Making sense of the new ruling on Residential Loan Tenure

Since MAS announced the cooling measure on 5 October 2012, there has been much talk about the implementation and impact of the latest ‘cooling measures’ ruling on Singapore residential loan tenure. You certainly need to understand and make sense on how the loan tenure may impact you.

Impact of tenure cooling measure

This change is very close to our hearts and it’s our duty to ensure our readers and clients understand it. In fact, we feel even stronger to advise clients to obtain in-principle approval of their mortgage loans.

We have analysed and broken down these changes in a simple-to-read format. We hope it’s useful.

For all residential property loans be it private individual, non-individual, HDB or Bank housing loan)
	If purchase is by an Individual(s)	If purchase is by non-Individual (Company)	Effective Date
New purchase with no outstanding Singapore housing loan	80% LTV if loan tenure is 30 years or shorter, OR loan period is 65 years old or younger. Minimum 5% of downpayment must be paid in cash. 60% LTV if loan tenure exceeds 30 years, OR loan period exceeds 65 years old. Minimum 10% of downpayment must be paid in cash. Examples: You and soon-to-be married wife are 30 years old. You are entitled to borrow 80% LTV for maximum 30 years as the age will be 60 years old. If you want 35 years tenure, you have to fork out 20% more to borrow 60% LTV. You are 55 years old now. To qualify for 80% LTV, you can borrow up to 10 years. Any longer tenure means you have pay 40% downpayment.	20% LTV for any tenure since 2013	If the date when the option to purchase was granted or, where there is no option to purchase, the date of the sale and purchase agreement, is on or after 6 October 2012.
New purchase with outstanding Singapore housing loan(s)	50% LTV if loan tenure is 30 years or shorter, OR loan period is 65 years old or younger. Minimum 25% of downpayment must be paid in cash. 30% LTV if loan tenure exceeds 30 years, OR loan period exceeds 65 years old. Minimum 25% of downpayment must be paid in cash. Examples: You and wife are 35 years old and have an existing outstanding property loan. You are entitled to borrow 60% LTV for maximum 30 years as the age will be 65 years old. You are a retiree and is 65 years old now. You do not qualify for 60% LTV. Your option is to look for banks that allow age up to 75 years and qualify for 10 years tenure and borrow at 40% LTV.	40% LTV for any tenure	if the date when the option to purchase was granted or, where there is no option to purchase, the date of the sale and purchase agreement, is on or after 6 October 2012.
Refinance	Outstanding loan amount will be refinanced as-is. Where a borrower applies for a refinancing facility in respect of any balance outstanding under a residential property loan, the sum of the tenure of the refinancing facility and the number of years since the first residential property loan granted to the borrower for the purchase of that residential property was first disbursed, cannot exceed 35 years. Examples: You have owned a property since 2005. The new rules state the maximum tenure allowed is 35 years from 2005 (i.e. 2040). Hence you can refinance at this moment with a new maximum tenure of 28 years (2012+28=2040). This is despite you being 35 years old today and 30 years to retirement age of 65 years old.	Outstanding loan amount may be refinanced as-is. Where a borrower applies for a refinancing facility in respect of any balance outstanding under a residential property loan, the sum of the tenure of the refinancing facility and the number of years since the first residential property loan granted to the borrower for the purchase of that residential property was first disbursed, cannot exceed 35 years.	For re-financing facilities, the rules will apply where the application date of such facilities is on or after 6 October 2012.