Property Financing

When comes to financial and payment part of new poject, there are several major items that buyers should keep in mind, which include payment scheme &timeline, Stamp Duty, home loan, use of CPF and so on. Other costs will involve legal fee, mortgage loan stamp duty, bank valuation fee, condo maintenance fee and the like. Finance your residential property in Singapore

Payment Timeline and scheme

For buying new project from developer, buyers are required to follow the standard progressive payment scheme ruled by Urban Redevelopment Authority. Kindly please check the payment timeline and scheme here for more detailed information.

Stamp Duty and/or Additional Buyer’s Stamp Duty(ABSD)

Stamp Duty is payable with 15 days after the date when you exercise of Sales and Purchase Agreement.  From 12 January 2013, some group of buyers will have to pay ABSD when they purchase some residential property in Singapore, which is depended on their citizen status and count of owned residential property. You can get the some concept about ABSD referring to the following table. You can find more details about how does ABSD apply to the purchase of residential property here.

Singapore residential property purchase and stamp duties

Bank loan to financing purchase

1.Total Debt Servicing Ratio(TDSR) Framework

Total Debt Servicing Ratio(TDSR) framework is a structural and permanent measure package applied to property loan in Singapore. The definite purpose is to encourage the financial prudence and avoid any over borrow behavior that may be beyond one’s financial capacity or put one at the risk of over leverage. When the market move away from their advantages, those who have been aggressively relying on bank loan will suffer first from financial trouble.  Simply put, TDSR can be understood as following chart.


2.Loan-to-Value(LTV) limits and Minimum Cash Down Payment(MCDP)

When you apply for home loan, the banker will apply Loan-to-Value (LTV) limits to your application after meeting the rules under Total Debt Servicing Ratio(TDSR) Framework. LTV limits and MCDP are subject to the factors such as numbers of home loans, loan tenure and age. Please refer to the chart below for quick review.

Singapore housing loan loan to value limits and cash down payment

3. Work out your Total Debt Servicing Ratio

Local bankers will apply a series of assessment process on your total current income and liability and work out your current TDSR Ratio. It’s a prerequisite for the bankers to evaluate the property loan to be granted for your next purchase.


4. Documents to be submitted for home loan application

When you get banker for home loan application, banker will ask you to present supporting documents. Here are some basic documents required for bank home loan in Singapore.
1) Option to Purchase Agreement or Sales and Purchase Agreement, if have not purchase, please provide an indicative purchase price.
2) Provide Valuation Report in the case of buying HDB flat
3) Your NRIC
4) Fill up bank Loan Application Form and Declaration Form and Credit Cards Statements.
5) Your income statement
A. Scenario one: for employed applicants
a) CPF contribution history showing company name
b) Latest Year Notice of Assessment
c) Latest 3 month’s Payslip
d) CPF Balances
B. Scenario two: for self-employed applicants
a) Latest 2 Year Notice of Assessment
b) CPF Balances

Watch the following animation video to get to know the loan application rules in Singapore.

For home buyers who plan to use bank loan for the progressive payment, it’s important to get In-Principal Approval of mortgage loan from the bank before you make any official commitment (pass the cheque with 5% of purchase price to the developer or its representative to accept Option To Purchase). Those regulations such as TDSR framework, Loan LTV limits and ABSD often surprise our clients that the actual amount of loan they can obtain from the bank will be different from their expectation. Proper preparation prevents unwise decision.

Use of CPF money

For Singaporean and Singapore Permanent Resident(SPR), money in your CPF Ordinary Account can be used to finance your residential property.  You can pay the part of down payment and progressive payment via CPF savings. The amount of CPF money can be withdrawn for housing matters is determined by the numbers of property you own, your age and policy changes. Click here for more details of use of CPF money for property purchase in Singapore.