Searching for your nest? You will be banging your head if you start your property hunt without knowing these 7 key facts.
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Minimum Downpayment
For the 1st housing loan, the minimum downpayment is 25% of the purchase price or valuation, whichever is higher. 5% must be paid in cash and the balance can be either in cash or from your CPF savings.
For HDB concessionary housing loans, the minimum downpayment is normally what you have in your CPF Ordinary Account, with the exception of $20,000 that you may retain. If this is less than 10%, the balance must be paid in cash.
The downpayment requirement for the 2nd housing loan onwards seems to be a Hobson's choice for the man in the street. Multi-millionaires, this is what you need to know.
For the 2nd housing loan, the minimum downpayment is 55%. 25% must be paid in cash and the balance can be either in cash or from your CPF savings.
For the 3rd housing loan onwards, the minimum downpayment is 65%. 25% must be paid in cash and the balance can be either in cash or from your CPF savings.
Property Stamp Duty
The most significant cash outlay beside the property purchase itself would be the property stamp duty.
It ranges from 3% to 20% of the purchase price.
You can obtain the figure easily using Finko's Property Stamp Fees Calculator.
CPF Usage
CPF savings can be utilised towards the purchase of a property, payment for stamp duty, legal fees and repayment of monthly instalments for the home loan as long as you meet the following criteria:
- You must be the owner of the property.
- The property must have a remaining lease of no less than 20 years.
- The property purchased is in Singapore, and the loan application is accompanied by a valuation report.
- The applicant must not be an undischarged bankrupt.
Maximum Loan Period or Tenure
For a private property home loan, the maximum tenure is the income-weighted age of borrowers up to 65 years old or maximum of 30 years, whichever is lower.
For a HDB flat home loan, it is up to 65 years old or maximum of 25 years, whichever is lower.
Do note if the remaining lease of the property is short, it will also have an impact on the loan tenure.
The number of years you can borrow over can greatly affect your loan affordability. Use this home loan interest rate sensitivity tool to have an idea of how mortgage instalments vary with loan tenure and interest rate.
Total Debt Servicing Ratio (TDSR)
Total Debt Servicing Ratio is the ratio of the borrower's monthly total debt obligations, including the mortgage in question, to gross monthly income, expressed as a percentage. MAS stipulates that a borrower's TDSR cannot exceed 60%.
More details can be found in our TDSR Guide.
Types of Mortgage Interest Rate
Mortgage rates can be broadly classified into fixed and floating rates. Basically fixed rates do not change over a set number of years while floating rates can move up or down.
Check out this article if you would like to understand more on the types of rate: Know your Home Loan Rate Type and Save Some Money.
Home Loan Eligibility
Now that you are pretty much in the know, there's one more thing left to do. Calculate the maximum home loan you are eligible for and you are set to go.
Good luck finding your dream property!