There are various government schemes in Singapore. If you own an HDB flat, one of the many schemes you may be required to participate in is the Home Protection Scheme (HPS). To sum it up, the HPS basically offers insurance that ensures your family does not become homeless by losing the HDB flat if you are unable to repay the home loan. Let’s learn more about it. In this blog, we tell you about Home Protection Scheme Singapore.
Home Protection Scheme (HPS)
The Home Protection Scheme (HPS) is a term insurance scheme that protects HDB flat buyers/owners by lowering their mortgage payments. If you work as an insurance agent, you are already nodding in agreement. Mortgage insurance provides life insurance protection for any sums still owed on your home loan. In case of unforeseen situations, HPS can act as a life saviour! For instance, whoever is paying for the HDB flat dies, is diagnosed with a terminal illness, or becomes totally and permanently disabled. You or your family may be eligible for a claim. The amount of the claim will be the balance on your mortgage.
So, if you die while still owing $100,000 on your home loan, the HPS will pay it off in full. As a result, your family does not have to be concerned about losing the apartment. And they do not have to struggle with loan repayments in your absence. Insurance companies sell mortgage insurance that does the same thing. So, if you’re buying an HDB flat and are already covered by HPS, you don’t need to purchase a separate policy. Unless you want additional coverage. HPS is relatively inexpensive when compared to private mortgage insurance.
Home Protection Scheme Singapore
Who qualifies for HPS? Is it required?
HPS is required for any HDB owner who uses CPF to pay their monthly home loan installment. (Except for executive condominiums and privatized HUDC flats, HDB flats are not included). If you are purchasing an HDB flat but are not using CPF to pay for the home loan, you are still eligible for and can participate in the Home Protection Scheme. Let’s say, you buy private property, executive condominiums (ECs), or privatised HUDC flats, you are not eligible for the Home Protection Scheme, but you can purchase private mortgage insurance.
How does HPS Work When there are Multiple Owners?
If you buy a home with your spouse or a family member, you will most likely be co-owners. So, how exactly does the Home Protection Scheme work? The total coverage of all owners must be at least 100% of the outstanding home loan. This is for those enrolled in the mandatory Home Protection Scheme (but it can be more). Hence, if you and your spouse pay the same amount for your HDB flat, you can each be covered for half of the loan.
For example, suppose you and your partner have a $100,000 home loan. Your total HPS coverage must total $100,000 to meet the minimum requirement, so yours can be $50,000 and hers can be $50,000. However, you can choose a different ratio, such as $80,000 for you and $20,000 for your spouse. This is useful if you are not dividing the loan evenly.
How Much HPS Premiums Cost?
The HPS premiums are determined by the following factors:
- The flat’s outstanding housing loan
- The term of the flat’s loan repayment
- Loan Types (HDB concessionary loan or bank loan)
- Member’s age and gender
Can I Pay HPS fees with CPF?
Yes. Your CPF OA automatically deducts the annual premium. If your OA does not have enough money for both the housing loan and the HPS premium (so as to avoid your coverage lapsing), you can pay with CPF. Home Protection Scheme Singapore is a good measure to secure your home and your family’s life.