A housing loan is a loan given by banks and other financial institutions to a customer to buy a residential property – a Housing and Development Board (HDB) flat, an executive condominium, a private house or a plot for self-construction of house. Home loans, also known as mortgage loans, are one of the biggest loans offered by banks and financial institutions in Singapore. Home loans come with long tenures and affordable interest rates. Housing finance is given for building a house, buying an existing house, buying a house up for resale, mortgaging your property, as well as renovation of your existing house. Almost all banks in Singapore offer home loans to their customers.
If you are one of the average Singaporeans with an annual income of around S$40,000 to S$80,000, you may not be in a position to buy a house on the strength of your savings. Unless you have a rich relative who has left all their property and money to you, you cannot dream of buying a house without going for a loan. So home loans are one of the essential loans in the average lifetime of a Singaporean. It requires a lot of planning and financial discipline to commit to a housing loan.
Why should you take a home loan, though? Here are some of the key benefits of a home loan:
The Singapore banking market offers several kinds of housing finance for its customers. These include:
Singaporean banks offer home loans with various kinds of interest rates. The key of these are:
Each bank has its own set of interest rate packages that it determines based on demand, economic situation and its operating costs. The interest rates vary depending on the type of home loan and the interest rate variant you choose. Factors such as tenure of the loan, price of the property, your repayment monthly income and credit score, also play an important part in the determination of interest rates for your home loan package.
Before applying for a home loan, you need to know all the eligibility criteria set by banks and financial institutions that you need to meet in order to ensure loan approval. The eligibility parameters for HDB loans and bank loans are slightly different. Let us look at them in detail:
There are some banks in Singapore that offer home loans for foreign citizens and expats as well, though most banks are more enthusiastic about giving housing finance to Singapore citizens and permanent residents. ANZ, UOB, and OCBC are among the banks that give home loans for foreigners.
To get your home loan approved quickly and without hassles, you need to provide a set of documents to the bank or HDB. The documents required for HDB loans and bank loans are slightly different, and salaried and self-employed persons have to provide different sets of documents. Generally, all institutions need the following documents:
Before applying for a home loan you need to first find the product that is most suitable for you. Check the packages offered by all banks, the kind of interest rates the banks are offering, and the loan amount and tenure you would need. You must also try to find your debt servicing ratio – the amount of loan you can afford. Later, you should try getting an in-principle approval for the loan amount that you would need to buy your dream home.
You can apply for a home loan in three different ways:
When you are in the process of buying a house and determining the right home loan for you, there are many online tools that help you in the decision-making process. Some of the most important tools that you should use are:
Almost all commercial banks in Singapore offer home loans to their customers. Here is a detailed list of banks and their home loan products:
|Bank||Home loan product|
|ANZ Bank||Equity Loan|
|Fixed rate home loan|
|Floating rate home loan|
|Bank of China||Housing Loan|
|CIMB||CIMB HDB Home Loan|
|CIMB Private Property Loan|
|CIMB Commercial Property Loan|
|CIMB London Property Loan|
|CIMB Australia Property Loan|
|CIMB Malaysia Property Loan|
|Citibank||New home purchase loan|
|Home loan refinance|
|Loan for Additions & Alterations or Reconstruction|
|HDB Refinancing Loan|
|POSB Home Loan for Buying Your Private Property|
|POSB Home Loan for Refinancing Your Private Property|
|Fixed rate loan|
|Home Loan Refinancing|
|Commercial property loan|
|Home Equity Loan|
|Maybank||Residential Property Loan|
|Commercial & Industrial Property Loan|
|Overseas Property Loan|
|OCBC Bank||Home Loan (New Purchase)|
|Home Loan (Refinancing)|
|Overseas Property Loan|
|HDB Refinancing Loan|
|POSB Home Loan for Buying Your Private Property|
|POSB Home Loan for Refinancing Your Private Property|
|Standard Chartered Bank||Home Suite|
|HDB Home Suite|
|HDB Bridging Loan|
|Commercial and Industrial Property Loans|
|UOB||Private Home Loan|
|Home Construction Loan|
|HDB Home Loan|
|Commercial Property Loan|
|International Property Loan|
|Home Loan for Foreigners|
|Home Loan Refinancing|
|Property Equity Financing|
Before applying for a home loan, you should consider the following factors:
