Equity Term Loan

If you own private property or EC, you’re eligible to take a term loan (for EC owners, you have to fulfill your 5-year MOP first) at a relatively low-interest rate depending on the bank.

Homeowners who need a sum of money for purposes like funding for the next property purchase can consider this option, this much apply to the homeowner that had benefited in the appreciation of the property or had fully paid up their existing property as the interest rate might be much lower than other common alternatives.

In most cases, banks will allow you to borrow up to 70% of your property value, minus any outstanding loan amounts and the CPF used for the property purchase. The amount you can loan will also be affected by TDSR (Total Debt Servicing Ratio), meaning your loan repayments cannot be more than 60% of your monthly income.

 

Here’s an example to help you understand how a term loan works:

– Mr. Goh’s property is valued at $1.5million

– He has an outstanding loan of$250,000

– He used $300,000 of his CPF to finance this property

 

Based on these numbers, Mr. Tan can loan $500,000. This is how the calculation is done: 

70% X 1.5 million = $1.05million

$1.05million – $250,000 – $300,000 = $500,000

 

If you need help to make sense of your property numbers, fill in your details below and I’ll contact you to help calculate the term loan you can take out.

 

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