With HDB new raised income ceiling affect home prices?

With HDB new raised income ceiling affect home prices?
with permission from www.PropertyBuyer.com.sg

Part – One A

“The ceiling will go up from the current $8,000 to $10,000 for HDB’s build-to-order (BTO) flats, and from $10,000 to $12,000 for executive condominiums, Prime Minister Lee Hsien Loong announced in his National Day Rally speech last night.”

“Before the change, a couple’s combined income had to be below $8,000 a month for them to qualify to buy a BTO flat from the HDB, which is typically 20 to 30 per cent cheaper than a resale flat.” (PMO)

(PMO, pmo.gov.sg/content/pmosite/mediacentre/inthenews/primeminister/2011/August/HDB_raises_income_ceiling_to_10000.html)

The income ceiling for New HDB flats will be raised to: -
Income Ceiling Type of Flat

$10,000
Studio Apartment 3-room (mature towns/estates),
3-room (Premium) 4-room or 5-room flat
$5,000
3-room Standard (non-mature towns/estates)
$2,000
2-room
(HDB, http://services2.hdb.gov.sg/webapp/BP13EligCheck/BP13SHome?strSystem=CHECK)

HDB Property Supply In The PIPELINE

As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)

The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand, from the between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply.

HDB Property Supply In The PIPELINE

As we discussed in our last article, despite all the HDB launches in 2010 and the “NOISE”, if we look at the statistics these announced supply are hardly enough to meet even Singapore’s local domestic needs, not to mention providing for the massive influx of foreigners and new Permanent Residents (PR). Ministry of National development got their numbers quite wrong. In that, they have under-supplied HDB flats to the tune of even up to 100,000 units (based on our estimates)

The fact that there is not a long queue at BTO registration (As claimed by some minister as indication of people not needing a home) itself does not mean that there is no latent demand as there are between 22,000 to 25,000 marriages each year. (http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/) This probably reflects the various complicated paper work and bureaucratic costs imposed as well as the people not being able to afford the supply of such HDB BTO flats.

Supply From Balance HDB Flats

Supply of HDB flats are from current balanced stocks are also in short supply.

There are not much supply from Balance flats as well. “The flats offered in the Sale of Balance Flats exercise are mostly under construction or near completion. Because of strong interest for such flats, the chances of getting a flat in the Sale of Balance Flats exercise are slim. Property Buyers who are not invited to select a flat can consider applying for a new flat under the BTO system, which is where HDB’s main supply for flats comes from.”

(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatSBF?OpenDocument)

There are hardly any supply of balance units, so the only way to go will be to buy from the HDB Build-to-order (BTO) market.

(http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatModeBTO?OpenDocument)

That means that the current shortage of HDB supply will stay at least until some of the proposed Build-to-order flats are completed. And more of such BTO sites will need to be launched, sold and completed. And the time frame for that will be 2 to 4 years considering that it takes on average 2 years to complete a HDB building project.

HDB Property Supply From BTO Launches

Let’s take a look at the supply of HDB flats from Build-to-order to be launched. There are only 5,500 units of HDB flats (Remember, we estimate that there is a demand of 22,000 to 25,000 of housing needs due to household formation, i.e. marriages)

WHAT KIND OF ASSET IS HDB?

WHAT KIND OF ASSET IS HDB?
by Property Buyer

There are many arguments for or against a HDB flat as an asset class. We shall list down the various benefits and shortfalls of HDB as an asset class in this research.

Technically anything that retains a monetary value, either appreciating or diminishing, is called an asset.

Let us first take a look at the charter of HDB so as to understand the characteristic of this asset class.

“Mission
We provide affordable homes of quality and value.
We create vibrant and sustainable towns.
We promote the building of active and cohesive communities.
We inspire and enable all staff to give of their best.”

(HDB, http://www.hdb.gov.sg/fi10/fi10320p.nsf/w/AboutUsVisionMission?OpenDocument)

HDB started off as a government housing program to alleviate severe shortage in housing. Therefore it is more of a social program when it started off. So it should be more concerned about providing shelter.

The HDB flats of yester years are based on the cost of construction maybe with some land cost added into the equation. Therefore these flats cost only several thousands of dollars in the late 1960s (around $5000 to $9000). At that time, factory workers earned around $200 a month (citations required), or $2400 a year. A flat is equal to about 2 times to less than 4 times of a factory worker’s annual salary. Home loan tenors are usually 15 years.

Today, HDB houses 82% (Singstat, http://www.singstat.gov.sg/pubn/papers/people/ssnsep10-pg25-29.pdf) of Singapore’s Citizens plus Permanent residents which numbers 3.11m. Singapore’s Total Citizen + residents stands at 3.77m (as at June 2010).

Singapore’s citizens stand at 3.23m as at 2010. (Singstat, http://www.singstat.gov.sg/stats/keyind.html#keyind)

HDB Subsidy And Regulations

HDB is a public housing program with a social charter. It is to provide affordable housing initially. As Singapore witness rapid progress from a third world country to a 1st world country (economically), HDB has gradually changed it’s stance. Prices of HDB flats soon soared. The prices today is no longer using the Cost plus model, i.e. using the cost as a base adding some margin as selling price. Today’s HDB pricing model is based on the Resale flat prices in the open market less off a market subsidy of typically $30,000 to $40,000 for new HDB flats. The grant is $20,000 for Singapore citizen and PR mixed household (HDB, http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatCPFGrantFamily?OpenDocument)

There are many policies and regulations governing HDB housing. This makes it much more cumbersome than any other classes of property asset classes either for selling, for buying as well as for leasing it out. There are also restrictions on minimum use (i.e. Minimum Occupation Period “MOP”) of between 1 to 3 years for resale flats and 5 years for new flats. Therefore, if you are able to bear with HDB rules and still manage to lease it out without breaking any rules, the yield can be higher than private properties. However, these rules changes without notice, and failure to comply can mean that HDB can forfeit your HDB flat.

EVOLUTION OF HDB AWAY FROM ITS SOCIAL CHARTER

HDB has also evolved away from its social charter of providing good quality affordable housing. It’s new pricing formula where a new flat is often pegged to a small discount compared to resale flat prices means that, any shortage in new HDB flat supply will lead to people being forced to buy in the open re-sale market. With more people buying in the resale market, the demand rises. From 2006 to 2010, HDB supply planning has been a massive failure where the Ministry of National Development under-supplies the market to the tune of an estimated >100,000 flats (Property Buyer, http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/)

based on our rough estimate. Naturally this led to a massive price hike of HDB flats. And subsequently new HDB flats also reflect the rises and raised prices.

