SIBOR or SOR?

SIBOR is generally more stable while SWAP tend to fluctuate more. However 3-month SWAP has recently stayed consistently lower than 3-month SIBOR for an extended period of time. SOR is also very reactive to currency exchange rates.

Which bank offers the best home loan deals?

Interest rates and spreads are not all that matter. Don't ignore the closing costs involved. Different banks can have different customized home loans for you. Don't be surprised if you will save more on a home loan that charges more interest because of the lesser closing costs involved. This is especially so if you know that you will refinance your home loan as soon as the lock in period has expired.

HDB loan or bank housing loan?

Our opinion is to always take a HDB concessionary loan if you are eligible for one. One of HDB's objectives is to to provide affordable housing for the people. While a bank is profit driven.

Negative Amortization?

Negative amortization for a housing loan occurs when your outstanding housing loan balance increases instead of decreases. There are a few instances that this can happen. Speak to us to learn more.

Loan To Value Singapore Limit And Ratio – LTV Mortgage Explained

Effective 12 January 2013

1) All residential property loans will now only allow a maximum loan tenor of 35 years.

2) If you take up a loan of more than 30 years or extends past the age of 65, you can either

a) borrow up to 50% of property value if you do not have an existing housing loan

b) borrow up to 30% of property value if you have an existing housing loan

3) Non-individual borrowers will now have a cap of 20% LTV

Here is how the latest cooling measures introduced on 5 October 2012 affect loan to value.

1) All residential property loans will now only allow a maximum loan tenor of 35 years.

2) If you take up a loan of more than 30 years or extends past the age of 65, you can either

a) borrow up to 60% of property value if you do not have an existing housing loan

b) borrow up to 40% of property value if you have an existing housing loan

3) The same rulings will be applied to refinancing residential properties

4) Non-individual borrowers will now have a cap of 40% LTV

Below are effects from previous measures

Loan to value (LTV) is one of the key criteria when a home buyer decides on a housing loan. It is simply a term to describe the housing loan quantum a bank or financial institution is willing offer as a percentage to the valuation of the property in question. While most 1st time home buyers want to obtain a loan to value ratio of 80%, property investors usually opt for a ratio of 50% to 60%.

For a $500,000 property, a buyer requesting LTV 80% can totally discard a housing loan offer with a loan to value ratio of 70% because a 10% difference means that the buyer has to cough up an additional $50,000 cash to complete the purchase. It is no wonder there are a lot of horror stories of buyers forfeiting their down payments because they are unable to obtain the 80% loan to value limit and ratio.

With the latest round of government intervention policies aimed at cooling off the property market, there is some confusion of what LTV you are eligible for. Here are some clarifications.

1) 2nd mortgage capped at LTV 60%. There is an increasing number of individuals confused about whether they can qualify for 80% LTV when they already own a property. This rule is for your 2nd mortgage, not 2nd property. So if your 1st private property is fully paid up, you can still qualify for 80% loan to value.

2) New ruling applies to new purchases. When you already have a mortgage, you can still refinance and cashout at 80% loan to value. If you are wondering if a mortgage lender will offer you a mortgage refinance at LTV 80% because you already have an existing mortgage, you can be assured that the 60% ruling applies to mortgages for new purchases.

3) You have an existing mortgage in a foreign country. This is a situation faced by many foreigners in Singapore looking to buy Singapore real estate. The ruling for 60% LTV cap for your 2nd mortgage applies on Singapore mortgages only. So even if you are an expatriate and have an existing mortgage loan in New Zealand, United Kingdom, etc, your 1st mortgage loan in Singapore still qualifies for 80% loan to value ratio.

4) Loan to value cap is not an entitlement. With so many figures being thrown about all over the market place, home buyers are forgetting that the 80% and 60% LTV ceiling is not an entitlement to their home purchase. How much housing loan you will be offered by the lenders ultimately depends on your personal income and financial commitments. With low personal income, you may even only be able to obtain 50% financing even when you can legally qualify for 80%.

Contact us for a FREE housing loan analysis and to learn about the latest loan to value on Singapore housing loans.

Don’t make the mistake of making a down payment for a piece of property and later finding out that you cannot afford to finance it. Not only will you lose your down payment, you will end up as another story passed around with gossip.

Do contact us if you want an opinion. We have good contacts and networks with local and foreign banks in Singapore. And we are able to provide you information and market talk from the ground up.

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