SINGAPORE: Elderly flat buyers will be able to make payment upon key collection and enjoy temporary loans when buying new homes, announced the Ministry of National Development on Tuesday (Mar 7).
A new Deferred Downpayment Scheme (DDS) and Temporary Loan Scheme (TLS) will help ease cash flow for senior citizens looking to unlock the value of their existing homes and "right-size", or downsize.
Proceeds from the sale of their existing flat would typically be enough to cover the purchase of a new one, but some of these elderly flat owners may have funds tied up in their existing home during the right-sizing process itself.
"Seniors ... have a nest-egg in their HDB flats and many would like to tap into this nest egg so that they can live out their golden years comfortably," said Minister for National Development Lawrence Wong during his ministry's Committee of Supply debates in Parliament. "Currently, the numbers who take up the right-sizing option are not large; and when we survey and ask people, they tell us the process is sometimes quite daunting. So we will work at making the entire process of right-sizing much easier."
The DDS, to be implemented from May 2017, will allow seniors who are right-sizing their homes to foot the full downpayment and balance purchase price for their new flat only upon key collection, a few years after booking the unit.
This is in contrast to the current requirement of a downpayment when signing the lease about three to four months after booking the flat. "We know that some seniors find it difficult to fork out the minimum five to 10 per cent downpayment, as their monies are locked up in their existing flats," said Mr Wong.
Now, elderly homebuyers will only need to pay stamp and legal fees when they sign the lease.
To be eligible, the homeowner must be aged 55 and above and applying for a two-room Flexi or three-room flat in a Build-To-Order (BTO) or Sale of Balance Flats (SBF) exercise.
TEMPORARY LOAN SCHEME TO START IN MARCH
The Housing and Development Board (HDB) will also start the TLS from Mar 8, for elderly homeowners who may need assistance in bridging their finances during the transition from existing to new flat.
"Currently, those who are right-sizing can make use of the HDB cash contra facility ... but this requires some coordination in timing, because you need to complete the sale of the existing flat and collect the keys to the new flat on the same day as a back-to-back transaction," Mr Wong explained.
"This is not always easy to do. In practice, we all know that it takes time to sell the existing flat and it is not always possible to time the transactions so perfectly. So we will provide right-sizing seniors with a temporary loan, which allows them to complete the sale of the existing flat after key collection."
The temporary loan will be disbursed after the first resale appointment for their existing flat. The loan amount will be based on what is needed to complete the purchase of their new flat, after taking into account available CPF savings. The temporary loan will then be redeemed using net proceeds from the sale of the existing flat.
The TLS will be extended to both elderly and non-elderly buyers who do not take a housing loan for their new flat.
Mr Wong also said there would be more "hand-holding" for the elderly.
"Seniors who are interested in exploring their monetisation options can walk in to HDB Hub or branches and receive one-on-one financial consultation," he explained. "To make the experience more comfortable, we have implemented an elderly priority queue at the HDB Hub so they can get prompt attention, and our officers will guide them through the right-sizing process."
"We hope this tailored package of measures will make the whole right-sizing process a more pleasant one for our seniors, from start to finish," he added.