FAQ for Residential Loan

One of the first steps to buying a property is getting the mortgage process started. The borrower can use our free comparison website to compare competitive rates and to look out for the promotional tie-up with lenders for preferential interest rates. DO not get pressured by property agents to put any deposit for the purchase, get an IPA (In-Principal Approval) as many a time, purchasers have to forfeit their deposits due to the rejection of mortgage loan or reduced quantum.
You, the borrower must be between the age of 21 and 65 and Singaporean, Permanent Residents and foreigners may apply. Additional bank requirements may differ from bank to bank.
A typical option to purchase (OTP) has to be exercised within 14 days, failing which the option fee will be forfeited (usually 1-5% of purchase price). For private property, the standard sale and purchase agreement (S&P) has to be completed in 12 weeks from the exercised OTP date.
Depending on the purchase price, typically the amount to be prepared is as below: • Upon exercise of the OTP, you would usually be required to pay 5-10% of the purchase price (Excl. option fee) as a down payment. • If this is your first property for which you are taking up a loan: You can pay up to 80% of the purchase price with your loan. • If this is your third or subsequent property and you have more than 1 existing loan on any other property: You can pay up to 40% of the purchase price with your loan. On top of above, additional fees to be prepared will be: • Stamp Duty (3% of purchase price - $5,400) • Additional Stamp Duty if applicable • Conveyance Fee ( No Legal subsidy for new purchase as per MAS guideline, while refinancing can enjoy legal subsidy from certain lenders typically range between $1,500- $3,000) • Valuation Fee ( No Valuation Subsidy for new purchase as per MAS guideline, while refinancing can enjoy valuation subsidy from certain lenders typically up to $500) • Fire Insurance Note that for any new launches with cash or rebates such as renovation, furniture, etc. Bank will typically factor in the rebate into the purchase price resulting in a lower approving amount.
Most financial insitutions offer up to 20 or 30 years tenure for local SMEs to purchase property. The loan tenure for smaller companies such as ORIX or ETHOZ will be much shorter, but they may be able to offer better loans.
Nobody likes to purchase a property above market valuation as any difference in amount will be needed to be top up in cash by borrower. Most mortgage bankers will be able to give an indicative valuation by reputable valuers, alternatively email us at enquiry@MoneyCompare.SG and we will get the indicative valuation for you in an instant, note that indicative valuation is not binding on the bank or us.
All banks will need the same set of documents as below to adhere to MAS Total Debt Servicing Ratio (TDSR): • Copy of NRIC/Passport of applicants • Income documents: o Latest computerised payslip/IR8A o Two years’ tax return (for self-employed applicants) o Two years’ commission statement (for commission based applicants) • Option to purchase • Latest CPF statement of account (if CPF usage is involved) • Latest CPF withdrawal statement for existing property (if applicable) • Option of sale for existing property (if applicable) • Latest available statement for all existing credit facilities • 6 Month monthly bank statement • For refinancing: Loan application • For Refinancing: Tenancy agreement (optional)
A Bridging Loan helps you to meet your temporary cash flow needs. It allows you to commit to buying a new property even before receiving the proceeds from the sale of your existing property. You can borrow up to 20% of the property purchase price, with a repayment period of up to 6 months, to meet the initial down payment on your new property.
An Equity Term Loan (ETL) is a loan taken out against your property to acquire additional cash from the bank. This is a common form of financing as typically interest rates are at a low prevailing mortgage interest rates. Basically, you pledge your property as collateral in a cash loan, and this allows you to keep your property and unlock the value of the property by turning its value into a loan. The amount that can be cashed out depends on the [current valuation of the subject property x (70% to 80%)] – outstanding loan amount – CPF Usage. i.e Say you have a $1,000,000 property with outstanding loan amount of $300,000 and CPF usage of $100,000, based on conservative 70% Loan to Valuation (LTV) = $300,000. Note only private properties are eligible for ETL and not HDB. Tenures for ETL are typically [75 years – your current age] – number of years spent servicing your home loan
After signing of offer letter with the lender, the next step is to find a legal firm to do the conveyance. Lenders will have a list of the approved legal firm in their panel, thus do check with your respective banker if your appointed legal firm is on their panel.
Typically, a residential mortgage application should not take more than 3-5 working days for approval and the usual time line is approx 1-2 days time around time to get the approval letter.
Although most lenders need to adhere to Total Debt Servicing Calculation (TDSR), some will give leeway to poor credit bureau record and some lenders also have different calculation on the borrower determined income especially so for self employed personnel where lender to lender have different way of calculating their declared income. Thus all is not lost if a particular lender reject your application or give a lower quantum as expected.
Typically lock in period for most residential mortgage is 0 to 2 years lock in. After the lock in period, you will probably receive a letter from the lender that there will be a hike in interest rates. Here, we will have 2 options: 1. Re-pricing: Go back to the same lender and ask for a re-pricing package, depending on your mortgage package initially, there might be a 1 x free conversion thus no cost will be incurred to do a re-pricing of your mortgage rates else lender might charge a one time off conversion fee. 2. Refinancing: If a lender does not give the best prevailing market rates, sometimes a refinancing of a package will yield more interest savings for you. Refinancing might incur additional conveyance and valuation fees but most often than not, it will be subsidized by the refinancing lender.
For a better understanding of your current finances, you can always refer to https://www.areyouready.sg/YourInfoHub/Pages/News-How-much-CPF-can-I-use-for-my-house.aspx for more information on how much of your Ordinary Account could be used in order to purchase your property. If you would like more information on the two schemes offered by the singapore government, you can take a look at https://www.cpf.gov.sg/Members/Schemes/schemes/housing/private-properties-scheme for the PPS and https://www.cpf.gov.sg/members/schemes/schemes/housing/public-housing-scheme for the PHS.
Of course, in our platform beside the transparency of bank interest rates and the useful information on getting a residential mortgage in our constantly updated blog, we too understand the daunting task of going through the whole rigorous process of documents submission and numerous Q&A for you to take up a Residential Mortgage Loan or Refinancing. Besides applying yourself, you can choose us to acts as a middleman between you and potential lenders. Our job is to work on your behalf and with several lenders to find the best mortgage home loans. We have a well-developed stable of lenders we work with, making your life easier. We are like your personal mortgage concierge and do all the legwork for you, negotiate terms and make the approval happen all for NO COSTS. As we are independent, we provides unbiased advise from your loan selection.