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01 Apr 2016

HDB = Marriage, What Next?


HDB = Marriage, What Next_Home Insurance

"Want to buy a HDB flat?"

"Yes!"

For some Singaporeans, a wedding proposal in the HDB-style ushers the real excitement of home ownership. But what comes next clearly requires more detailed planning.

As a first-time buyer, chances are you would take up a HDB loan. The benefits are many including a steady interest rate (2.6% per annum), 90% loan quantum (compared to 80% for banks), access to your Central Provident Fund (CPF) for the down payment and no early repayment penalties. As a young couple, any means to relieve cashflow is a plus!

However with a HDB loan, you would be bound by certain insurance requirements. Knowing what they are would help you to better plan your home insurance needs in future.

Fire Insurance: This policy will pay for the reinstatement of the building structure and any HDB provided fixtures up to the amount insured. You would need to purchase fire insurance from HDB's appointed insurer. Premium is very affordable and is renewable every 5 years. It covers for other perils including flood and water damage.

Note however, in the event of damage, this policy would not cover your household items and personal belongings. Just imagine having to build up from scratch again after you have renovated your home?

For better coverage, consider getting home contents insurance from private insurers. Some of these policies allow you to add on building cover so you can maximise protection on top of the basic HDB fire insurance policy.

Mortgage Insurance: If you are paying your home loan using your CPF savings, you are required to purchase HDB's Home Protection Scheme (HPS). This policy is like mortgage insurance and protects your outstanding loan in the event you or your spouse pass away or are permanently incapacitated. In such unfortunate circumstances, the policy ensures that your children or dependants would still have a roof over their head.

HPS premium is calculated based on your age and gender, outstanding loan amount, repayment period, loan interest and preferred coverage. You are exempted from HPS only if you have a private life insurance that covers your home loan.

If you have plans to sell your flat in future and upgrade to a private property, consider getting mortgage insurance from a private insurer as the policy will follow you to your next home. HPS does not cover private residential properties, Executive Condominiums (EC) or privatized Housing and Urban Development Company (HUDC) flats.