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Housing loan discharge – do you have to pay more money for it?

Yes, a housing loan discharge typically incurs more expenses for you

housing loan discharge
You may incur legal costs with housing loan discharge

A woman who fully repaid her housing loan took to social media to ask why she had to pay an additional sum for the discharge of her loan. “Why pay finish loan still need to pay to stop my loan?” she asked.

In a post to a popular Facebook group on April 15, one netizen shared a photo of the fees she was charged for her housing loan discharge.

The letter, dated April 12, was from the Bedok branch of the Housing and Development Board’s (HDB) Housing Management Group. The letter read: “Dear Owner(s) We are pleased to inform you that the housing loan of your flat has been fully paid”.

It continued that there were still “fees for discharge of loan” to be paid. These fees included a stamp/registration fee, conveyancing fee, and GST on conveyancing fee. The additional amount she needed to pay in order to discharge her loan was $120.65.

When you mortgage your property to a mortgagee (in this case HDB), the ownership of the property is transferred over to the mortgagee as a form of security for a loan. However, you have a right to redeem this mortgage, which entitles you to call for the re-transfer of your property when the secured debt is satisfied. The process is known as mortgage redemption.

Typically, you would have to appoint a lawyer for housing loan discharge and all legal fees are usually borne by you.

Mr Paul Ho, chief officer at iCompareLoan, said: “HDB has a standard rate for housing loan discharge of mortgage, which includes reassignment.”

HDB’s standard rates for housing loan discharge are as follows and it is tied to your flat type:

  • 1 room flat – $22
  • 2 room flat – $33
  • 3 room flat – $44
  • 4 room flat – $55
  • 5 room flat – $66
  • HDB Executive flat – $77
  • HUDC flat – $88

HDB in fact has an entire set of conveyancing fees rules where all such fees are clearly spelt out. It is called the Housing and Development Act (Chapter 129, Section 65 (1) (g)) – Housing and development (conveyancing fees) rules:

Types of transactions for HDB, HDB Executive and HUDC flatsBoard’s Scale of Fees (Computed to the next $)
1Sale of flat by the Board, together with mortgage of such flat to the BoardFirst $30,000 @ 9.0 c. per $100 or part thereofNext $30,000 @ 7.2 c. per $100 or part thereofThereafter @ 6.0 c. per $100 or part thereofThere shall be a minimum fee of $20.
1aSale of flat by the BoardFirst $30,000 @ 9.0 c. per $100 or part thereofNext $30,000 @ 7.2 c. per $100 or part thereofThereafter @ 6.0 c. per $100 or part thereofThere shall be a minimum fee of $20.
1bMortgage of flat to a lender other than the BoardFirst $30,000 @ 9.0 c. per $100 or part thereofNext $30,000 @ 7.2 c. per $100 or part thereofThereafter @ 6.0 c. per $100 or part thereofThere shall be a minimum fee of $20.
2Resale, transfer or assignment of flat by the ownerFirst $30,000 @ 13.5 c. per $100 or part thereofNext $30,000 @ 10.8 c. per $100 or part thereofThereafter @ 9.0 c. per $100 or part thereofThere shall be a minimum fee of $20.
3MortgageFirst $30,000 @ 13.5 c. per $100 or part thereofNext $30,000 @ 10.8 c. per $100 or part thereofThereafter @ 9.0 c. per $100 or part thereofThere shall be –
(a) a minimum mortgagee’s fee of $20 for 1 room and 2 room flats and $40 for other types of flats; and
(b) a minimum mortgagor’s fee of $20 for all types of flats.
4Discharge of mortgage (including reassignment)1 room flat – $22
2 room flat – $33
3 room flat – $44
4 room flat – $55
5 room flat – $66
HDB Executive flat – $77
HUDC flat – $88
5Transmission, Notice of Death and Surrender of Lease1 room flat – $22
2 room flat – $33
3 room flat – $44
4 room flat – $55
5 room flat – $66
HDB Executive flat – $77
Multi-Generation flat – $77
HUDC flat – $88
6Application for a subsidiary certificate of title for lost duplicate Lease incidental to any transaction above1 room flat – $100
2 room flat – $150
3 room flat – $200
4 room flat – $250
5 room flat – $300
HDB Executive flat – $350
HUDC flat – $400
7Application for a subsidiary certificate of title for damaged duplicate Lease incidental to any transaction above1 room flat – $22
2 room flat – $33
3 room flat – $44
4 room flat – $55
5 room flat – $66
HDB Executive flat – $77
HUDC flat – $88
source: HDB

In fact, for housing loans from HDB, the process is much simpler as HDB will handle some of the communication with the CPF Board for you if you are planning to use CPF funds for the housing loan discharge.

Written by Ravi Chandran

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