Singapore Home Loan Guide: Easy Steps to Apply for a Mortgage

Most people apply for a home loan when buying a property in Singapore. This guide will introduce the types of loans available for property purchase in Singapore, the application process, and how to choose the most suitable loan option for you.

Introduction to Singapore Home Loans

Simply put, a home loan is borrowing money from a bank to purchase a property. If you are buying an HDB flat, besides banks, you can also get an HDB housing loan by borrowing from the Housing & Development Board. The bank or HDB will pay for the property on behalf of the buyer, and the buyer will need to repay the borrowed loan amount in monthly installments over several years.

HDB Loan vs. Bank Loan Comparison

If you are purchasing private property, you will take out a loan from a bank. If you are buying an HDB flat, you can choose to take a loan from either HDB or a bank.

Banks usually offer different loan packages for properties still under construction (Building Under Construction, or BUC) and completed properties. You can also choose between fixed or floating rate loans.

Banks that offer home loans in Singapore include: DBS Bank (DBS), OCBC Bank (OCBC), UOB Bank (UOB), Maybank, HSBC, CitiBank, CIMB, Standard Chartered Bank, Bank of China, Hong Leong Finance, and RHB, among others.

If you are buying an HDB flat, you can choose between a bank loan or an HDB loan. Initially, the HDB loan interest rate is usually higher than bank loan rates. However, since the HDB loan rate can only be 0.1% above the CPF Ordinary Account interest rate and has not changed since 1999, it is more stable than bank loan rates.

Additionally, HDB loans are more lenient than bank loans, offering a higher Loan-to-Value (LTV) ratio and a lower down payment requirement, allowing buyers to borrow more funds.

Fixed vs. Floating Rate Loan Comparison

Fixed-rate loans lock in the same interest rate for the duration of the contract. If you anticipate that future interest rates are likely to rise, a fixed-rate loan is a good option.

Floating-rate loans are usually pegged to a benchmark, such as the Singapore Overnight Rate Average (SORA). Therefore, the interest rate fluctuates, which means your monthly repayment amount may vary.

With our assistance, you can compare home loan packages and the latest interest rates from major banks to choose the loan package that best suits you.

How to Get a Home Loan in Singapore

When applying for a home loan in Singapore, it is advisable to compare loan packages from different banks. You can personally consult various banks and submit loan applications, but this is a cumbersome method.

Another method is to seek assistance from Anjia SG. Let Anjia SG’s loan application specialists handle the tedious application process for you, help prepare your application documents, and keep you updated on your application status. Anjia SG’s loan specialists can also provide you with personalized financial planning solutions and promptly answer your questions.

Before you prepare to purchase a property and pay the option fee, it is best to first obtain an In-Principle Approval (IPA) from a bank. An IPA is an estimate of the loan amount a bank is willing to offer for your property purchase. This allows you to clearly understand your down payment amount, loan tenure, loan quantum, and approximate monthly installments, ensuring you have sufficient funds to buy your desired property. An IPA is typically valid for 30 days. Anjia SG’s loan application specialists can also help you apply for an IPA.

Documents Required for a Home Loan Application

Applying for a home loan requires a substantial amount of paperwork, so it’s recommended that you start preparing as early as possible. We have also listed the required documents for you:

• Singapore Citizen or Permanent Resident NRIC / Passport
• HDB flat and financial information (if applicable)
• Option To Purchase (OTP) or Sale and Purchase Agreement for the property
• HDB-confirmed valuation of the property (for HDB resale flat purchases)
• Property valuation report (for private property and executive condominium purchases)
• Latest Notice of Assessment (NOA) and past 12 months’ CPF contribution history
• Latest 3 months’ payslips
• Latest 3 months’ proof of salary income (if working overseas)
• CPF withdrawal statement
• HDB statement
• Credit card statements or proof of credit facilities

For other loan information, it is recommended that you confirm the necessary application documents with the lending bank before applying to ensure nothing is missed.

Glossary of Home Loan Terminology

During the home loan application process, you may encounter some technical terms. Here are explanations for them:

1. Additional Buyer’s Stamp Duty (ABSD)

Singapore Citizens purchasing their second and subsequent properties, as well as Singapore Permanent Residents (PRs) and foreigners purchasing any property, are required to pay Additional Buyer’s Stamp Duty (ABSD).

2. Cash Over Valuation (COV)

Cash Over Valuation (COV) is the difference between the actual sale price of an HDB resale flat and the valuation of the property by the Housing & Development Board (HDB). In other words, COV represents the amount you pay above the property’s valuation. The maximum loan amount is calculated based on the property valuation or the purchase price, whichever is lower. Therefore, the COV must be paid in cash.

3. Buyer’s Stamp Duty (BSD)

Buyer’s Stamp Duty (BSD) is a tax that everyone who buys a property in Singapore must pay. BSD is calculated based on the property’s price or its market value, whichever is higher.

4. Loan-to-Value (LTV) Ratio

The Loan-to-Value (LTV) ratio is a ratio that indicates the maximum loan amount that a bank or HDB can lend.

5. Mortgage Servicing Ratio (MSR)

The Mortgage Servicing Ratio (MSR) refers to the proportion of your total monthly income that is used to repay your home loan. The cap is 30%.

6. Total Debt Servicing Ratio (TDSR)

The Total Debt Servicing Ratio (TDSR) refers to the proportion of your total monthly income used to repay all your loans, including home loans, student loans, car loans, personal loans, and credit card debt. The TDSR cap is 55%.