Committing more than what you have in the bank account is scary, especially if it’s your first time. In 4 steps, we are going to equip you with enough knowledge for you to be clear on what to do in each stage of the new purchase
Step 1
Determining the type of property
HDB or Private Property
This is very important as it is a key question to your budget. Do keep in mind, if you are undecided, you can proceed with other steps first before making a decision; the following steps are aimed to give you more clarity.
Step 2
Determining the maximum loan quantum
Understanding the maximum loan quantum is different for HDB and Private Properties. (Executive condos are considered as Private properties after 5 years MOP)
The maximum repayment of loan the loan will depend on a percentage of your income. this defers for HDB and Private properties
In the interest of getting more clarity, we will be using the profile of
John
35 years old
$10,000 Income
$800 car loan
HDB(Step 2)
Mortgage Servicing Ratio (MSR) is 30% of gross income for the owners
$10,000 * 30% = 3000
Private Properties(Step2)
Total Debt Servicing Ratio(TDSR) is 60% of gross income for the owners
$10,000 * 60% = $6000
$6000 – $800 = $5200
You can then use our affordability calculator to find out what the maximum loan quantum for your purchase
Step 3
Figuring out the Cash/CPF constraint
For bank loans, you are able to take up to 75% of the property’s value, the remaining 25% would have to be made out of at least 5% cash and the rest can be filled with your CPF.
For HLE Loans, you can take up to 90% of the property value as loan and the remaining 10% can be filled with CPF and grants
Step 4
Engage a professional to talk about your needs
This professional may be your real estate agent or your favorite mortgage broker that will guide you thru the complexities of the purchase.
