Housing Loan Information
Residential Home Loan Regulations (MAS)
|1 Loan||2 Loan||3 Loan|
|Loan Tenure||Up to 30 years||31-35 years||Up to 30 years||31-35 years||Up to 30 years||31-35 years|
|Age||The age used to calculating loan tenure will be income-weighted.|
|Up to 65||Up to 70-75||Up to 70-75||Up to 65||Up to 70-75||Up to 70-75||Up to 65||Up to 70-75||Up to 70-75|
|Maximum TV Limit||75%||55%||55%||45%||25%||25%||35%||15%||15%|
|Minimum Cash Downpayment||5%||10%||10%||25%||25%||25%||25%||25%||25%|
|Gaurantors / Co-borrowers||Every co-borrower must be a mortgagee.|
If the co-borrower does not meet the TDS conditions, the guarantors must be co-borrowers.
|Mortgage Servicing Ratio||N/A|
|Total Debt Servicing Ratio||60%|
|Stress Test Interest Rate||3.5%|
What is the MSR (Mortgage Servicing Ratio)?
The Mortgage Servicing Ratio (MSR) is just the percentage of your monthly gross income that is used to pay down your mortgage.
Only HDB & executive condominium (EC) purchases were subject to the MSR.
The MSR is currently listed at 30%, which implies that if you make $4,000 per month, you can only utilize $1,200 of your earnings to finance your mortgage.
Although it appears to be a harsh approach, it is actually a reasonable one that helps guarantee home purchasers only committed to how much they can afford.
What about the Total Debt Servicing Ratio?
Many property purchasers want to know if the MSR is much like the Total Debt Servicing Ratio (TDSR). The answer is no; the TDSR specifies that loan repayments may not exceed 60% of a borrower’s gross monthly income.
All loans that take, included (but not limited to) your mortgage, are included in these debt repayments. This means that if you have any other outstanding loans (such as vehicle loans, credit card bills, or personal loans), they will all be counted against the 60 percent.
The MSR, as previously stated, only applies to HDB apartment and EC transactions. If you’re buying a private home, you simply need to think about TDSR.
Loan-to-Value (LTV) Ratio (LTV)
The loan-to-value (LTV) ratio specifies the maximum amount that a property buyer can borrow, whether from HDB or a bank. LTV ratios are used as a protection against borrowers over-leveraging.
The maximum Loan-to-Value ratio for HDB Concessionary Loans, which are exclusively available for BTO, SBF, ROF, and resale flat acquisitions, is 90%. That implies you can borrow up to 90% of the value of your home or the purchase price, whichever is less.
The maximum LTV ratio for a bank loan is 75 percent LTV for the first loan (i.e. no outstanding home loans). 5 percent of the remaining 25% must be paid in cash. The remaining 20% can be paid with a combination of cash and CPF-OA savings.
Loans from Banks
Alternatively, you might try obtaining a mortgage through a bank or financial institution (private property buyers, you have no choice!).
The key benefit of taking out a bank loan is the comparatively average environment, which means you may possibly pay much less than if you took out a HDB concessionary loan.
Again, in order to take advantage of this, you must be able to make the 25% down payment (of which at least 5 percent must be in cash). For a $1 million home, that’s a total of $250,000, $50,000 of that which must be in cash.
Bank mortgage packages are classified into two types: fixed rate loans and adjustable rate loans. The agreed-upon rates are normally valid for two to three years before reverting to another rate decided by the bank.
Bank Loans with Fixed Interest Rates
Fixed rate home loans, as the name implies, apply the same agreed rate throughout the contractual time. For example, if you sign up for a fixed rate plan at 2.1 percent p.a., the rate will remain constant for the three years you agreed to.
Bank Loans with Variable
Floating rate mortgages are a little different. These are linked to some form of index and will move up and/or down with it. In general, these are regarded as more volatile, whereas fixed rate packages are regarded as more stable.
The Singapore Interbank Offered Rate (SIBOR) packages are the most common type of variable rate loan. Because it is tied to a published index, it is more transparent than other rates that are decided only by the banks.
How to Get a Bank Housing Loan
The first stage in obtaining a bank house loan is to obtain an In-Principle Approval (IPA). As a conditional approval for your housing loan, IPA indicates how much you may borrow from the bank and the various loan packages available, giving you a better knowledge of which properties are appropriate for your budget.
Once you’ve agreed to sign a loan package with the bank, you’ll be issued a Letter of Offer that has all of the pertinent information, such as the loan amount, interest rate, and loan lock-in term. You will be free to exert your Option to Purchase and purchase the property with this Letter of Offer.
You will most likely require the following documents:
A photocopy of your NRIC
The most recent pay stubs (3 months)
The most recent Assessment Notice (2 years)
The most recent CPF Ordinary Account Statement