Getting a home loan is not as easy as getting a personal loan. Since the loan amount is the biggest of all, the documents required and the procedures to be followed are more. It is a given that you must first find the right house for yourself, bargain to get a price that you can afford to pay or take loan for, and find a lender whose home loan packages suit you the best. Once that is done, the following procedures need to be followed:
Your Central Provident Fund (CPF) is a saving grace when it comes to buying a house. Since CPF is compulsory and all of us are saving from our first day of a job through CPF, you should take advantage of CPF housing schemes to pay for your new house or home loan. What you can do is to pay the down payment using your CPF savings, and link the monthly instalments of your home loan – whether from bank or from HDB – to your Ordinary Account (OA). This way, you’ll retain much of your CPF savings for retirement, as well as be able to own a house. It is advisable not to use up all your CPF savings towards your home purchase. Let us look at how you can leverage CPF savings for purchasing a residential property:
You cannot use the Public Housing Scheme if you are buying an HDB flat with a remaining lease of less than 30 years or if your age plus the remaining lease on the house is less than 80 years. There is a limit on how much money you can withdraw from OA to fund your house purchase. If you are taking a bank loan, the withdrawal limit is 120% of the valuation limit – that is, the purchase price or the price you paid for the HDB flat when purchasing, whichever is lower. If you’re taking a new HDB loan, you can use your CPF savings until the loan is repaid completely. If you are below 55 years of age and are taking an HDB loan, you need to first set aside the Basic Retirement Sum in your Special Account (SA) and OA. There are further terms and conditions about using CPF savings to buy an HDB flat. You can check with your lender and the CPF office for further details.
The other terms are similar to those of buying an HDB flat. Consult your lender and the CPF office for further advice.
One of the biggest dilemma in going for a home loan is to decide whether you should take an HDB loan or a bank loan. Of course, if you are buying a private property, there is no room for confusion because you can only get a bank loan for private properties. But if you are buying an HDB flat – new or resale – you need to decide which lender you would prefer. To make this decision easy for you, we are listing the advantages and disadvantages of HDB and Bank loans:
Advantages of HDB loan:
Disadvantages of HDB loan:
Advantages of bank loan:
Disadvantages of bank loan:
Depending on what you’re looking for from a house loan, you should weigh the pros and cons of both HDB and bank loans before making a decision. If you want to take less risk and be more stable, go for an HDB loan. If you’re willing to experiment and take moderate risks, or if you want a non-HDB property, go for a bank loan.
The maximum tenure offered on bank loans is 35 years. However, the applicant should not be more than 70 or 75 years old at the end of the loan tenure.
Yes, Singaporeans working overseas can apply for an HDB home loan as long as they fulfil the eligibility conditions. They will need to submit additional income proof such as employment pass, work permit, etc.
Yes you can. However, you will not be able to buy an HDB flat. You can only buy private properties and executive condos if you are a foreigner.
You should have a credit score of more than 1911 and a risk level rating of A However, if your income is high, you may get a home loan even with a score of 1844 to 1910. This depends on your relationship with the bank.
No, you can only opt for refinancing your loan once the lock-in period is over.
Most of the banks offer a minimum amount of S$100,000 as home loan.
Banks will give loan according to the valuation and not as per the purchase price. So if the purchase price is higher, you will have to pay the balance from your own sources.
Yes, you can repay the loan in advance before the end of its tenure. However, please make sure you read your loan agreement letter to know about pre-payment charges.
No, you cannot get a home loan to pay the down payment for the property but you can pay it with your credit card or by opting for a personal loan.
Yes, most of the banks will require you to take fire insurance when you avail a home loan.
It is not mandatory, but a mortgage insurance will be very helpful to your family if you die or lose your ability to earn an income before the loan tenure is over. Your family will not have to inherit your debt along with the house.
A savings account in the same bank as your home loan is not mandatory but is advisable. This would make it easier to link your EMIs to the loan account and activate auto-debit facilities. It will also help you keep track of repayments and loan balance.