The move away from a “COST PLUS” model to a market value model is in fact capitalist in nature and there is nothing social about it.

BETTER QUALITY HDB FLATS COST MORE?

As HDB flats began to have more and more frills, HDB adopted a one size fits all approach. Whether you liked it or not, HDB flats comes with valued added features. These features don’t cost very much to build, but they do nevertheless ends up increasing the selling prices quite a bit. In other words, HDB resembles more and more like a private developer. What these does is, it raises the base cost of land and subsequently prices of all HDB flats, regardless of whether you can afford to have those amenities.

Singapore’s median income per household (per month) is $5704 (Singstat, http://www.singstat.gov.sg/pubn/papers/people/pp-s17.pdf), while the average income in the 41th to 50th percentile income per household’s working adult is $1,506 (per month).

This means that at current prices in the range of 300,000 onwards, if people were to borrow $240,000 and pay a down payment of $60,000. This would result in a 30 year loan tenor with each monthly installment of $960.82 per month for 30 years. On a new household of 2 person, earning an average income (41st to 50th percentile median), the total household income would be $3,012. As each of them would need to contribute 20% to CPF, their total take home pay would be around $2,400. This $960.82 a month is about 1/3 of all their expenditure although CPF can pay for part of this amount.

What does this mean? It means that even at the 50% percentile point (the cut off point of half the people) many will find it very tough to afford a HDB flat, much less the others who are earning less. And all these frills are good for people who can afford it, but increases the hardship of people who do not need these frills as they still have to grapple with daily cost of living.

DOES UPGRADING INCREASES HDB VALUATION?

HDB flat’s valuation has always been subjected to some debate. All these upgrading projects are not free, home owners of HDB flats have to co-opt to pay for it.

Many older estates which are more than 40 years old such as Tanglin Halt HDB estates have been upgraded. However all these physical upgrades like adding a balcony and an extra room only make these flats more livable. As for the argument that upgrading really increase the value, we believe there will be some net increase in value, but whether there is any value added increase (above and beyond the cost of construction), that we doubt it will be much. The best comparison will only be verified using 2 similar type properties (in the same estate) before Upgrading and after upgrading. Compare the 2 properties again to mark the average selling prices. We believe that the price increase will likely be in-line with construction costs, and not much more. If at all it is much more, it is likely due to the construction time.

Say if it takes 18 months to complete construction, during this time, the base price of all HDB flats in the area also increases, these should be due to overall increase of HDB prices and not due to value added construction. For example, 2 similar properties of similar location, one undergoes upgrading. Before upgrading, both are priced at $300,000. After $50,000 of upgrading, the one after upgrading is priced at $400,000. Does this mean that it has increased much? Let’s see. If the HDB flat without upgrading is priced now at $360,000. What does it say about the upgrading program?

Hence the value added increase (above and beyond mere construction cost) are not necessarily due to upgrading works, but by overall market conditions in the resale market.

What is the purpose of upgrading the building without upgrading the lease?

Let’s call it sprucing up. At the end, it leads to increased consumption, as these increase in values are not realized in most cases.

HDB FLAT IS A HIGHLY REGULATED MARKET

All HDB flats have HDB appointed valuers. These valuers tend to value HDBs in a non-market driven way. In the 1998 and 1999 where there is a financial crisis, HDB prices were trading below valuation.

Illustration: -

A valuation could be $280,000 and the traded price could be $240,000. And these anomalies persists over extended periods of time.

During the HDB price booms in 2007, 2008 and 2010, Cash over valuation have reached levels such as $50,000.

The biggest question we would like to ask is, why are valuers pricing it as such? It could be that they are using a different methodology than the commonly practiced Benchmark method used in valuing private properties.

But persistently the valuations seemed to lag the actual transacted prices again.

So in other words, we can infer that the prices are set by the Singapore government and it is not entirely a free market as we would like to think, otherwise there is no reason that the HDB flats are valued using a different methodology than those of the Private properties.

PRICE INCREASE FOR HDB FLATS IS GOOD?

Price increase for HDB flats if it is in a moderate way and generally keeping pace with inflation and median wages, then it is acceptable.

Based on an average income of $1504 (41st to 50th Percentile) (Singstat, http://www.singstat.gov.sg/pubn/papers/people/pp-s17.pdf), a $300,000 HDB flat equals to 16.62 years of annual income.

Compared to previous level in the 1970s of about 2 to 4 times, the home loan affordability has gone down. Even though people can still afford the installment, they are nonetheless enslaving themselves for a typical 30 years tenor home loan.

As HDB flats are mainly to provide affordable housing, any price increase should be carefully calibrated. And as most people who own HDB flats would be assumed to own only 1 property, therefore the HDB flat is their one and only residential dwelling. If HDB flats were to rise in value, the whole asset class would generally rise in tandem apart from some pricing anomalies.

So where will these people stay if they sold their only home?

In fact, higher HDB prices attract higher Property Tax (IRAS, http://www.iras.gov.sg/irasHome/page04.aspx?id=9690)

This is because Inland Revenue Authority of Singapore (IRAS) revises the Annual values for HDB flats. Annual values are the potential rental income if it is rented out. And IRAS charges residential (own stay) 4% of the assessed value.

So Higher HDB prices (if you are not going to sell) ends up costing you more with no extra benefit.

So if there is a risk of HDB affordability, there is likely a risk of default some time down the road, causing a potential loss of asset value.

HDB FLATS ARE LEASE HOLD FOR 99 YEARS


Upgrading or no upgrading, HDB flats are leasehold properties. This means that both the land and the building depreciate in value. The most important component of that value is in fact the number of leases left on the property as well as it’s location. The condition of the property may not account for much of that value (as long as the building is not too run down). But expensive housing leads to higher home loan costs.

Even if HDB does increase in value even if the remaining leases are less, it reflects overall buoyant property market. These increases need to be compared with the increases in values of properties which have more number of years of leases remaining as well as Free Hold properties to get the ratio. If these increases are lesser in ratio or magnitude or both ratio and magnitude compared to 99 years properties with more remaining leases or FH properties, upgrading will mean no benefit at all as any gains to be had are wiped out by a even more expensive property.

