Do I need an In Principal Approval from a bank for a bank loan before I apply for a flat via the Open Booking of Flats for HDB?

It’s good to have.

An In-Principle Approval (IPA, sometimes referred to as AIP or Approval In-Principle) is an agreement with a bank. Based on your credit history and financial health, a bank can assess your eligibility and pre-approve your home loan.

If you bought your BTO through HDB, an IPA is similar to what HDB makes you apply for prior — the HDB Loan Eligibility (HLE) letter.

No actual loan that takes place when you get an IPA; rather, it’s a guarantee that the bank will extend you the loan when you need it.

An IPA is NOT a commitment that you’ll take up a loan from that bank, so if the interest rate is revised upwards and/or you find a better rate or suddenly inherit a house, you can let the IPA lapse or apply for your home loan from another bank.

It works the other way as well. If your financial situation suddenly changes, the bank reserves the right to reject or cancel your loan application or IPA. So don’t plan major life or job changes when buying a home.