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COVID-19: Banks to Allow Temporary Halt in Payments for Education, Renovation, and Motor Vehicle Loans
Cash flow concerns arising from the Covid-19 situation have been the top of the list for most individuals. Especially during the “Circuit Breaker” period, where non essential businesses were first asked to stop operation, then followed by a tightening of measures to close more workplaces until 1st June 2020. And especially if you are a Self-employed Person.
However, life goes on, and bills and expenses continue to pile up. The house that you bought last July and the renovation loan you have gotten, these instalment payments are not going to go away just because your income or your job is affected.
Earlier in March 2020, the Monetary Authority of Singapore (MAS) implemented a set of measures to allow individuals to defer home loan and insurance premium payments. On 30th April 2020, MAS rolled out new measures to further support individuals facing financial difficulties due to the Covid-19 pandemic.
This second package allows individuals to choose to temporarily halt payments for education, renovation and motor vehicle loans until 31st December 2020. Those with commercial or industrial property loans, as well as mortgage equity withdrawal loans, can also apply to their banks to defer payments until the end of this year, subject to requirements. Banks’ service fee for maintaining minimum average monthly balance in the bank account can also be waived, and including bank fees charged for failed Giro transactions set up for insurance premiums, electricity bills, phone bills etc.
Individuals do not need to show that he has been affected by the Covid-19 pandemic to apply for the above relief. Most importantly, one’s credit score will not be affected by the deferments as well.
MAS, together with the Association of Banks in Singapore and the Finance Houses Association of Singapore, has also announced other relief measures to allow individuals to extend the loan tenure for debt consolidation plans and to refinance investment property loans without being subject to the total debt servicing ratio and mortgage servicing ratio.
Applications for all the relief measures will start next Wednesday, 6th May 2020.
And applications for loan tenure extensions for debt consolidation plans will start on 18th May 2020.
However, before deciding to take on the option to defer payments or to extend your loan, please note that this could result in higher overall costs. Does this temporary cash flow relief outweigh the accumulated interest costs that you have to bear eventually?