SUMMARY: ARE HDB FLATS AN ASSET? WHAT SHOULD YOU INVEST IN SINGAPORE?

HDB Flats are a highly volatile asset class which is highly regulated with pricing mechanism which is not entirely transparent. Though there are some semblances of market forces at play, by and large, the Supply is controlled by HDB land sales and build program. The demand is based on demography of the Nation, therefore this demand is well known and understood by any actuaries. Also any additional demand in the form of New citizens or Permanent residents are known by the Immigrations and Check points authority of Singapore (ICA), therefore demand is also known and controllable. With HDB’s size and reach, it is safe to say that they are likely to have control of pricing of sub-contracting work.

So with Supply, Demand, Costing, Pricing and Regulation under control by the government, you cannot simply apply normal practices of investment into buying HDB flats, this is a highly dangerous asset class in our opinion coming from an investment stand-point.

For those people who are residing in HDB flats as their sole residence, HDB flats and its increased valuations becomes a Tax Liability (Property Tax), therefore in terms of Cash flow, it is purely a liability.

For those people who are residing in a HDB flats as their sole residence, the Upgrading works and its subsequent increase in value poses both a tax liability as well as increased consumption as they need to co-opt payment for these upgrades. (Of course the benefit is an enhanced living condition)

For those people who are Permanent residents or people who have private properties as well as HDB properties, the increase valuations may present golden opportunities to capture capital gains.

For those who bought new HDB flats at an elevated price, this increase in price will cost them huge amounts of interest servicing cost over the next 25 to 30 years. This also means higher stamp duties which goes immediately to IRAS.

For those who bought new HDB flats at cheaper prices or HDB resale flat using a housing grant, they could pay up to 25% of the HDB resale price or 90% of the valuation value (whichever is higher) or up to $50,000 in levy. Therefore any remaining capital gain is likely to be small in view of capital gains levy.

HDB flats are a dangerous and volatile form of asset. Many people may make money only to put in even more money for the next HDB flat or upgrade to a higher consumption bracket. Many people who decide to stay in their flats will only see paper valuation gains, there is absolutely no gains that can be had as it will attract increase property tax.

REFERENCES

Reference 1: -

(HDB, Vision/Mission, http://www.hdb.gov.sg/fi10/fi10320p.nsf/w/AboutUsVisionMission?OpenDocument)

Reference 2: -

(Singstat, http://www.singstat.gov.sg/pubn/papers/people/ssnsep10-pg25-29.pdf

“HDB Flat Dwellers)

An estimated 3.11 million Singapore residents were staying in HDB flats in 2010, accounting for 82 per cent of Singapore residents. In 2010, there were ten planning areas where at least 90 per cent of Singapore residents were staying in HDB flats (Chart 4).”

Reference 3: -

(Singstat, http://www.singstat.gov.sg/stats/keyind.html#keyind)

Reference 4: -

(Property Buyer, http://propertybuyer.com.sg/articles/singapore-property-investor-buyer/why-singapore-property-prices-go-crazy/)

Reference 5: -

(HDB, http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatCPFGrantFamily?OpenDocument)

Reference 6

Singstat, http://www.singstat.gov.sg/pubn/papers/people/pp-s17.pdf

Reference 7: -

IRAS, http://www.iras.gov.sg/irasHome/page04.aspx?id=9690

Reference 8: – Not quoted in this research, used only as a reading reference

(The Online Citizen, http://theonlinecitizen.com/2010/10/27453/)

Reference 9

Singstat, http://www.singstat.gov.sg/pubn/papers/people/pp-s17.pdf

HDB home owners - Agents partner with Rogue Lawyers to jack up rates

HDB home owners - Agents partner with Rogue Lawyers to jack up rates

April 2011

Amidst many complaints against property agents, the Singapore government has set up the Council of Estate agencies to regulate the property agency business as well as to issue each property agent with a license number, and measures such as NO dual representation do not go far enough.

If you have discovered that you have paid more than a certain rate for your legal conveyancing, you should raise a suspicion and make a NOTE (though not necessarily a complaint) to Council of Estate Agencies (CEA).

There is also a rule in which agents cannot refer home owners to money lenders. Shouldn’t CEA ban agents from striking deals with bankers and lawyers and pocketing illegal kick backs?

Agents are still happily making referrals to lawyers and banks. This is a serious problem and we should highlight here so that in case you are a victim, you could raise this issue with Council of Estate Agencies.

Agents like to strike deals with lawyers to give them kick back. So where is the extra fees coming from? The lawyer (those bad ones) will go about charging the home buyer more in order to pay out the commission. Not only that, agents also work with companies that have pre-arranged ELEVATED legal fees with some law firms. This extra cost is passed on the home buyer. These illegal companies then pass on this extra commission gained as a result of illegal legal fee kick back to the agents. This is illegal under current law as lawyers cannot give out commission from their law fee.

Property agents also push you towards unattractive home loan rates just so as to benefit from the legal fees kick back.

It is always useful to note down the time, date of communication with the property agent. And try to communicate more with Emails and get them to confirm their facts via email. Do not rely too much on verbal conversation.

Attached here is a property agent complaint form which we downloaded from the CEA website. (Please note, you should always check the CEA website to ensure that the form is up to date, we only provide a convenience and are not liable to any losses whatsoever from using the form)A property agent complaint form is available at property buyer. You can contact them at loans (at) propertybuyer.com.sg

CEA Property Agent Complaint Form is available upon request.

Reasonable conveyancing rates guide

For HDB buyers - Buying a HDB in the resale market
$500 mortgage stamp fee is around $1900 to $2300. In fact, $2300 is already at the higher range, you should already start to open your eyes and raise a complaint or lodge a check with CEA if it is at above $2000.

Conveyancing rates for HDB home loan refinance
The estimated legal fees inclusive of Mortgage stamp fee is from $1900 to $2300.

For Private Property Loan- Buying a New Condo under construction
Total (Inclusive of Mortgage Stamp fee) is $2500 (for near to TOP) to $3500 (for those many years later)

Some law firms claim that it will cost them more resources to keep things on file and track condos which are still under construction. And indeed if the completion is far away, the law firm’s responsibility is dragged out longer. If they did not execute according to the letter of instructions from banks, they may become black listed by the banks and be kicked out of the bank’s panel. The cost is also more.

