Buying a property is a large financial commitment. For most of us, we would finance a portion of it. This then is a summary of what you need to fork out in terms of downpayment as well as how much of loan you qualify for when you purchase a property. These home loan limits and ratios are set by the Monetary Authority of Singapore (MAS).
HDB Flat Purchases
1) Loan from HDB
- Downpayment of 10% of the purchase price or market valuation, whichever is lower (Can be fully funded by CPF Savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
2) Loan from a bank with no other outstanding housing loan (Loan tenure 25 years or less. Sum of loan tenure and age of borrower at the time of applying does not exceed 65.)
- Downpayment of 20% of the purchase price or market valuation, whichever is lower (First 5% strictly cash, next 15% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
3) Loan from a bank with no other outstanding housing loan (Loan tenure exceeds 25 years up to a maximum of 30 years. Sum of loan tenure and age of borrower at the time of applying exceeds 65)
- Downpayment of 40%Â of the purchase price or market valuation, whichever is lower (First 10% strictly cash, next 30% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
4)Â Loan from a bank with 1 other outstanding housing loan (Loan tenure 25 years or less. Sum of loan tenure and age of borrower at the time of applying does not exceed 65.)
- Downpayment of 50%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 25% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
5)Â Loan from a bank with 1 other outstanding housing loan (Loan tenure exceeds 25 years up to a maximum of 30 years. Sum of loan tenure and age of borrower at the time of applying exceeds 65)
- Downpayment of 70%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 45% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
Private Property Purchases
1) Loan from a bank with no other outstanding housing loan (Loan tenure 30 years or less. Sum of loan tenure and age of borrower at the time of applying does not exceed 65.)
- Downpayment of 20% of the purchase price or market valuation, whichever is lower (First 5% strictly cash, next 15% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
2) Loan from a bank with no other outstanding housing loan (Loan tenure exceeds 30 years up to a maximum of 35 years. Sum of loan tenure and age of borrower at the time of applying exceeds 65)
- Downpayment of 40%Â of the purchase price or market valuation, whichever is lower (First 10% strictly cash, next 30% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
3)Â Loan from a bank with 1 other outstanding housing loan (Loan tenure 30 years or less. Sum of loan tenure and age of borrower at the time of applying does not exceed 65.)
- Downpayment of 50%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 25% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
4)Â Loan from a bank with 1 other outstanding housing loan (Loan tenure exceeds 30 years up to a maximum of 35 years. Sum of loan tenure and age of borrower at the time of applying exceeds 65)
- Downpayment of 70%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 45% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
5)Â Loan from a bank with 2 or more other outstanding housing loan (Loan tenure 30 years or less. Sum of loan tenure and age of borrower at the time of applying does not exceed 65.)
- Downpayment of 60%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 35% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
6)Â Loan from a bank with 2 or more other outstanding housing loan (Loan tenure exceeds 30 years up to a maximum of 35 years. Sum of loan tenure and age of borrower at the time of applying exceeds 65)
- Downpayment of 80%Â of the purchase price or market valuation, whichever is lower (First 25% strictly cash, next 55% can be fully funded by CPF savings if CPF savings are sufficient).
- Cash over valuation if purchase price is higher than valuation. (Strictly cash)
Things to take note:
A) Banks calculate the age of joint borrowers using an income weighted average age
| Income of Younger Borrower is MORE than income of Older Borrower | Income of Younger Borrower is LESS than income of Older Borrower | |
|---|---|---|
| Outcome | IWAA is lower. Loan tenure is longer. | IWAA is higher. Loan tenure is shorter. |
| Income Weighted Average Age (IWAA) | A aged 30 earns $7,000 per month B aged 50 earns $3,000 per month IWAA = [(30 x $7000) + (50 x $3000)] / ($7000 + $3000) = 36 years | A aged 30 earns $3,000 per month B aged 50 earns $7,000 per month IWAA = [(30 x $3000) + (50 x $7000)] / ($3000 + $7000) = 44 years |
B) For borrowers who currently own only one residential property with the intention of selling it and are obtaining the second housing loan for the purpose of purchasing a new Executive Condominium (EC) from a developer of a new HDB flat can be treated as individuals with no outstanding housing loan. They will need to provide a copy of the signed undertaking with HDB to dispose of their first property within the stipulated time to the bank granting them the loan for their second property.
C) For borrowers with outstanding loans who wist to be considered as individuals with no outstanding loans, they must provide evidence that they have sold their existing properties. If the existing property or properties are private properties, the borrower can provide the signed Sales and Purchase (S&P) agreement with the corresponding paid IRAS stamp duty certificate. If the existing property is a HDB flat, the borrower can provide HDB’s approval letter to sell the flat. This letter is issued about 2 weeks after the first appointment.
The information stated is accurate as of date of publishing.
Yours Sincerely,
Daryl Lum
www.daryllum.com
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