To be a successful Singapore homeowner or property investor, you should know the ins and outs of getting a home loan in the city-state. If you know what they are, you can save money on your house and increase its resale value, rental income, and affordability. Check home loan compare Singapore.
Financing To The Fullest Extent
To get an HDB loan, you can borrow up to 90% of the property’s value or price, whichever is less. A 10% down payment is required to secure a loan.
Different Interest Rates
Interest rates for HDB loans are fixed at 0.1 percent higher than those of the Central Provident Fund (CPF). This is currently 2.6 percent. The HDB interest rate rarely varies and has been the same for almost 20 years. As such, many perceive it to be a set rate.
Bank home loan interest rates are substantially more variable consisting of fixed and floating rates. Regarding home loans in Singapore, there is no “perpetual fixed rate,” meaning that interest rates will change over time.
Home Loan Eligibility
A valid source of income is essential for both banks and HDB. This is frequently six months of your pay slip or CPF payments. IRAS Notice of Assessment (NOA) can also be provided if you are a self-employed or commission-based individual taking out a property loan Singapore.
Qualifying for an HDB loan further requires the following:
- There must be at least one Singaporean co-borrower
- If you’ve already taken out two HDB loans, you’ll need a bank loan to get a third.
- You cannot earn more than $14,000 per month for families, $21,000 per month for extended families, or $7,000 for singles.
- Ownership of another property is a no-no. To apply for an HDB loan, you must wait 30 months after selling your property.
- Only one commercial property can be owned at a time, and you must be operating it if you own one (e.g., it cannot be a retail space that you rent to someone else). You must also be self-employed and rely solely on that business for your income.
- The property’s remaining lease must run until the buyer is 95 years old or older.
- For eligibility, you must afford the monthly payment.
- Getting a bank loan is more complicated because each bank has its own set of rules, which might vary widely. However, all banks, including HDB, will perform a credit check on potential borrowers. There is a standard requirement for a credit score of at least BB to get a bigger loan amount and lower interest rates.
To get a home loan after a bankruptcy discharge, you’ll typically need to wait five to seven years after receiving your official discharge letter.
As a foreigner, be aware that Singapore banks are also subject to Know Your Customer (KYC) and other compliance issues so that they may want additional identification and confirmation of your identity.
Additionally, all banks will demand you to meet the following income and age restrictions and Loan To Value ratio.