How much can I loan for Singapore property?
The latest cooling measure for residential property loans is implemented on 6 October 2012. Under this new ruling, Loan To Value (LTV) is reduced for loans that stretches beyond 30 years or 65 years old for the borrower. The 2nd property loan and the subsequent ones will see more reduction of LTV. The impact of this measure reduces buyers’ purchasing power for subsequent property. This is another measure implemented to prevent unwanted events like the sub-prime crisis. Below is a table illustrating this measure. Before moving further, there are 3 important points to note:
- This measure is for the number of housing loans you have, regardless of the number of residential properties you own. You can own 5 fully paid condominiums, the next loan will still be your first loan.
- All non-residential loans are not taken into count for LTV. You can have 5 industrial properties on loan and 1 fully paid house. The next housing loan will still be your first loan. However, other forms of liabilities will still affect your Total Debt Servicing Ratio (TDSR).
- Age is based on Income Weighted Average Age (IWAA), which in return will determine the maximum allowable loan tenure.
To put into words to explain this table:
- If you are taking your 1st residential loan, you can loan up to 80% if you do not exceed 65 years old at the end of loan tenure, capped at maximum of 30 years and mandatory cash portion is 5%. Otherwise, your LTV will be only 60% if you exceed 30 years or past 65 years old at the end of loan tenure with mandatory cash portion of 10%.
- If you are taking your 2nd residential loan, you can loan up to 50% if you do not exceed 65 years old at the end of loan tenure, capped at maximum of 30 years. Otherwise, your LTV will only be 30% if you exceed 30 years or past 65 years old at the end of loan tenure. Mandatory cash portion for 2nd loan is 25%.
- If you are taking your 3rd or subsequent residential loan, you can loan up to 40% if you do not exceed 65 years old at the end of loan tenure, capped at maximum of 30 years. Otherwise, your LTV will only be 30%. Mandatory cash portion for 3rd and subsequent loan is 25%.
- LTV for purchase under Singapore-registered company will be 20%. Overseas companies, for example BVI companies, are not allow to take loans.
HOW TO OVERCOME HOME LOAN RESTRICTIONS
Due to this measure, many buyers resort to one of the most popular method to obtain better gearing; Decoupling of ownership. This is due to the common situation where first housing is a matrimonial home under both husband and wife’s name. Therefore, decoupling allows some potential savings on Additional Buyers’ Stamp Duty (ABSD) and also increasing gearing, should both party have strong income. You can read more about decoupling here.