Legal conveyancing for buying Private residential – completed condominium
Total (Include of mortgage stamp fee) is $2500 to $3210.

The price varies a bit, depending on the law firm and the banks. Some banks are deemed more troublesome at the back end, therefore some law firms charge more. But there is a limit to it, so the above prices can be used as a guide.

Conveyance fees for Private Residential Refinance
The legal conveyance fees (including mortgage stamp fee) ranges from $2500 to $2800.

Why do legal conveyance rates differ?

Basically it is up to the law firms when to charge you higher. Perhaps sometimes, we feel it depends on their mood, other times, it depends on whether they are in cahoots with the Dishonest property agents.

Law firms can charge you extra under these situations: -

Last minute appointments such as 1 day before the exercising of option date, law firms may charge more.
Exercise dates falling into public holidays (maybe)
Faster that the normal legal completion date.
Liaising with CPF on expediting payment.
Multiple parties involved in the property.
Involving bridging loans or construction loan.
In illegal partnership with property agents.
Not corrupt, but legal conveyancing is not their core business and hence they charge a higher price.
Some property, usually those above 3m may face higher legal conveyancing fees, due to more potential complexity. (But not always the case)
Involving probate cases and estate issues.
What can you do if you get charged higher fees than normal?

If you have discovered that you get charged a higher fee than what we have described, it is possible that you have been cheated by the property agents, if you have not been cheated by the agents (in that they did not receive a commission), it is possible that you have over-paid.

Although the law society fee recommendation stipulates a higher fee, the free market has stabilized on the above fees which we have highlighted and hardly anyone uses the recommended fee.

In case you have paid higher than the highest range there, you can take down your property agent's license number and raise a complaint in case the bank and/or the law firm was referred to you by the property agent.

CEA Property Agent Complaint Form

These guideline fees are what we understand to be correct market rates as at April 2011

In case you do not know if you are cheated, you can tell us your story, we will be able to guesstimate whether you have been cheated.


write to loans at propertybuyer.com.sg perhaps we can go through your case to let us know if you have been cheated.

SMS Property Buyer mortgage consultants at: +65 9782 8606

MRT and condo price fluctuation

MRT and condo price fluctuation
Article contributed by: Property Buyer Singapore Home Loan Consultants

Singapore is Digging everywhere in building MRT stations

Property Buyer Singapore Home loan consultants investigates the effects of MRT on Singapore property prices.

There are a total of 78 stations in operation (As at today) and many more being built. (Wikipedia).

How many properties are located within 1km radius of MRT? And 2km of MRTs?

How will property prices go up or down?

Is having the MRT convenient? Do you feel convenient or it is really convenient?

Is there readily too much availability of private condominiums claiming to be near MRT?

Before you get excited about being close to MRT, have you thought of the Over-crowding in MRT trains?

Will distance away from city centre be no longer important?

Will prices rise because of a MRT station or prices rise because of sub-urban developments?



Estimation of how many properties are within 1km of MRTs

SMRT stands for Singapore Mass Rapid Transit. A public train system.

According to Wikipedia, there are 78 MRT stations in Singapore. Based on a 1km radius coverage, the area is Pi x Radius x Radius.

3.1416 x 1km x 1km= 3.14 sq km

Based on 78 MRTs, area coverage = 78 x 3.14 sq km = 245 sq km.

Singapore's total size is 710.3sq km.(Singstat, http://www.singstat.gov.sg/stats/keyind.html)

Go to google map and open up a Singapore map, you will easily see that in the heart of Singapore is the Mac-Ritchie and Pierce reservoir water catchment area and there are other areas reserved for military use. There is a scale on the bottom left of the screen. You can roughly calculate that the size of those non populated areas may be around 100sq km in total.



WHAT IS THE SIZE OF SINGAPORE'S ACCESSIBLE AREAS?

So Singapore’s accessible areas are 710.3 – 50 – 50 = 610.3 square kilometres.


So 78 MRT stations will cover 245 sq km out of 610.3sq km. If we assume that all accessible areas are populated evenly, the 78 MRT stations already cover 40.14% of the accessible land area in Singapore.

In other words , if we draw a 1km area around each MRT station, we will end up with those areas covering 40.14% of singapore's usable land.


There are many properties across singapore, it would be easy to assume that properties are spread out fairly evening throughout the Singapore geography.

If we make the above statement, therefore roughly 40.14% of all properties in Singapore are within 1km of an MRT station.



How many number of units of Private housing is 40.14%?

Wow, that is a lot of properties that are near to an MRT station.



So there are some 250,334 (URA Q2, 2010) units of Condominium and apartments property units and many hundreds thousands of HDB flats.



40.14% of that is some > 100,494 of choices of private property on the market that is potentially near to MRT stations.

Technically you have some 100,000 units of private property to choose from. Even if these properties are not put up for sale all at once. Each year, there would be a turn-over of 3 to 6% which amounts to 3,000 to 6,000 of buy and sell activities on these private properties.




DOES STAYING NEAR TO MRT REALLY MEAN SO MUCH?




Let’s look at the travelling time and the number of train one must get off and get back on in order to get from one place to the other.




Is distance to your place of work no longer important if you have MRT near your home?

Is distance to your children’s school no longer important if you have MRT?

It's worth not to get carried away by MRT. The overall lifestyle needs and distances from all your lifestyle needs are important too.




MRT needs to maximize share holder return - Over-Crowding is the least of their worry



So many far away places are now covered by MRT. Does it mean that it is more valuation property? Yes to an extent, but that still does not address the distance issue.

Sentiments?



What are the effects of MRT on prices of Singapore properties?



If people start to realise that being near to a MRT station is no magic pill and neither is it a paradise, they will not bid as much.




For those properties which are far away from town, being near to an MRT will command a good premium, while those farther away will have likely lesser value.




For those properties which are near to city centres or near town, being near to MRT should have a smaller premium as access becomes more varied and not singularly dependent on the MRT.




To Summarise The Effects of MRT on Properties

For Far away locations

Near to MRT means easy access. Alternative modes of access not great.

Not near to amenities

Not near to working place

Not near to business centres

Not near to schools, etc.



So perhaps access to MRT gives a greater premium compared to those in the same area without MRT within easy reach.



