L4&5: Housing Loan

Question 1

Explain the importance of housing loan as a strategic anchor to the banks

Answer 1

1. It has a large loan quantum (due to volume and profitability)
2. It is secured
3. Provide bank with an opportunity to build a cluster of products and develop further customer relationship through cross selling.

Question 2

Briefly explain what a consumer should understand about the following:

a) property type/types of property financed

Answer 2

a) Property Type

Loan packages differ between HDB and private property. There are also some packages that only apply to uncompleted property (building under construction)

b) types of properties financed
- Freehold & leasehold properties (remaining leasehold at least 60 years)

• Private residential properties (condo & landed)
• HDB / Executive Condominium

Question 3

Eligibility

Answer 3

• Min income
• Minimum age of 21 y/o
• Maximum age of 65 y/o
• SG can purchase HDB, private and landed property
• PR only private property
• Min loan amount depends on price of housing property

Question 4

Loan Period

Answer 4

• Private (35 years)

- HDB (30 years) or 65 years of age, whichever is earlier

Question 5

Stamp duty, legal fees, and valuation fee

Answer 5

Stamp fees is payable with cash / cpf.

Legal fees include stamp fees for mortgage document.

CPF lawyer fees if cpf is utilized and law firm engaged is not on the CPF panel.

The buyer’s stamp duty is calculated based on property value or purchase price, whichever is higher.

It is payable within 2 weeks after the option is exercised.

Valuation fees are paid to obtain a valuation of the property.

Question 6

Interest charged

Answer 6

Most bank offer a:

• Fixed Rate
• Floating Rate
• Variable Rate
  Home loan.

Banks will start charging interest from the date the home loan is first disbursed.

Banks are required to inform borrower in advance ( 30 days) before any change in the interest rate charged OR any change in terms and conditions of home loan agreement.

Question 7

Insurance

Answer 7

Borrower are required to take up a fire insurance policy on the mortgaged property based on the reinstatement value.

Question 8

Refinancing

Answer 8

Owner-occupied residential properties bought before TDSR, a borrower is exempted from TDSR Framework when he refinances his housing loan.