new condo mortgage rules in Singapore
In the past, it was very easy to get a mortgage in Singapore. You could get one with just a bank statement and a couple of documents. However, that is no longer the case. The government has made it much more difficult for first-time buyers to get mortgages in Singapore these days. This is mostly because of new regulations that were introduced in January 2019.
These new condo mortgage rules in Singapore will make things even more challenging for you as a homebuyer. However, there are still ways you can get a mortgage if you meet the new criteria.
In this article, we will discuss everything about this new law and its implications for you as an individual looking to buy property here whether as an investment or for your primary residence.
new condo loan rules and implications
First, let’s discuss what these new condo loan rules are. The government has implemented a number of changes to the lending market in Singapore from January 2019.
Let’s have a look at the major ones.
1) Premium interest rate feature will be removed
One of the biggest changes is that the premium interest rates for loans for first-time buyers will be removed. This means that it will no longer be possible to buy property without having to take out a loan with an interest rate higher than 4%.
2) Total loan size must not exceed 80% of purchase price
Another change is that total loan size must not exceed 80% of purchase price. This means that your loan amount cannot exceed $400,000. You can get loans up to this amount from HDB when you need to buy property for your primary residence or where you plan on staying for at least 5 years and you intend to live there for more than 3 months every year. If you need to get more money, you can also take out a loan from banks like DBS or OCBC if you plan on living in Singapore for less than 3 months each year and stay there less than 6 months altogether.
With these rules, it will become much harder for individuals not planning on staying in Singapore long term and buying properties as investments since they’ll have to go through this procedure before getting a mortgage in order to avoid taking out an unsecured commercial mortgage with high premiums.
new condo financing rules in Singapore
To begin with, the new condo financing rules in Singapore are meant to prevent first-time buyers from getting mortgages with high loan-to-value ratios. It was also implemented because of the large amount of property loans that were given out.
The new condo mortgage rules in Singapore have a few different requirements for first-time buyers. One of the biggest is that you must be earning at least $5,000 a month before taxes and incur an average monthly housing cost of no more than $2,500 if you want to get approved for a mortgage.
This means that your total monthly income must be at least $6,000 during the application process.
This is one requirement for the application process that can be difficult for first-time homebuyers to meet. In fact, most individuals will not qualify for this because they don’t earn enough money or their total monthly expenses are higher than what they earn per month. But it doesn’t mean that you won’t qualify if you do meet this criteria!
There is still a chance that you will qualify even though your expenses are higher than your income and it is hard to meet this requirement. You just might have to work harder and make more sacrifices in order to buy property here in Singapore when compared with other countries where you can roll over loans from one property investment into another without any issues or restrictions.
For a SGD $1 million condo downpayment in Singapore, the table below breaks down the costs you’ll face:
|Singaporeans||Permanent Residents (PRs)||Foreigners|
|Loan-to-Value Limit (75%)||$750,000||$750,000||$750,000|
|Outstanding Condo Downpayment (25%)||$250,000||$250,000||$250,000|
|Minimum Cash Downpayment (5%)||$50,000||$50,000||Not Applicable|
Buyer’s Stamp Duty (BSD) in Singapore
Stamp Duty (BSD) is a Singaporean government levy on the purchase of residential property. In addition to BSD, buyers will also have to pay Additional Stamp Duty (ASD), which is levied based on the price of the property. For example, if you are buying a $1 million condo and the total costs come to $258,600 in stamp duty charges plus$18,600 in additional housing authority service tax (ABSD), your total cost after taxes comes to SGD$269,200. This amount may increase depending on how high your purchase price goes relative to Singapore’s median price.
The table below shows the Singaporean tax rates for different purchase amounts:
BSD Rates for residential properties
- 1% of purchase amount over First $180,000
- 2% of purchase amount over Next $180,000
- 3% of purchase amount over Next $640,000
- Remaining amount 4%.
new condo lending rules in Singapore
As in January 2019, Singapore introduced new condo lending rules. These new rules have made it much harder for first-time buyers to get loans for their condos.
If you are thinking of buying a property in Singapore, these are the new regulations you should be aware of and how they affect your mortgage application especially if you are looking to buy your first home.
1) The maximum loan amount is reduced to $400,000 – some projects may be excluded
This means that the loan amount will now vary depending on the type of project that is being purchased. This is based on whether or not a project has been exempted from this policy which means the loan amount will remain unchanged even with the increased loan limit.
2) The minimum loan amount is increased to $100,000 – some projects may be excluded
The minimum loan amount applies to all projects regardless of exemption status which means that no project can qualify unless its cost exceeds $100,000.
3) Documentation requirements have been changed
The documentation requirements for condo loans have been changed as well which includes:
– A bank statement for at least six months
– A copy of identity card or valid passport
– Proof of ID (which could include a driver’s license issued by any country other than Singapore)
– A copy of government issued identification card or resident identity card
– Copy of tax assessment from last 12 months
4) Assessment has been made mandatory every three years.
How much deposit do I need for a new condo?
The amount you need to put down will depend on the specific condo project and specifics of your credit history. In general, though, a 25% deposit is typically required for government land sales condos in Singapore, while a 5% deposit is usually needed for collective sale condos.
How much do you have to put down on a new launch?
Typically, you will need to put down a 5% deposit on new launches. In addition to this initial deposit, you may also have to pay stamp duty and additional housing authority service tax (ABSD).
Do I need to pay ABSD for new launch?
Yes, buyers of new launches in Singapore will also have to pay additional housing authority service tax (ABSD). This is levied on top of stamp duty charges and is based on the price of the property.
How much loan can you take for a condo Singapore?
You can typically take a loan up to 80% of the purchase price of the condo.
Can I use CPF to pay monthly installment for condo?
CPF can usually be used to pay monthly installment for condos, provided the condo is registered in your name. However, you will need to verify this with the developer or condominium’s management company.