Home Equity Loan or Term Loan in Singapore

If you are the proud owner of a private property or an Executive Condominium (EC), there’s an enticing opportunity awaiting you—a Home Equity Loan or Term Loan with a favorable interest rate. For EC owners, it’s essential to fulfill your 5-year Minimum Occupation Period (MOP) before becoming eligible. The actual interest rate offered will vary depending on the specific bank you choose.

This option is particularly appealing for homeowners seeking a lump sum of funds for purposes such as financing their next property acquisition. It’s especially beneficial for those who have seen their property appreciate in value or have completely paid off their existing property, as the interest rates tend to be more competitive than other common financing alternatives.

In most instances, banks are willing to extend a loan of up to 70% of your property’s current value, minus any outstanding loan balances and the Central Provident Fund (CPF) utilized for the property’s initial purchase. However, it’s essential to consider the Total Debt Servicing Ratio (TDSR), which dictates that your loan repayments cannot exceed 60% of your monthly income.

To illustrate how a term loan works, consider the following example involving Mr. Goh:

  • Mr. Goh’s property is appraised at $2 million.
  • He still owes $250,000 on his existing loan.
  • He utilized $300,000 from his CPF to finance the property.

Based on these figures, Mr. Tan is eligible for a term loan of $500,000. The calculation unfolds as follows:

70% of $2 million = $1.4 million
$1.4 million – $250,000 – $300,000 = $850,000

If you find yourself perplexed by your property-related finances or require assistance in determining the Home Equity Loan or Term Loan that suits your needs, kindly provide your details below. I’ll be sure to get in touch and help you navigate the intricacies of this financing option.