For many Singaporeans, the ultimate dream is to own and live in a private condominium. For being in a position to do that, you need to be aware of certain key factors. Let’s take a look at a few convenient options by which you can move to a condo in a hassle-free manner:
• Move to a condo and continue to retain your flat simultaneously
You can own a flat as well as a private property as long as you are a Singapore citizen. It is mandatory for you to comply with your flat’s MOP (Minimum Occupancy Period). This option is not applicable for permanent residents. PRs need to dispose their HDB flats within 6 months of purchasing a private property.
• Purchase a condo and put up your flat for sale at a later stage
Make sure your pending mortgage is settled before selling your flat. This will bring down your Loan to Value (LTV) ratio to a great extent. If you plan to buy a house with an incomplete mortgage, the LTV ratio will be much higher. Make sure there are no outstanding car loans, personal loans, and credit card payments on you. By doing this, there is less impact on the loan size you are planning to opt for.
• Invest in a condo after selling your flat
If you don’t want to feel pressurized by the six-month limit, you can choose to opt for a condo only after you sell your flat. Once you have a buyer for your flat, the proceeds from the sale will take care of your pending mortgage.
06th October 2017
Facing a home loan rejection can be frustrating especially when you need it the most. The bank may or may not disclose the actual reason when your home loan application is rejected. Enclosed below are a few common factors that can lead to a home loan rejection:
• Poor credit rating
Factors that lead to a bad credit rating include:
• Delay in credit card payments
• A defaulter in making the required payments
• Having restructured loans
These factors will be considered by the banks and might result in your loan being rejected.
What can you do to avoid this?
Before applying for a home loan, make sure you have a neat track record of making your payments on time. Be compliant in your credit card payments at least for 12 months and then apply for your home loan.
• Less income and high liability
Are you someone who has a lot of commitments but earn less? What can you do to avoid getting your home loan rejected? Try and finish your other financial commitments before applying for a home loan. If you earn a low income, an option for you could be to opt for a longer tenure with lesser monthly instalments.
• Legal problems
Chances are high that your home loan application may get rejected if you are fighting a legal case. It is always recommended to apply for a home loan once your legal issues are sorted.
04th October 2017
Top banks in some of the world’s leading financial capitals now have something to cheer about, even amidst the backdrop of falling gas and oil prices. The reason for their merriment is an uncharacteristic boom in property prices.
Recent data points to the fact that an increase in home-buying activity has increased the thirst amongst Singaporeans for home loans and other property related loans. In Singapore, mortgage loans make for at least 15% or 20% of the total loans offered by the top three major financial players in Singapore – DBS, OCBC and UOB.
With an increase in applications over the last year, banks are seeing warmth even in the cold waters of falling gas and oil prices. In the first quarter of this year, banks saw a 20% increase in mortgage loan applications.
However, with the increase in applications, banks are trying to focus on reducing the turnaround time – usually, there exists a 2-month lag between applying for the loan and disbursing the loan. Also, an increase in interest rates has helped banks earn much better, offsetting the negative impacts of declining gas and oil prices in Singapore.
18th August 2017
The first quarter of 2017 saw a rise of 20% in applications for mortgage loans as compared with the numbers from the previous quarter, according to data from Credit Bureau Singapore (CBS).
The CBS’s second Consumer Credit Index (CCI) also revealed that car loan applications increased by 4.13%, but personal loan applications decreased by 5.97% and credit card applications were down 5.94%.
Overall, new credit applications declined by 2% in Q1 2017, as against Q4 2016.
CBS’s quarterly CCIs examine consumer credit behavior and the overall credit situation in Singapore.
30th June 2017
Singapore banks are likely to benefit from the recent relaxation of seller’s stamp duty for residential properties from the current 16% to 12%. This change could lead to lower prices for private residential properties in the country.
Currently, OCBC and UOB have the largest share of housing loans in the country – 27% of the total loans. UOB also has the largest share of building and construction loans – 23% of the total loans.
UOB and DBS banks have recently launched promotions for home loans pegged to FHR rates (Fixed Deposit Home Loan Rate) with a 0% spread. These promotions specifically target properties that are still under construction. Homeowners will benefit tremendously from this 0% spread for up to 4 years until they receive their TOP or Temporary Occupation Permit.
