash Backed Loans have low interest rates.
Someone I know used that before, long ago. Was overseas though, not here.

 

[Nofear40]

Doesn't look like it to me.

The part about private property owners being able to inherit HDB still says that the private property has to be disposed of. The only exemption is that they don't have to wait for 15 months, unlike those who sell of their private property to buy HDB

Owners of private property or owners who have disposed of private property within the last 15 months may take over the ownership of an HDB flat if they meet the following: The existing flat owner has fulfilled the requisite occupation period. At least 1 of the proposed owners is a Singapore Citizen.

 

[DevilPlate]

Try not to plan to inherit yr parents hdb lah.
inherit pte property bestest…free of absd for now

 

[pclow59]

How about having a HDB now and parents pass on and I inherited part of their private property, will need to sell my HDB?

 

[BBCWatcher]

How about having a HDB now and parents pass on and I inherited part of their private property, will need to sell my HDB?

You're not required to sell your HDB flat when you inherit property of any type anywhere in the world. However, you may be required to sell the inherited property within a reasonable period of time if you want to keep your HDB flat. It depends mainly on the type of property and whether you've satisfied the Minimum Occupation Period (MOP) for your HDB flat.

 

[PhantomOpera]

What if the beneficiary already owns private property?

Suppose the beneficiary of the deceased already owns private property. In that case, it will depend on the date the inherited HDB flat was bought by the deceased. If the deceased bought the flat before 30 August 2010, the beneficiary may keep both the private property and the HDB flat. There are conditions, however:
the beneficiary must be eligible to own an HDB flat; and
the beneficiary and their family must live in the HDB flat

https://www.latestprojectlaunch.com...the inherited HDB flat,at least 21 years old.

Is this still valid i.e. a person who owns a pte ppty can inherit and keep the HDB subject to the above 2 conditions? If the beneficiary wishes to rent out the HDB, must keep a room locked?

 

[DevilPlate]

Is this still valid i.e. a person who owns a pte ppty can inherit and keep the HDB subject to the above 2 conditions? If the beneficiary wishes to rent out the HDB, must keep a room locked?

Cannot lah.

own HDB can inherit pte ppty in general but not the other way round.