Trusted Loan and Mortgage Broker in Singapore

Bridging Loan is a Short term loan of up to 6 months. It helps to pay for the down payment of your new property purchase (less off 5% of the mandatory cash down payment), while waiting for the sale proceeds of your existing house. You will only need to pay the interest on the Bridging Loan during its loan period. 

Depending on the Loan to Value Ratio that one would like to borrow, you can simply use 65 or 75 to minus away the borrower’s present age, in order to obtain the Loan Tenor. This is in the case of a single borrower. Do note that for properties that are older (e.g with balance Lease of 40 years), you may not be able to obtain the maximum loan tenor based on the tabulation above, as lenders will require at least 25 years of balance lease left after the loan duration has been served completely.

In the past, for cases with more than 1 borrower, the Loan Tenor is based on the age of the youngest applicant. However, since MAS announced on 5 July 2018 as part of a package of measures to cool the property market and keep price increases in line with economic fundamentals, the Income Weighted Average Age (IWAA) was introduced.

(Age of younger borrower x gross monthly income) + (Age of older borrower x gross monthly income) / (Gross monthly income of younger borrower + Gross monthly income of older borrower)

Scenario 1: The income of the younger borrower is higher then the income of the older borrower. Borrower A is 28 years old who earns a gross monthly income of $5,000. Borrower B is 35 years old who earns a gross monthly income of $3,000.

IWAA = (28 x 5,000) + (35 x 3,000) / (5,000 + 3,000) = 31 (Round Up)

Outcome: IWAA is lower.

Scenario 2: The income of the younger borrower is lower then the income of the older borrower. Borrower A is 28 years old who earns a gross monthly income of $3,000. Borrower B is 35 years old who earns a gross monthly income of $8,000.

IWAA = (28 x 3,000) + (35 x 8,000)/(8,000 + 3,000) = 34 (Round Up)

Outcome: IWAA is higher.

Based on the above scenarios, it is generally better for a younger borrower to earn more than an older borrower as it will result in a lower IWAA (31 years vs 34 years). The lower your IWAA, the tenor that can be obtained will be longer. Therefore, it also means that you are able to obtain a higher loan amount since it is stretched over a longer period for the loan repayment.

The LTV dictates the amount you can borrow from the bank. Having a LTV ratio of 55% allows you to borrow up to 55% of the property's value or price, whichever is lower.

Example based on single Mortgagor and Borrower:

Assuming you are applying for your first property loan at 35 years old (at application), take the 65-year cap (if your borrowing is at 75% LTV) and subtract it with your current age. The remaining loan tenure you'll be eligible for is 30 years for a private property loan and 25 years for a HDB bank loan (assuming it’s your only property loan after taking it up).

Note that the balance 5% downpayment must be paid in cash while the remaining 20% can be paid via cash and/or CPF.

A joint Tenancy is where the Property is held in equal proportions. Example: Husband and Wife has equal share of 50 / 50 towards the property co-owned.

A Tenancy in Common is where one can hold 1% of Shares on the Property co-owned while the other party holds 99% of the Property co-owned.

Part Purchase is when the shareholdings or ownerships of an existing property is to be restructured.

Example:
Existing: 2 owners of 50% Share each

New Arrangement to be restructured:
1 existing owner to buy over the share of the other so that the property is under one Mortgagor / Borrower only. Vice Versa can be apply but it is termed as Decoupling.

A Lock in Package does not allow one to do a Partial Prepayment or a Full redemption towards the Principle Outstanding Loan amount during the Lock in Period. By doing so, there will be a penalty on the amount prepaid or redeemed which range from 1% - 1.5%. Thus, it will be good to discuss with an expert with regards to the package most suited for you.