HOW TO GUIDES

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Financing the Purchase of Property


Mortgages can be obtained for purchase of all freehold properties and some leasehold properties depending upon the usage and the unexpired lease term. New leasehold residential properties which generally come with 99 years leasehold shouldn't be a problem. Banks may be unwilling to give loans for residential properties with less than 60 years unexpired lease.

The current Monetary Authority of Singapore (MAS) ruling (January 2013) allows buyers with one or more outstanding housing loan to borrow up to 50 percent of the valuation (Market Value) or purchase price, whichever is lower. If the loan period extends beyond the borrower’s retirement age of 65 or if the loan tenure exceeds thirty years, the LTV is 30 percent. 25 percent must be paid in cash, the remaining balance can be paid using the buyer's Central Provident Fund or cash.

The Loan-to-Value (LTV) limit has been lowered to 20 percent on housing loans granted by financial institutions regulated by the MAS for property purchasers who are not individuals.

  • Further information on the LTV limits effective as of January 2013 (PDF)

Some banks offer a lower interest rate for mortgages where the residential property is the first property purchased and is for owner occupation.

The purchaser should check the market valuation for the property they want to buy. Valuation directly affects the amount of financing that can be granted for the property. Banks generally do not require a condition survey on the state of repair of a property. However, if there are serious known risk issues, banks may be reluctant to grant a mortgage. The condition of the property also affects market value and hence the actual loan amount that can be obtained under a mortgage.

The purchaser will also need to check if their credit status and income proof will enable them to borrow the amount required.

Pricing and Property Valuations