How much can you borrow for a HDB, EC or condo?

By EdgeProp Singapore / EdgeProp | February 22, 2018 11:33 AM SGT
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Buying a home is probably the biggest financial commitment you will ever make in your lifetime. Which is why, it needs to be carefully planned.
Before you even start your hunt for a new home, you should first work out the details of what you can afford as well as what you need to pay for. Importantly, you also need to consider how much you can borrow.
Below are some guidelines on buying HDB flats, executive condominiums and condos in Singapore, as well as the loan amount you are eligible to borrow to facilitate your home-buying decisions.
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1) HDB
Loan to value: Up to 90%
i) Loan ceiling
If you’re looking at buying a HDB unit, the maximum loan you can obtain will depend on whether you’re using a HDB concessionary loan or a private bank loan. For HDB home loans (which only covers HDB flats and not Executive Condominiums), you can borrow up to 90% of the flat’s value or the selling price (whichever is lower). Meanwhile, the loan ceiling for bank loans is at 80%.
HDB flats come with a maximum home loan tenure of 30 years. However, if you have a loan tenure that stretches beyond 25 years, then your lending limit may be capped at 60% of property value or selling price.
ii) Interest rates
While it offers a higher margin of finance, HDB home loans also come with higher interest rates. They currently stand at 2.6% and has been consistently so in the last 15 years. On the other hand, bank loan packages come with interest rates of between 1.3% and 1.7%, but will increase exponentially after three years.
iii) Eligibility
HDB loans also come with tighter eligibility criteria for buyers. For instance, at least one buyer must be a Singapore citizen, and the average gross monthly household income for buyers must not exceed $12,000 for families or $18,000 for extended families. If the buyer is single and is looking to buy a 5-room or smaller resale flat, or a 2-room new flat in a non-mature estate under the Single Singapore Citizen (SSC) scheme, his or her gross monthly income needs to be below $6,000 to qualify for the HDB loan.
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Further, buyers must not own any private residence (in Singapore or overseas), and they should not have taken two or more housing loans from HDB. If they’ve taken one housing loan from HDB, the last property own must not be a private residential property.
Buyers who are not eligible for a HDB home loan can opt for a bank loan. The same goes for if you are buying a Design, Build and Sell Scheme (DBSS) flat or an Executive Condominium (EC).
iv) Payment
A key benefit to getting a HDB loan is that the down payment can be fully paid using your CPF monies. However, CPF usage and loan margin will be restricted for purchase of flats with remaining lease of less than 60 years. For resale flats, a maximum of $5,000 can be paid as deposit to the seller.
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In comparison, buyers who are getting a bank loan must include at least 5% of property price in cash.
For HDB home loans, maximum repayment period is capped at 25 years, or until the buyer is 65 years old, whichever is shorter. Meanwhile, the maximum repayment period for a housing loan from a bank is 30 years. Monthly instalments are capped at 30% of the applicants’ gross monthly income for both loan types.
2) ECs and Condos
Loan to value: Up to 80%
i) Loan ceiling
If you’re buying an EC or a condo, you will need to get a bank loan, which will allow you to borrow up to 80% of the property value or selling price, whichever is lower.
In addition to this, you must meet the total debt servicing ratio (TDSR) requirement, which means that your total monthly repayments, inclusive of other loans, cannot exceed 60% of your gross monthly income after taking your home loan. For example, if you’re planning to buy a $1.62 million property in the Rest of Central Region (RCR), the gross monthly salary you would need to be making to fulfil the TDSR requirement is $9,729.
Like HDB flats, the maximum loan tenure for ECs is 30 years. Meanwhile, private properties in Singapore have a maximum loan tenure of 35 years. However, lending limit beyond 30 years may be capped at 60% of the property value or selling price.
ii) Interest rates
As explained above, HDB loans do not cover ECs, so you’ll need to secure a bank loan if you’re thinking of buying one. Obviously, the same applies for private properties.
Unfortunately, the age of low interest rates are over and rates for both fixed and floating home loan packages have been rising since the beginning of the year. Home loan packages currently start at 1.60%, but will increase exponentially after three years. We’ve compiled a list of some of the best value home loan packages here.
iii) Eligibility
Only Singaporean couples and Singaporean/permanent resident couples can buy an EC unit. The couple must also not exceed the household income ceiling of $14,000 a month.
This is also provided that buyers only own or owned one of the following units prior to their application: flat bought from HDB, EC or DBSS flat purchased from the developer, and a HDB resale flat bought using a CPF Housing Grant (only applies to first-time applicants).
In essence, an eligible buyer is allowed to purchase the above properties twice in total, not twice per type of property.
Private properties in Singapore are costlier, but have lesser restrictions on foreign ownership. However, to curb foreign speculation, the Singapore government impose an Additional Buyers Stamp Duty (ABSD) of 15 percent on foreign buyers, on top of the regular Buyer’s Stamp Duty (BSD).
So if you’re a foreigner looking to buy a condo in the city fringe, be prepared to pay more than $300,000 in stamp duties alone, with prices increasing the closer you move to the core.
iv) Payment
For EC purchases, assuming the banks are able to loan you up to 80% of the property value, you would need to have 5% cash for the down payment and the remaining down payment by cash or CPF.
If you’re a Singaporean or a PR buying a condo, under the CPF Board Private Properties Scheme (PPS), you can use your CPF is a number of ways: pay for purchase price of the property, repay housing loan in part or in whole to service monthly loan instalments, repay construction loan, as well as for payment of stamp duty, legal costs, survey fees and other costs incurred in the property purchase.