Q&A on Property Loans

Q&A on Property Loans

For most buyers, a home is the largest purchase in life and usually needs long-term financing. This guide explains eligibility, affordability rules (TDSR/MSR), loan types, interest rates, repayments, key timelines—and what to do if things go off-track.

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Introduction

This guide covers housing loans and refinancing for residential property in Singapore (owner-occupied or investment). When you approach a bank, you must receive a Residential Property Loan Fact Sheet showing the key features and the effect of future rate increases on your monthly instalments.

Refer to the glossary at the end for plain-English definitions of key terms.

New to the market

The Basics of Buying Property in Singapore

Eligibility checklist

  • HDB flats: Citizenship & family nucleus rules; income ceilings & MOP may apply (check latest HDB rules).
  • Private & EC: Private condos open to most; EC (from developers) has eligibility checks; foreign purchase of landed needs approval.

Budgeting & affordability

Set a realistic budget including price, duties, legal/valuation, and buffers for renovation and furnishings.

Upfront costs

  • BSD on all purchases; ABSD where applicable.
  • Option fee & exercise fee per contract.
  • Legal & valuation fees.

Ongoing costs

  • Mortgage instalments & any package fees.
  • Property tax, fire/home insurance.
  • MCST maintenance fees; upkeep/sinking fund.

Financing rules

  • TDSR: Share of income to all debts.
  • MSR: For HDB & new EC (from developers).
  • LTV: Depends on loan count, tenure & age.
  • Tenure: Longer lowers instalments but raises total interest.

Typical purchase timeline

  1. Work out budget & obtain Approval-in-Principle (AIP).
  2. View units & shortlist.
  3. Secure OTP / book new-launch unit.
  4. Exercise within deadline & appoint lawyers.
  5. Valuation, legal checks & loan Letter of Offer.
  6. Pay stamp duties & complete by agreed date.
Documents you will need
  • Identity documents & latest credit bureau report.
  • Payslips/NOA & CPF contribution history.
  • Existing loan statements; tenancy agreement (if investor).
Common pitfalls
  • Committing before AIP is ready.
  • Underestimating duties and legal costs.
  • Missing OTP or stamp duty deadlines.
  • Overlooking exit costs (e.g., SSD where applicable).
Who can buy what

Eligibility to Buy Property in Singapore

Buyer profiles & property types

  • Citizens: HDB (eligibility & income rules), private property, EC (eligibility checks).
  • PRs: HDB resale (family nucleus rules), private condos/apartments; landed usually needs approval.
  • Foreigners: Private condos/apartments; landed needs approval; new EC not available in most cases.
  • Entities & trusts: Subject to tax/approval; living trusts attract specific ABSD (Trust) rules.

Ownership, residency & taxes

  • Citizens/PRs have broadest access to HDB & private markets.
  • EP/DP holders should expect longer loan timelines.
  • BSD on all purchases; ABSD by profile & property count.
How much can you borrow?

Affordability, TDSR and MSR

Total Debt Servicing Ratio (TDSR)

TDSR caps the share of gross monthly income used for all debts (including your mortgage, car loans and credit lines). For most borrowers the cap is 55%.

Mortgage Servicing Ratio (MSR)

MSR applies to HDB flats and new Executive Condominiums from developers. It caps the share of income used for the mortgage at 30%.

Other factors

  • LTV limits by loan count, age & tenure.
  • Stress-test rate used by banks affects your maximum loan.
  • Duties (BSD/ABSD) & cash/CPF mix shape cashflow.

Quick tips

  • Secure AIP before viewing.
  • Buffer for rate increases & moving costs.
  • Review lock-in & clawback terms early.
Loan pricing

Interest Rates: Fixed vs Variable

Fixed-Rate Packages

  • Rates are fixed for the stated period (often promotional vs later variable).
  • After the fixed period, rates become variable and are typically benchmarked to a reference (e.g., SORA/board rate).
  • Your agreement/Fact Sheet will set out if/when the bank may change reference type and/or spread.

Variable-Rate Packages

Comprise (i) a reference rate and (ii) a spread.

  • Reference may be public (e.g., SIBOR/SOR/CPF-OA rate/bank deposit rate) or an internal board rate.
  • Interest starts from the date of first loan disbursement (not the LO date).
Paying your loan

Repayments & Schedules

Monthly-reducing method

  • Each instalment = principal + interest.
  • Principal outstanding reduces monthly; next month’s interest is computed on the reduced balance.

What you’ll receive

  • Fact Sheet with monthly & yearly breakdowns, total interest over tenure, and what if rates rise scenarios.
  • An amortisation schedule (download or hard copy) showing month-by-month split and payoff date.

Changing instalments

Some loans allow changes during tenure. Always check:

  • Fees/charges or notice period required.
  • Minimum/maximum change allowed.

Reducing total interest

  • Shorten tenure • Increase instalments • Partial prepayment.
  • Verify any penalties during lock-in.
Discounts, subsidies & other benefits
  • You must declare any benefit that reduces purchase price (e.g., furniture voucher, duties paid by developer).
  • Banks deduct legal/valuation subsidies and similar benefits from price when computing loan amount.
  • Early full redemption/refinance may trigger clawback of subsidies—check terms.
  • Panel lawyers/insurers often offer lower charges; using non-panel service may attract admin fees.
When things go wrong

Defaults: What Happens If You Miss Payments?

Possible actions by bank

  • Declare an event of default & recall the loan.
  • Charge higher interest.
  • Foreclosure/sue to recover outstanding; pursue shortfall if sale proceeds are insufficient.
  • Commence bankruptcy proceedings.

What you should do

  • Avoid over-committing—stress-test your payments.
  • Contact your bank early if you face income shocks (job loss, illness) to explore options.
Plain-English

Glossary

Option to Purchase (OTP). Right to buy within a set time after paying an option fee.

Exercise. Confirm the purchase by signing & paying the exercise fee.

Completion. Final stage: full payment, keys handed over.

Valuation. Independent market value used by banks for loans.

BSD / ABSD. Buyer’s duties payable on purchases (profile & count dependent).

MSR / TDSR. Affordability caps for mortgage & total debt respectively.

LTV. Max % of price/value the bank can lend.

White-glove support

How We Can Help

  • Plan budget and structure for long-term goals.
  • Explain TDSR/MSR/LTV clearly with numbers.
  • Compare bank packages; arrange valuation & lawyers.
  • Manage OTP, stamp-duty dates and completion timeline.
  • Set reminders to review/refinance before lock-in ends.
Speak to a Mortgage Adviser Check Affordability

Tip: Start your Approval-in-Principle early—good units move fast and rate windows can be short.

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