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. 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:
|Bank||Home loan product|
|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|
|Refinance your mortgage|
|Loan for Additions & Alterations or Reconstruction|
|DBS||Buying Your Private Property|
|Refinancing Private Property Loan|
|Buying or Refinancing Your HDB Flat|
|POSB||Buying Your HDB Flat|
|Refinancing Your HDB Loan|
|Buying or Refinancing Your Private Property|
|HSBC||Buy a new property|
|Refinance my home loan|
|Buy a property for commercial use|
|Get home equity loan|
|Maybank||Home Loans (Private property and HDB flat loans)|
|Commercial & Industrial Property Loan|
|Overseas Property Loan|
|OCBC Bank||Home Loan (New Purchase)|
|Home Loan (Refinancing)|
|Overseas Property Loan|
|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.
With real estate prices in Singapore hitting the roof, many Singaporeans are considering buying a property overseas. If you are one of them, chances are you will also need a loan to finance your purchase. So, before you go ahead and look at your options, there are some things you need to understand to ensure the best results.
• Foreign exchange risk: It’s important to decide whether you are taking a local currency-based loan or a foreign currency-based loan. When you go for a foreign currency-based loan, you will be exposed to currency exchange fluctuation risk, which can lead to additional costs for you.
• Bank approval: The process of getting an overseas property loan in Singapore is quite different from any other loan, in terms of the complexities involved. Even if you have a good credit score and an impressive income, the chances of getting bank’s approval in-principle are never certain.
• Nationality of the buyers: When applying for an overseas property loan in Singapore, nationality of the buyers matters as much as anything else.
Buying a property overseas involves huge investment and is always considered riskier than buying a property somewhere locally. That’s why it’s important that you take some time and look at every single aspect of the investment. Once you have shortlisted a property overseas, get in touch with your local bank to discuss any concerns you may have.
30th November 2017
• While HDB loans are more convenient to get, they make up for the lower legal fees convenience by giving you a higher interest rate. While floating rate bank loans are the cheapest option in the market, even fixed rate loans are cheaper than HDB loans.
• Due to the strictness of the HDB regulations, you might not even be eligible for an HDB loan so be prepared to at least consider bank loans as a viable option. HDB loans are only viable for couples. At least one member of this couple should be a Singapore citizen, with a maximum household income of S$12,000 and who have taken not more than two HDB loans previously. To qualify for this loan, you should have sold your private property at least 31 months ago; you can’t use the HDB loan to buy an executive condominium.
• Unlike when you buy a condo flat (20% minimum down-payment), buying a build-to-order (BTO) flat allows you to put as low a down payment as 10% of the purchase price. This benefit is only available to you if you are taking an HDB loan, a bank loan would not give you this benefit.
• If you are a couple buying BTO flat and are first time applicants, you are also eligible for the Staggered Down payment Scheme. This scheme allows you to pay your down payment, whether 10% or 20%, in two instalments.
• When you apply for a home loan, whether it is a bank loan or a HDB loan, the amount that you can borrow is always limited by your total debt servicing ratio (TDSR). Your monthly loan repayments (including any other loans you might have taken) together cannot be more than 60% of your gross monthly income.
• Unlike bank loans which allow a loan tenure of up to 30 years, HDB loans only allow a maximum tenure of 25 years or till you are 65.
• Since HDB loans drain out your CPF Ordinary Account before lending you the balance, it limits the way you can use your OA balance. There are not many ways you can avoid this, you could transfer the money to your Special Account to use it for retirement, thereby limiting the money HDB can drain, or you can take a bank loan. A bank loan lets you customize your payment plans and hence it is up to you how much CPF you use for your loan payment and down payment.
• The type of property you buy decides when you start paying your loans. HDB properties allow you to repay our loans from the day you pick up the keys. This means that you don’t need to pay till you move in. Some bank loans need you start paying from the moment you sign the loan, so consult your offer documents carefully.
16th November 2017
Singapore is home to people of different cultures with as many as 3 out of every 10 people in Singapore being foreigners. Noting this fact, it does not necessarily come as a surprise that foreigners end up marrying citizens or Permanent residents.
But if you are a foreigner and you might, in the near future or not, get married to a Singaporean citizen or a Permanent Resident, here is what you need to know:
You will not be awarded citizenship upon marriage
There is of course a prevalent misconception that marrying a Singaporean citizen will gain a foreigner citizenship. That, however, isn’t true. If you are a citizen and are going to marry a foreigner, whether or not your spouse-to-be will be eligible to stay for a long term can be assessed by using the pre-Marriage Long-Term Visit Pass Assessment System of the Immigration and Checkpoint Authority.
Once you are married, the foreign national will receive an attested letter from the Ministry of Manpower, indicating consent to allow a foreign national to gain valid employment in Singapore, in line with his/her skill sets.
Purchasing a private property or an HDB Flat
This is an aspect that crosses the mind of married couples more often than not. HDB has a separate scheme to enable non-citizen spouses to get an HDB flat subject to certain terms. You are definitely eligible if you are a foreigner married to a Singaporean national. You can visit the official HDB flat to obtain further details on the same.
31st October 2017
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