For Central and Prime locations

Access to amenities – Good

Near to many places

Near to shopping areas

Near to schools

Near to business centres

Modes of transport varied and plentiful (such as Bus, train, taxis, etc) and distances near.

Such locations do not significantly (perhaps should not) be affected by whether there is MRT or not.





Will Premiums shrink for those properties near to MRT?



The premiums one pays to properties which are near to MRTs will shrink over-time. Singapore Property Buyer may need to focus on your own lifestyle core needs, rather than what is good to have in order not to overpay.

Those very far locations touting MRT as a feature should generally not be valued higher than those that are nearer to city centres or with good locations (but without MRT) except when there is HYPE. (people who buy into Hype may lose out)

At some stage developers want you to think that distances doesn't matter as long as there are MRTs. Now If you will only imagine how you will squeeze with all the people on the super crowded and not very regular frequency MRT train . Getting to town is no mean feat, then the choice will always be LOCATION and smooth connectivity as a priority, be it railway, MRT, bus, boat, car or whatever transport.

Contact Property Buyer Mortgage Consultants for your Home Loans and Refinance needs at sms / text 9782 8606.

Invest in Singapore Property: Will Low singapore SOR rates inflate property prices?

Invest in Singapore Property: Will Low singapore SOR rates inflate property prices?

Quotes -->

“Analysts say the Sibor drop may complicate recent government efforts to rein in rising asset prices, in particular a surging real estate market.” (David Roman and Gaurav Raghuvanshi, Dow Jones Newswires, online.wsj.com/article/BT-CO-20100519-718371.html

,19th May 2010)

"Property is the most interest-rate sensitive sector of the economy," said David Carbon, an economist with DBS. "The economy is growing very fast, rates are very low: You can draw your own conclusions." (David Roman and Gaurav Raghuvanshi, Dow Jones Newswires, online.wsj.com/article/BT-CO-20100519-718371.html



Some financial news reports or articles have been saying that Sibor at an all time low is making the situation more complex as low interest rates cause asset bubbles especially in the property market.

Though the statement looks correct universally and is more or less so, but if you bother to drill down, a lot of so called Universal truth is not so Universal afterall.

How much movement in interest rates before something happens? Is property most sensitive to interest rates? (Maybe but maybe not)

The general hypothesis is that when Interest rates are low, people can afford the properties, therefore bidding up the property prices . We are usually very careful about being a parrot and repeating statements such as these.



While in the extreme, that statement "Property is the most interest-rate sensitive sector of the economy" is usually true, but the degree of sensitivity of property to that is suspect.



Because if you look at 2007 to 2008, during the property boom, the run up in prices as well as interest rates are almost in tandem. It took quite a lot of interest rates hike (from about 2% home loans singapore rates to almost 5%) to slow down the property market. So there is a substantial lag effect.



And eventually it was the break-out of the global financial crisis that made people lose jobs and lose confidence that did the job or slowing the property market.

So how will Singapore condominium prices be affected by varying property loan singapore rates.

At Property Buyer Singapore Mortgage consultants, we like to research it and present the facts.
Tel: 6100 0608
Sms: 9782 8606
http://www.propertybuyer.com.sg/articles/about-us



Arguments FOR AND AGAINST " Low Interest rates complicate recent government efforts to rein in rising asset prices"



Our customers are buying for reasons that are NOT how much Singapore bank interest rates they have to pay.

Then they will check the repayment schedule, only then they will realize that they are over-stretching or not.



The cases that we have seen are very different.

It is often not just about the Home loans Singapore, it's more than that.

Property Buyers who are getting home loans in Singapore do so for the following reasons : -

Need a place to stay
Replacement for their renting
Property available in their locality
Property meeting their budget
Property meeting their lifestyle
Investment reasons – Income (very few)
Many people stated Capital appreciation as a reason
Interest rates are very low Not many people told us this was their main reason for considering property purchase.


We have a sample size of 50 clients over the past many months , population of 5 million people, 90% of people did not state interest rates being low as buying criteria (only 10% stated low mortgage interest rates as property buying criteria).

Based on a statistical tool at (://www.surveysystem.com/sscalc.htm) we have arrived at a figure of 90% +/- 8.32% using a 95% confidence level.



Property investors ARE NOT BUYING DUE TO LOW Property LOANS RATES!!! (We are 95% certain) - Based on our 30min rough estimation



People that bother to read our research material are typically skewed towards private properties, their range do vary a lot, from property purchase between $1m to $10m. And as these people are not related, we can therefore assume that they are fairly homogeneous and representative of Singapore’s Private property buyers.



We can say with a 95% confidence level that between 81.68% to 98.32% of people buying properties in Singapore , they are buying for reasons other than low interest rates. Between 3% and 1% bank interest rate, it makes little difference to their property buying intentions. Of course it would still make a difference to them if interest rates are between 10% and 1% (But historically unlikely as it has only happened once within this 20 years) . Of course there are between 1.68% to 18.32% @ 95% confidence level are buying due to low interest rate reasons.

So low interest rates is one of the many factors that cause property asset prices to rise, but only a small reason .



Low interest rates don't mean that banks can grant you loans, you must pass the bank affordability test



Singapore Banks practice a safety threshold for property mortgage loans interest rates. Therefore only those who have a healthy income (cash flow) minus off their liabilities meeting a certain debt servicing ratio (typically 50%) are granted a loan.



Singapore banks generally set a property loans interest threshold at between 3.5% to 5% at this point in time. Even if the prevailing interest rates are 1% or less on your home loans, you will be tested for your servicing ability at between 3.5% to 5% home loans rates. You must pass the bank's credit department test to get a loan . As there is some buffer between existing rates and the bank's threshold, there is some time lag .

Therefore singapore bank residential interest rate is INELASTIC to creating property demand when interest rates are low.



So if you cannot pass the affordability test, you cannot buy a property using bank's financing, so how will you add to the demand to force property prices to rise?



Singapore's SIbor interest rates have peaked at about 3.6% within the last ten years. And the banks usually Lag in increasing interest rate means threshold.



When banks set their threshold for interest rates, they look at historical interest rates. No matter how low the prevailing rates are, they will still keep it at a higher level just to make sure that you can afford to repay the loan.



Therefore dropping Sibor from 3.5% to 1% or thereabouts is INELASTIC to create any demand and hence will NOT push up Singapore property prices.


