We expect that all Singaporeans can get their flat by the time they decide to live alone or build a family. Unfortunately, that is not the reality now. Actually, more and more Singaporeans every year decide to cancel their flat applications for various reasons. Their decision is making the real estate market plummet.
There are others who are fortunate enough to pursue their HDB flat applications but there are others who had to give up because of financial difficulties. There are about 3% (or about 2,000) who had to give up their applications. This number will go up if we consider other reasons. Here are the top reasons behind the cancellations of flat applications:
- Unable to secure a big loan: HDB introduced a system that can help them measure how much we can borrow from the bank. They have introduced Mortgage Servicing Ration (MSR) and Total Debt Servicing Ration (TDSR). For example, TDSR is originally set at sixty percent of our income. This means that our total loans should not exceed more than sixty percent of our income.
If we have car loans, student loans and credit card debts, we will have an immense problem securing a big loan from banks. That is just TDSR. More people are cancelling because of MSR. MSR is originally set at thirty percent of our gross monthly income.
- Not good credit rating: Buying a home will be our biggest purchase so it is just right that banks will be more cautious because of our borrowed money. Before approving our bank loan, they will go to a rigorous job of checking our credit rating and history. If the rating or the history is not job, we have to expect that they will not approve our loan.
- Breaking up: When couples get a house, they have to show their marriage certificate first before getting the key. It is only right to prepare for the future so while we are still a couple, why not apply a flat together? But the thing is, there are some couples who break up before they show their marriage certificate. This is the reason why many people cancel their flats.
- Unexpected circumstances: Unexpected circumstances include things that can affect our cash flow. For example, we lost our jobs or we are hit by a serious illness.
It is difficult now to get a flat especially with the circumstances but we have to pursue it especially if we do not want to live under our parent’s roof all the days of our lives. Getting a flat or even an approval may be tough but if we really want it, we can get it.