RESIDENTIAL PROPERTY HOME LOAN.

• When buying a property for own stay or investment, for long term or short term, choosing the right loan package is an integral part of the selection criteria as it will reduce unnecessary additional costs incurred in the future.

• The main features of the loan package we need to consider are interest rates, loan-to-value ratio, loan tenure, repayment, lock-in-period, prepayment penalties, subsidies, interest offset features, valuation etc.
• The types of reference rates for home loans include; (I) Singapore Interbank Offer Rate (SIBOR), (II) Swap Offer Rate (SOR), (III) Variable Rates (with a reference rate determined by the banks) or (IV) Fixed Rates.
• To calculate loan affordability, Total Debt Servicing Ratio (TDSR) applies. This means that buyers can only use a maximum of 60% of their total net income to service their major liabilities which includes their mortgage payments. Learn more about TDSR here

• In addition to TDSR, when buying HDB or Executive Condominium (EC) apartments, we also need to take into consideration the Mortgage Servicing Ratio (MSR) which caps the maximum amount of monthly instalment for HDB or EC properties at 30% of your total monthly income. Assuming that you have a monthly fixed salary of $ 8,000 and no outstanding monthly debt obligations, your MSR limit would be $2,400 to pay for the instalment of your HDB or EC. In addition, TDSR applies as well. Whereas if you were buying a private property, you would be able to afford a property with monthly mortgage instalment of $4,800, under the same salary conditions. That is assuming of course you have the available funds to pay for the downpayment and stamp duties.