Frequently Asked Questions (FAQ)
Posted by condolaunchsg on May 23rd, 2020
1. How do I know if I am ready to buy a property?
The idea of making a large ticket purchase as a first time home buyer can be daunting. This checklist allows you to self-evaluate whether you are prepared to make a home purchase:
2. I am ready to make my home purchase, and I wish to sign a bank loan that helps me finance my home purchase. What affects my maximum loan amount and loan tenure?
There are two factors that affect loan amount and loan tenure: Age and Financial Commitment.
Generally, the younger you are, the longer your maximum loan tenure possible. Maximum loan tenures are capped at 30 years for HDB flats and 35 years for private properties.
For loan tenure exceeding 25 years for Penrose condo, or 30 years for private properties, the maximum loan amount could be reduced to 55% of the property purchase price as well.
Therefore, it is important to consider and budget prudently for long-term instalment payments to get the best loan most suited for your needs.
To calculate your maximum home loan amount, banks will take into account the ratio of your debt to your income. This is called the Total Debt Servicing Ratio (TDSR), which is capped at 60% of all borrowers’ gross monthly income. This means that the total amount of your debt (including home loans, study loans) cannot exceed 60% of your gross monthly income.
Therefore, it is crucial to clear off as many outstanding debts as possible within your means and consider what other loans you might wish to take (for instance, car loans).
If you are seeking to upgrade your home, you are exempted from TDSR requirements if:
If you are purchasing a HDB flat or Executive Condominium, banks also have to calculate your Mortgage Servicing Ratio (MSR) based on loan amount and combined monthly gross income. This is capped at 30% of all borrowers’ gross monthly income, which means that mortgage repayments must not exceed 30 per cent of a borrower’s gross monthly income, even if you have no other debt obligations.
3. Can I use CPF to finance my home loan?
Yes! You can use the funds in your Ordinary Account to:
4. What should I know about property loan refinancing?
Refinancing means replacing your current home loan package with a new one from another bank, usually with improved terms to lower your mortgage payments.
However, take note of the following:
As an alternative to refinancing, consider repricing your home loan with your existing bank.
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