How Expats Get a Home Loan for Property in Singapore

With the development of the global economy, more and more people are choosing to invest in overseas property. Singapore, with its sound and robust infrastructure, livable environment, favorable investment conditions, and pro-business environment, has attracted a large number of overseas buyers. However, before taking action, it is crucial for buyers to fully understand Singapore’s mortgage interest rate policies. Today, let’s take an in-depth look at how foreigners can get a loan to buy property in Singapore and related issues concerning mortgage rates and bank loans.

It should be made clear that according to Singapore government regulations, foreigners can only purchase private condominiums and are not allowed to buy landed properties or HDB public housing on the main island. There are three main types of land tenure for properties in Singapore: 99-year leasehold, 999-year leasehold, and freehold. Generally, the choice of which type of property to buy is a personal decision, and it is best to consult a professional Singapore real estate agent for expert advice.

Singapore’s Home Loan Policies for Foreigners

Here are the key aspects of Singapore’s home loan policy to understand: For foreigners, it is possible to obtain a loan from banks or other financial institutions to purchase property in Singapore, with a loan-to-value (LTV) ratio of up to 75% of the property price. This makes it relatively easy for foreigners to buy property in Singapore. An individual’s mortgage loan amount varies based on the number of outstanding housing loans the borrower has. The specific loan amounts and down payment percentages are shown in the table below:

Singapore Home Loan Amounts and Down Payment Ratios

*Source: Monetary Authority of Singapore (MAS)

If the loan tenure exceeds 30 years, or if the applicant will be over 65 years old at the end of the loan period, the loan amounts and down payment ratios will be as follows;

*Source: Monetary Authority of Singapore

Singapore Mortgage Interest Rates

Regarding Singapore’s mortgage interest rates, the rates offered by banks in the market are currently very attractive, ranging from 3% to 4%. Therefore, if you are considering investing in property in Singapore, you can choose to use a loan for leverage, which can significantly reduce financial pressure.

Types of Mortgages in Singapore

Before taking out a home loan, you also need to understand the two main types of mortgage services in Singapore: fixed-rate and floating-rate. As the name suggests, a fixed-rate mortgage means the interest rate remains unchanged throughout the loan repayment period, which protects you from potential losses due to rising interest rates in the future. However, if interest rates fall during your repayment period, you will still have to pay interest to the bank at the original rate.

A floating-rate (or variable-rate) mortgage is also easy to understand; it fluctuates with market interest rates. The best choice of mortgage type depends on your personal needs, and it is advisable to consult with a professional real estate expert before making a decision.

The Process for Foreigners to Get a Home Loan in Singapore

After gaining a preliminary understanding of Singapore’s home loan information and policies, the most important question is: how can foreigners get a bank loan to buy property in Singapore? Firstly, only banks fully licensed by the Monetary Authority of Singapore can provide loans to homebuyers. The most common ones are the three major local banks and seven foreign banks with a significant local presence. For a list of these banks, you can consult our property advisors.

Secondly, you will need to prepare the following documents to apply for a home loan;

1. Option to Purchase (OTP) or Sale and Purchase Agreement for the property

2. Home loan application form (completed and signed)

3. Your ID card and a copy, or passport and a copy

4. Proof of income (last 3 months’ payslips, along with bank statements to show salary deposits into your bank account) or proof of bank transactions

5. Latest income tax assessment

6. Any other required documents

Since proof of income is mentioned, understanding the basic conditions for loan approval is also crucial. Starting from the cooling measures introduced on December 16, 2021, homebuyers must meet the Total Debt Servicing Ratio (TDSR) requirement that their mortgage installment payments do not exceed 55% of their monthly income (this 55% threshold remains in force after the most recent round on 27 April 2023), which involves a complex calculation. If you have decided to take out a bank loan to purchase a property and wish to know more about whether you meet the loan approval criteria mentioned above, please feel free to consult us, and we will do our best to assist you.

Important Considerations for Foreigners Buying Property in Singapore

There are a few other important points for foreigners buying property in Singapore: First, you will need to hire a lawyer to handle the relevant procedures during the property purchase process. Second, foreigners are required to pay an Additional Buyer’s Stamp Duty (ABSD) of 60% when purchasing property in Singapore. Third, according to Singapore law, any legal documents signed by individuals under the age of 21 are invalid and not legally protected. However, if a minor can purchase a property with full payment, it can be done through a trust.

Regarding the issue of foreigners getting a loan to buy property in Singapore, we have provided you with a preliminary explanation of the policies. If you wish to learn more about applying for a home loan in Singapore, please feel free to contact us for a more detailed and complimentary consultation.

Official Sources & References

• IRAS — Additional Buyer’s Stamp Duty (ABSD) rates: ABSD official page
• IRAS — Remission of ABSD (Trust): ABSD (Trust) remission

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