Asset quality for housing loans are also said to stabilize, wherein banks will benefit from this stabilization.
10th April 2017
With a weak economy, poor labour market conditions, and rising interest rates, the private residential property market in Singapore has hit its lowest in 6 years. According to analysts, the private home prices may continue to decline this year. As per data released by the URA, in the October-to-December quarter, the private residential property index dropped by 0.4%. The non-landed private residences segment fell by 2% in the Rest of Central Region, and the prices in the Outside Central Region fell by 0.3%, while the prices in the Core Central Region fell by 1.9% like it did in the previous quarter.
The prices of landed properties rose by 0.9% in the last quarter. In 2016, the prices of landed properties fell by 4.4%, making it the largest decline amongst all market segments. According to analysts, a further decline in prices (3% to 3.5%) may bring in more buyers which in turn will increase the transaction volume to between 16,000 and 18,000.
09th January 2017
Singapore’s housing sector had gone through a few cooling measures and so it was inactive for a long period. However, it did result in a rise in sales volume, if not in prices.
The head of UBS Wealth Management’s Asia Pacific investment division said that property prices in Singapore have dropped drastically since 2013. She also mentioned that the average household income has grown in the recent years. Singapore has seen a growth in sales volume as well as in the launch of new properties.
As per data from the government, the prices of private residential spaces had gone down by 1.5% at the end of September, 2016 compared to the previous quarter. After this price decrease, the government issued many cooling measures in order to control the prices of the housing sector. Since 2011, the government started to charge an Additional Buyer’s Stamp Duty. With this charge, foreigners and Singaporeans who own more than one property, will have to pay an extra 15% on the purchase price.
Experts have commented that the skewed sales-price ratio is due to excessive supply and poor rents.
10th December 2016
The Housing Board of Singapore is taking steps to solve the problem of noise faced by the residents. They have signed a pact with 3M Singapore recently at the World Cities Summit, as per which a research will be conducted on materials for floors, walls and windows that will reduce or absorb noise transmission within flats. As per the CEO of HDB, the research will aid them in understanding the noise created through traffic and other human activities better. To recognize the challenges that they might face on the ground level and to detect research areas the HDB has decided to develop a Smart Urban Master Plan, for which it has signed a contract worth $10 million with NCS consortium. This partnership will also lead to the creation of a smart hub that will collect data from sensors around the HDB estates, which will help in monitoring operations of the estates.
12th July 2016
Runtime – This is an ongoing promotion that is valid until December 31, 2016.
Particulars – Get shopping vouchers worth up to S$50 when applying for the BOC Tax Payment Program.
• Receive Takashimaya Vouchers worth S$20 on applying for a 12 month tenure with a minimum deposit of S$2,888.
• Receive Takashimaya Vouchers worth S$50 on applying for a 24 month tenure with a minimum deposit of S$2,888.
• A processing fee of 1% will be charged for onetime payment.
• A processing fee of 2% will be charged for a 12 month tenure.
• A processing fee of 3.5% will be charged for a 24 month tenure.
Terms and Conditions:
• This promotion is applicable to the first 300 applicants with successful loan approval within the promotional period.
• The vouchers will be mailed through postal mail to the applicant on the mailing address provided on the application within 2 months.
• For further details on this promotion or for more information on the terms and conditions, please feel free to contact the bank.
The SGD 100 million Intellectual Property Financing Scheme that was introduced 2 years ago has approved its first loan application using IP as collateral where a Singapore owned Footwear Company used patents to obtain financing.
The IPOS (Intellectual Property Office of Singapore) has confirmed that the loan was disbursed to Masai Group International and was supported by DBS Bank. This overseas scheme consists of 3 participating financial institutions including DBS. The other 2 participating institutions are OCBC and UOB.
On why it took more than 2 years to approve its first loan under this scheme, IPOS has said that using IP as collateral is a new concept to both, the business community as well as the finance community and it is not the case in Singapore alone but all over the world. This is mainly because IP is an intangible asset even if it is very critical.
Andy Chaw bought Masai in 2012 from its Swiss owners and will use the financing to invest and strengthen the company’s global IP portfolios, brand marketing and support its R&D efforts for product development and new technologies.
02nd June 2016