Asset Pledging and Unpledging: A Creative Financing Approach

Pledging and Unpledging are widely utilized financial strategies in Singapore. They become particularly relevant when individuals with substantial bank savings encounter eligibility hurdles for home loans. These hurdles arise from the Total Debt Servicing Ratio (TDSR), a financial metric that directly ties loan repayments to one’s monthly income. To overcome this hurdle, one viable option is to engage in asset pledging, which can bolster your income profile. Examples of assets that can be pledged include Singapore dollar deposits, stocks, bonds, and even gold.

However, it’s crucial to note that effectively employing this pledging strategy requires a substantial reserve of savings and financial assets. Additionally, the duration for which assets are pledged plays a pivotal role. Assets pledged for a minimum of 4 years are valued at 100% of their worth, while those pledged for less than 4 years are calculated at 70% of their value. Consequently, meticulous planning is essential to maximize gains and prevent the undervaluation of your assets when using the pledging approach to finance your property.

If you are intrigued by the potential of this property financing strategy and wish to explore it further, please provide your details below. I will be delighted to reach out to you and provide a more comprehensive explanation of this innovative approach.