Therefore your affordability do NOT increase with lowering interest rates in Singapore. It's whether the bank will lend to you, or NOT (if you fail the cash flow criteria).

The interest rates from about 3.5% to 1% is inelastic to actual demand in Singapore's context aided by bank's interest threshold setting.




Third point - IF PROPERTY INTEREST RATES ARE HIGH AND YOU NEED A PLACE, WITHIN THE INELASTICITY RANGE OF INTEREST RATES YOU WILL STILL BUY (If you can afford it)



Say you need a place to stay, you will still buy a place even if interest rates increases. So interest rates increases beyond a certain (will cause the bank to raise their safety threshold interest rates even higher) and eventually cause people to shun away from buying a property.



But Low interest rates alone do not do the opposite. It may not cause people to want to buy a property. When the rates are low, it could be more of a need based demand.



As there is a safety threshold, however low the interest rates go, the bank's safety Sibor interest rate threshold typically do not fall further. (But it is the bank's decision).



novice property investors cannot simply believe in news reports and rumours



We are not Singapore economists, we are mindful and wary of generic motherhood statements . Because this is how most news work. They report something that is easy to read and digest.



Though the print media always try to get things right, because some of them are under a lot of time pressure to churn out sensational news on a daily basis, therefore it is also prone to dishing out generic motherhood statements that does nothing to help the investor.



So, Sibor must raise significantly (say several percentage points say 2 to 3% ) before it dampens property buying sentiment and ease the rising property prices. Singapore government got it wrong again leading to the treasury coffers swelling due to high prices for land sales. But nonetheless, we think policy levers are more effective than interest rates.



With this we conclude that low interest rates will not complicate housing demand or property asset bubble , but rather the shortage of housing due to poor timing and planning by the Singapore government is the cause of it.

Invest in Singapore Properties: Sibor or SOR rates

by: Property Buyer Home loans

If you are investing in Singapore properties and you want to know how safe is your cash flow? What can affect your property investing cash flow?

Rental rates can affect your revenue while the underlying Borrowing costs determined by Sibor and SOR can affect your Cost.

Which is safer? SIBOR rates or SOR rates?

In order to know the answer, we need to dwell deeper into how Sibor and SOR works in Singapore.

Setting Interest rate targets in USA and Singapore?

The USA is united from many states. There is a federal government and the state government. As the Federal government has certain rights and controls while the local government the others.

Therefore, the federal reserve uses rougher policy tools such as using interest rates to control inflation and regulate growth for the country while the local government does it's part.

Singapore on the other hand is small. The Singapore government can micro-manage. When the economy heats up and Consumer Price index (CPI) rises, instead of raising interest rates to control inflation, Singapore could raise it’s currency value against a trade weighted basket of currencies.

This reduces the prices of imports as the Singapore dollar strengthens. This has the effect of lowering inflation for Singapore citizens. However this also impacts certain industries which relies on exports.

SO DOES SINGAPORE GOVERNMENT SET AN INTEREST RATE TARGET?

Singapore’s interest rates are consistently set low. Though we are not sure “SET” is the right word. There are many factors including the liquidity of banks in Singapore which helps “SET” the interest rate environment.

Banks that are flushed with cash from depositor’s funds or it's own capital will release unused funds it into the Singapore Inter-bank market, made available to be borrowed by other financial institutions, for a small interest rate charge of course.

The rate is called, the Singapore Inter-bank offered Rate (SIBOR). This is the rate at which the banks lend to each other. Sibor is traded and published in the Association of banks of Singapore (ABS).

SOR is the Swap offered Rate also traded on the Association of Banks of Singapore.

SOR is a Swap. Swaps are basically derivatives contracts. These contracts are traded at a fairly high volume between the banks and financial institutions in Singapore.

SOR or Swap offered Rate is a benign form of Derivative which involves the US dollar and the Singapore dollar where banks trade with each other to borrow the funds. And the borrowed funds carry an interest rate. SOR is determined this way. Swap contracts behave a little like a share in a stock market.

Singapore’s interest rates are consistently lower than that of the US and that of Australia. This ensures that Gross Fixed capital formation is maintained at a higher level of which a significant portion goes into investment. Such as that of plant, machinery, software, etc. All of which could significantly enhance the long term productivity and efficiency of the Country.

Low Sibor and SOR rates drive investment driven inflation?

Singapore is not immune to inflation. However, due to the various policies tools at the disposal of the Singapore government, it can selectively target industries that are over-heating by imposing levies, taxes or restrictions while leaving the other industries which are not over-heating to continue to grow.

Thus Singapore’s micro-managed economy can maintain a higher growth rate due to long term lower interest rates driven by investments.

Australia's housing loans Interest rates are Crazy

Will Singapore’s interest rates reach the levels seen in Australia and US? It is hard to say whether Singapore will ever reach those rates seen in Australia or the USA, but on a comparative basis, Singapore’s interest rates tend to be lower than those in Australia and the USA.

Why will Singapore’s Sibor or SOR rates rise?

In most modern economies, credit is well developed. What this means is, when there are investments or economic activities, funds are being used up. For example, a project that costs $600 million may need financing of at least 60% of that fund.

That means the company who invests in that project only comes out with capital of $240 million while borrowing $360 million. Even the company’s investment of $240 million may also come from issuing shares or bonds of the company, leaving the actual capital of the investment lesser than $240 million.

In other words, investments deplete the funds available for lending into the Singapore inter-bank market. This leads to an investment activity based and economic expansion based rise of rates.

The other instance is when there are major economic shocks where we do not know how much are the banks exposed to these shocks. In such a scenario, each bank will view the other one with suspicion as they do not know whether they will get back their money if they leave lend it out. In such a scenario, the SIBOR or SOR rates move up very quickly. In such scenario, it is expected that the Singapore Government would intervene to provide the liquidity of the last resort, thereby stabilizing the market.

So it is safe to say, when investment grows, funds are sucked up because most investments are still credit driven in a developed economy like Singapore.

For Investors looking to invest in Singapore properties, it is important to understand the Singapore government's interest rate policy levers to estimate if you will be able to afford your Property loans in the coming future.

Invest in Singapore properties: DBS OCBC Maybank eases credit

Invest in Singapore properties: DBS OCBC Maybank Eases Credit
Article contributed by: www.PropertyBUYER.com.sg

DBS Singapore term loans - Equity loans (loan to valuation) has been revised from 70% to 80% starting January 2010.

