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Humanising Finance
October 2018
Financial Planning for Young Families
New Home Loan Rules - How Do They Impact You?
Buying a residential property is a significant financial commitment. Choosing a suitable housing loan could be equally daunting. With recent revisions in housing loan regulations to promote a stable and sustainable property market, Humanising Finance takes you through the key changes and how they will impact you.
1. What are some of the revised lending rules?
From July 6, the Singapore Government tightened the loan-to-value (LTV) limits by 5% for all housing loans granted by financial institutions. Individual borrowers buying their first property can now borrow up to 75%, instead of 80% previously, if they do not have any outstanding housing loan for the purchase of another residential property. However, if the loan tenure is more than 30 years or the loan repayment extends past their 65th birthday, they can only borrow up to 55% of the home purchase price.

Home buyers who are Singapore Citizens and Singapore Permanent Residents now need to pay a higher amount of Additional Buyer's Stamp Duty (ABSD) when they purchase their second and subsequent residential units. The revised ABSD ranges from 12% to 15%.

For foreigners, the ABSD rate has been raised from 15% to 20% for any home purchase. You may refer to the MAS website for the details of ABSD rates.

2. What do these changes mean for a home buyer?

A more stringent LTV limit means that private home buyers will now have to put aside more cash for down payment, potentially delaying their purchase. Home buyers need to plan their cash flows more carefully to afford the higher down payment.

Foreign property buyers may curtail their demand due to a higher ABSD, and this could be good news for local buyers who are seeking to upgrade their home.

Singapore's property market entered into an en-bloc frenzy over the past two years. Entities that are looking to purchase any residential units via en-bloc collective sales will have to pay a revised ABSD of up to 30%. This will likely lead to more cautious sentiment among property developers, and cause a slowdown in the en-bloc momentum ahead.

Overall, the private housing market in Singapore has turned the tide in recent years and is now considered a buyers' market. What's on the horizon? Developers may devise new offers to attract home buyers. Regardless of the market condition and one's personal preferences, it is prudent to speak with a tax consultant and a home loan relationship manager to work out a financial plan before committing to purchase a property.

Maybank Singapore offers a variety of home mortgage packages for home buyers. Make an appointment with one of our loan specialists today. Find out more.

Disclaimer: This message is not an advice or recommendation for any financial planning, investment, legal, tax or other purposes and, accordingly, no responsibility or liability is assumed by us or our affiliates, whether directly or indirectly, from any person taking or not taking action.
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