5 Tips for Getting a Home Loan in Singapore: Foreigner Edition
Foreigners in Singapore (non-Singaporean citizens) face restrictions on what properties they can get, and how they can finance those properties in the country. However, there’s nothing to worry about as the process of applying for a home loan as a foreigner is not too far off from that of a Singaporean citizen, as long as you meet the requirements.
If you’re a foreigner living in Singapore and you’re planning to purchase a property, this guide will provide you some insights on how you can apply for and secure a home loan in the country.
Note: This article covers the property and home loan eligibility of non-Singapore Citizens, which include Permanent Residents (PRs) and foreigners.
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Types of Properties that Foreigners Can Buy in Singapore
The Residential Property Act of Singapore gives foreigners the privilege to buy both public and private properties in the country. However, there are some restrictions on the specific types of properties foreigners can and cannot buy, depending on their residency status in the country, or whether they are purchasing as a couple, for example.
For instance, foreigners can generally buy non-landed private property, but for public housing, it sometimes gets tricky.
A Permanent Resident (PR) can only buy executive condominiums (EC) that have reached the 5-year minimum occupancy period (MOP), but can buy a resale HDB flat three years after obtaining PR. PRs can also buy privatised ECs that are more than 10 years old.
Non-Singaporean PRs (other foreigners) can only buy a privatised EC that is more than 10 years old. If you’re married to a Singaporean, you can read this article to learn more about purchasing a house together.
If you’re planning on getting a property in Singapore, besides knowing what you can buy, an even bigger and more long-term concern will be how you finance that property. Of course, the most common way is to get a home loan, unless you’re flushed with cash.
Here are some tips on how to get the home loan you need with maximum ease and speed.
5 Home Loan Tips for Foreigners in Singapore
In Singapore, the Loan-to-Value (LTV) limit, which is the maximum percentage you can borrow based on the property price or value (whichever lower), is up to 75% for bank loans and up to 90% for an HDB loan. This generally applies to both citizens and foreigners, although banks do have internal credit criteria and may sometimes limit your LTV to below these levels.
Here are some tips that can help you get your home loan approved and processed smoothly:
Get Your Documents Ready
Prepare relevant documents that can provide the lender more assurance to allow you to borrow the maximum LTV possible. If you want for the bank to request these documents, your application may be delayed.
These include your passport, PR certificate (if any), pay slips, bank statements, certificate of employment or proof of business, and other proofs of assets.
Have A Good Local Credit Rating
Every country has its own credit rating system. Even if you have a good credit score in your home country, it is unfortunate that it has little to no influence on your ability to borrow money in Singapore. Therefore, we recommend that you start establishing a healthy local credit rating so that lenders can use them as a point of reference when reviewing your home loan application in Singapore.
In Singapore, the Credit Bureau Singapore (CBS) credit score is a 4-digit number from 1,000 to 2,000. 1,911 to 2,000 is the highest score range (AA), which is the best rating you can get. The poorest score range is 1,000 to 1,723 (HH), which means you have the highest risk of defaulting on a payment.
A good place to start would be to pay for your local credit card bills on time and in full. In case you have a poor local credit rating, aside from trying your best to pay off existing debts, abstaining from using credit cards and avoiding big purchases that you cannot outrightly pay could also be of help.
Make Sure Your TDSR And MSR Are Within Limits
In Singapore, borrowers must not exceed the Total Debt Servicing Ratio (TDSR) of 60%, which is a portion of your gross monthly income that you spend on your debts’ monthly repayments, including the projected monthly dues of the home loan you’re applying for.
If you are buying a HDB flat, borrowers must also not exceed the Mortgage Servicing Ratio (MSR) of 30% to get a home loan, which is the portion of your gross monthly income that you spend on repaying a mortgage, including the projected monthly repayments of the home loan you’re applying for.
Note: For private properties purchases, you only have to worry about keeping your TDSR within means. However, for public housing purchases, you have to keep in mind both TDSR and MSR.
Get A Joint Borrower If Needed
If your age or income affects your LTV or if they may hinder you from getting a loan approval, you may consider getting a joint borrower on board. A joint borrower can lower the joint borrowing age or increase the amount you can borrow.
This may be harder as a foreigner if you do not have someone you can fully trust in the country. Additionally, in Singapore, all joint borrowers must be joint owners as well.
A child or spouse can also act as a joint borrower and be considered as a co-owner of your property. However, some people may not agree to becoming a joint borrower because legally, they would also be liable for the repayments.
Have Enough Cash For Downpayments And Other Charges
Unlike Singaporean citizens and PRs, foreigners in Singapore do not have a Central Provident Fund (CPF) that they can use to pay off some portions of their down payments and monthly repayments. Therefore, you have to prepare at least 25% for the property’s downpayment in cash, given the maximum LTV loan of 75%. You also have to prepare some cash for other fees such as your Buyer’s Stamp Duty (BSD), Seller’s Stamp Duty (SSD), and Additional Buyer’s Stamp Duty (ABSD).
Need More Advice?
Buying and financing a property in Singapore may be unfamiliar to you, but it doesn’t have to be difficult!
The good thing is, PropertyGuru Finance’s home loan advisors have the local knowledge and experience in mortgages that can help make applying for a home loan in Singapore much easier for you. Best of all – all services are free!
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More FAQs on Foreigners Buying Homes in Singapore
Can I Buy Property in Singapore as a Foreigner?
Yes! However, depending on whether you are a PR or not, the types of properties you’re eligible to buy may vary. Generally, all foreigners can buy private non-landed residential properties.
Can Foreigners Buy Freehold Landed Property in Singapore?
Foreigners can buy both freehold and leasehold properties, but cannot buy landed properties in Singapore (unless in Sentosa Cove, or special permission is granted).
Can Single PR Buy Condo in Singapore?
Yes! There is no restriction stopping single PRs or foreigners from buying condos in Singapore. However, additional stamp duties may apply.
Can PR Buy Second Property in Singapore?
For private properties, there is no restriction on how many properties PRs can own (although additional stamp duties may apply). For HDB flats, PRs cannot own another property at the same time.