OCBC bank Singapore term loans - equity loans (loan to valuation) has been revised from 70% to 80% starting January 2010.

Maybank has raised the lending limit from 80% to 90% loan to valuation.

Note: Monetary Authority of Singapore allows banks to lend up to 90% of the valuation of a Property, but not all banks offer 90% loans.


Term loans are also known as equity loans. These type of loans allow property owners to take cash out of a property whose valuation have risen by refinancing these properties.


How Singapore Property term - equity loans work

For example (if CPF is not used)



A property which was bought for $1m dollars with an outstanding loan of 800k.



If the property valuation increases to $1.2m, this Singapore property owner can go to a bank to refinance their home loans. At $1.2m valuation and at a Loan to valuation of 80%, the bank can lend you $960,000.



If your new possible loan size is $960,000 that means you will be able to refinance your $800,000 home loan + a term loans (or equity loan) for $160,000.



This immediately avails $160,000 (after 12 weeks) of cash if your income can support $960,000 of loan quantum.



These cash out is not allowed for down payment for another property.



The actual impact or increase in liquidity is likely to be limited. These lending changes are not announced openly, as a result, they are not likely to lead to people suddenly going to the bank to apply to Singapore property buyer with “cash out”.



In Singapore Monetary Authority of Singapore do not make a lot of announcements unlike the federal reserve in the USA.



Therefore if we use DBS as a proxy for the Singapore government's policies, it does possibly infer a credit easing stance, albeit a very minor one. This could mean that credit and financial risks have abated and the climate is more positive for lending or it could be just a minor adjustment to keep Term loan and home loan maximum Loan to valuation cap in-line with home loans loan-to-valuation caps.



Easing of Credit typically fuel property asset prices.



What does it mean for Singapore property investors and buyers alike?



We do not think this is a big tide of change, rather it should be taken as just one more positive signal (out of many other signals) for property buying rather than a definitive BUY signal.



PropertyBuyer.com.sg Mortgage Consultants have a panel of lawyers with whom we work closely with.

However we do NOT take legal fee kick-back (Many property agents refer you to a law firm in return for a fee, the law firms then charge you a higher rate to recoup the illegal commission paid to the Singapore property agents).

But in return for this partnership with the Conveyancing Lawyers which benefits the conveyancing lawyers more than it benefits us, we monitor their performance. We require the Singapore conveyancing lawyers to be expedient, work with integrity and care. These lawyers also have to highlight any risks as soon as they see it. Their charges also must be transparent and in-line with market rates. But you are free to choose your own lawyers.



How do Singapore Mortgage Consultants survive then?



Banks pay us a fee on successful loan transaction as we complement the banks and ease the work load of bankers on the front end. You don't have to pay us an entry fee, exit fee or subsription. It's totally Free and transparent.



We are able to keep our independence because we work with all the major banks.

Invest in Singapore properties: Housing loans Glossary

Invest in Singapore properties: Housing loans Glossary

Do you know that in Singapore, the home loans terminology differs from that of the US and elsewhere? Of course there will be common terms. In the US, there are Fico score, in Singapore there is none.

Approval-in-Principle

This process allows the bank to first assess your cash flow and your liabilities and determine how much they would be able to lend to you. Singapore Home loans mortgage consultants can help you to conduct Approval-in-Principle so that you can be assured of a home loan. Please do note that Approval-in-principle are simply that, “approval-in-principle”, while there is much more certainty that the banks can lend you, the bank’s credit department have the final say whether to lend or not after looking at your credit report. Some banks will assess the credit report for an Approval-In-Principle home loans while some banks do not assess the credit report for an Approval-in-Principle, therefore it is best to be honest about your financial situation so that you do not end up with an “approval-in-principle” only for the bank to reject it at the last minute after finding out past credit issues.

Approval-in-principle are only valid for about 1 month.

Amortization

The process of paying off a debt (often from a loan or mortgage) over time through regular payments. The monthly payment is broken down into interest payments and the remaining amount is for principal repayments. In the early years, payments consist largely of interest; as time goes on, principal repayments increases. At the end of the loan tenure, the entire debt will be repaid.

Amortization Schedule

This is basically your home loan repayment schedule showing you the repayment of your principle and your interest over the entire span of your loan amount.

Bridging Loan

The bridging loan is usually a temporary term loan used to pay for the down-payment or part of the down-payment of the new property purchase. The bridging loan is most often collaterised against a current property that the buyer owns, but is in the process of being sold. Or in some cases, the bridging loan is collaterised against a current property that is already sold, but whose sales proceeds have not arrived. Bridging loans are very tricky as timing of execution is of critical essence. Make sure to check with your bank to make doubly sure or else your will end up in a situation where you have no funds to execute a property transaction where you have already exercised the option and entered into a sale and purchase agreement.

Board Rate

Board rate or mortgage rates and many other terminologies were invented by banks to be used as a reference in which to peg their variable rates. For example, if the bank set their “board rate” to 4.25% and the variable rate you pay is 2%. That would mean it is (Board rate – 2.25%). In case the bank modifies the board rate, it would affect your interest rates.

Building Under Construction (BUC)

Building under construction are buildings which have the permit to launch for sale but are still being constructed. This applies mostly to new development such as Condominiums whose Temporary Occupation Permit (TOP) is still some time away. Banks treat BUC and completed properties differently.

Cancellation Fees

The penalty that banks charge, usually a percentage of the loan amount (or a percentage of an un-disbursed amount), if you were to cancel your housing loan after you have accepted the Letter of Offer but before the housing loan is disbursed or cancel the home loan after partial funds have been disbursed but the others are not.

If you re-finance your home loan when the funds have not been fully disbursed, it would be considered a cancellation and cancellation fees would apply.

Cashback or Cash incentive Housing Loan

The lender refunds a percentage of the housing loan the cashback and you are usually tied into the loan for a number of years in which a penalty is applicable if the loan is redeemed. This type of loans is also usually useful for home owners who are contemplating redeeming a loan which is still in penalty period.

Combo Housing Loan

A combo or hybrid housing loan can be sub-divided into different parts for a single property. Each part can be treated as a separate housing loan so you can choose a package for each division. In other words, if you borrow $1m for a Singapore property, you can opt to have $500,000 under a fixed rate regime and another $500,000 under a Sibor rate package. Both loans are collaterised against the same property.

Claw-back Period

If you are to fully redeem your mortgage within the claw-back period, the lender will reclaim most of the subsidies given to you. These would usually be the legal subsidy and may include valuation fees, fire insurance premiums, cash incentive, etc.

Certificate of Statutory Completion (CSC)

The Commissioner of Building Control will issue the Certificate of Statutory Completion to a building project when it is completed. The building can only be occupied when a Certificate of Statutory Completion (CSC) or Temporary Occupancy Permit (TOP) is granted.

Fixed Rate Housing Loan

Fixed rate housing loans provide you the stability and ease of planning your cash flow. However Fixed rate housing loans usually comes with a lock-in period which correspond to the duration where the loan is fixed.

Floating or Variable Rate Housing Loan

The interest rate can rise or fall throughout the tenure of the loan. Lenders usually give at least one months notice when adjustments are made to the interest rate. Most lenders allow partial prepayments for this type of loan, making this a good package if you intend to repay a significant portion of your housing loan in the initial few years.

Floating rate packages comes in 3 main forms: -

* Bank’s variable rate packages which are pegged to the bank’s internal reference.
* Sibor pegged housing loans.
* Sor pegged housing loans.

Full Redemption Penalty

The amount that banks charge, usually a percentage of the loan amount, if you were to fully repay your housing loan within a lock-in period.

Interest-offset housing loan features

This feature allows you to offset your housing loan interest with funds deposited into an account designated by the bank. For example, your housing loan may be $1m and you also have $300,000 cash which you do not intend to pay down the loan. You could put this $300,000 cash into the designated account to offset against housing loan interest payable, (i.e. your effective loan is ($1m - $300,000 = $700,000) and you will only interest on $700,000 rather than $1m in case this is a 1-for-1 interest offset. For example, if the interest cost is 3%, the bank will charge you interest of 3% on the $m and give you interest of 3% on $300,000. In case it is a 2/3 offset, for a 3% interest rates, the bank will charge you 3% for your $1m loan and give you 2% interest for your $300,000 cash.

Many business people like this package as it allows them the flexibility to incur less interest costs if they do not use their funds, while still giving them the choice to use the funds like a current account.

If the housing loan is paid down, then this option of using cash in case of an emergency would disappear.

Interest-only Housing Loan

Monthly payments consist entirely of the interest due on your loan so that the balance you owe is not reduced during the term.

Letter of Offer (LO)

A contract between the borrower(s) and the bank stating the terms of the housing loan package.

Loan Quantum

The loan quantum or principal is the amount of money that you borrow.

Loan Tenure

The period of time that you will take to fully repay your loan.

Loan to Value (LTV)

A percentage figure indicating the size of the housing loan on a property in relation to its value. Thus, a house worth S$500 000 with a mortgage of S$400 000 would have a loan to value of 80%. Most banks and financial institutions have better housing loan deals for LTV 80% and below. The maximum LTV that lenders can legally go to in Singapore is 90%. This is mandated by the Monetary Authority of Singapore (MAS).

Lock-in Period

The number of years that you are tied to your lender. If you fully redeem your loan within this period, there will be a full redemption penalty that is equal to a percentage of your loan quantum. Lenders may also charge a penalty for making partial payments within this period.

Option to Purchase - OTP

This is a contract which compels the property owner to sell you the property at an agreed price if you give a 1% deposit. The Option to Purchase (OTP) usually gives a 14 day period in which to exercise the option. The law society gives certain guides on how an Option to Purchase should be drafted. However we have also seen many Option to Purchase contracts which are drafted by the Seller’s Property agents or property agencies which are unfair to the Property Buyer.

It is therefore our advice that when a deal is imminent, ask the property agent to send you a draft of the Option to purchase for you to first go through with your lawyer. If you do not have a Lawyer and would like us to help you take a quick look, you can email us at loans@propertyBUYER.com.sg, either us or our panel of lawyers can take a quick look at it and give you some comments. But do not, although we are generally more conservative in our approach, we cannot guarantee to be able to spot all errors or omissions and you promise not to hold us accountable to it.

Partial Redemption Penalty

The amount that mortgage lenders charge, usually a percentage of the loan amount, if you were to prepay your housing loan within a lock-in period.

Payment Holiday Housing Loan

A relatively new type of mortgage in the Singapore market. You take a break towards paying of your interest or monthly installment at certain periods during your loan tenure. This takes many forms, there is also a beautiful Sunday package which gives the borrowing 1 day free interest rate, which amounts to 1/7 reduction in actual interest rates.

Prepayment

Payments that you make in addition to the monthly installments.

Refinancing

Switching from one housing loan package to another, usually to get better rates or terms and condition.

Re-pricing

Switching from one housing loan package to another deal with the same lender.

Singapore Inter-bank Offered Rate (SIBOR)

Singapore Inter-bank Offered Rate is published by the Association of Banks in Singapore. This market is almost equivalent to the Federal Reserve funds market. Banks lend excess funds to each other at the Association of Banks in Singapore. The rates will be determined by the demand of funds and the availability of funds. During times of extreme financial stress where banks view other banks with suspicion, funds become scarce and monetary authority of Singapore is known to intervene by pumping funds into this market.

Singapore Swap Offer Rate (SOR)

Swaps are a form of financial derivatives. Swaps in Singapore are contracts of US$ versus S$ contracts which banks use to avoid converting their currency so as to incur the losses from bid and spread. As banks trade these Swap contracts within the Association of Banks of Singapore (ABS), the rates move in tandem with supply and demand. Swap Offer Rate is the rate that the banks will lend to each other at a pre-determined rate.

Temporary Occupancy Permit (TOP)

The Commissioner of Building Control will issue the Temporary Occupation Permit to a building project when it is completed. The building can only be occupied when a Certificate of Statutory Completion (CSC) or TOP is granted. A TOP, unlike a CSC, is not compulsory, but is usually obtained before a CSC as requirements for a TOP is less stringent.

Term Loan (Cash out)

For properties which has equity a term loan is possible. A Term loan is usually more strict and is contingent on many things such as equity value, remainder lease on the land, CPF property withdrawal and accrued usage and cash flow.

Contact Property Buyer Mortgage Consultants at: -

(sms) +65 - 9782 - 8606

(email) loans@propertyBUYER.com.sg