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Home Loans in Singapore (2022): How to Apply for A Mortgage

Joanne Poh
Home Loans in Singapore (2022): How to Apply for A Mortgage
When buying a home in Singapore, most people take out a home loan in order to finance the purchase. Here is a guide to the kinds of home loans you can take, what you need to apply for one and how to quickly and easily compare loans and choose the best one for you.

Home loans in Singapore

Simply put, taking out a home loan involves borrowing money from the bank in order to pay for the property. In the case of HDB property, it is also possible to borrow money from the HDB (i.e., an HDB housing loan) rather than a bank.
The bank or the HDB will disburse money to pay for the property. After that, you will repay your home loan in monthly installments over a number of years.

HDB vs bank loans

If you are buying private property, your loan will need to come from a bank. HDB flat buyers can choose between an HDB loan and bank loan.
Bank loans typically offer different loan packages for uncompleted property (BUC) and completed property. You can also choose between fixed rate and floating rate loans.
Banks which offer home loans in Singapore include DBS, OCBC, UOB, Maybank, HSBC, Citibank, CIMB, Standard Chartered Bank, Bank of China, Hong Leong Finance and RHB.
If you are buying HDB property, you can take out a bank loan or an HDB loan. At the outset, HDB loan interest rates are typically higher than bank loan interest rates, but offer a great deal of stability as they are pegged at 0.1% above the CPF Ordinary Account (OA) interest rate, which has remained unchanged since 1999.
HDB loans are also a bit more forgiving than bank loans as they offer a higher Loan-to-Value limit and require a smaller downpayment than bank loans, which enables the buyer to borrow more money upfront.

Fixed vs floating rate loans

Fixed rate loans lock in interest rates for a number of years before the interest rate starts to fluctuate. They can thus be a good option if you anticipate that interest rates will rise in the near future.
Right now, fixed rate home loans are hovering at around the 2.65% to 3% mark.
Floating rate loans are pegged to a benchmark such as the Singapore Overnight Rate Average (SORA). They are thus fluctuating, which means your monthly repayments can change from month to month.
Floating rate packages nowadays usually tack on about +0.78% to +1% to SORA. For example, it could be 3M SORA + 0.8%.

How to Get A Home Loan in Singapore

When searching for a home loan in Singapore, it is recommended that you compare home loans from different banks to find one with an attractive interest rate.

Find A Suitable Home Loan

To compare home loans, you can do it the hard way by enquiring at all the different banks individually and then applying for a home loan with a banker.
A less tedious way to source for a home loan is to compare loans on PropertyGuru Finance. You can then let a PropertyGuru Finance mortgage advisor do the heavy lifting by helping you with your paperwork and applications and keeping you informed of any updates.
PropertyGuru Finance advisors can also give you personalised help with planning your finances and answer any questions you might have.

PropertyGuru Tip

Get an In-Principle Approval (IPA) just in case!

Getting In-Principle Approval (IPA) from a bank is a smart way to prepare in advance to finance our property, and gives you the assurance that you will be able to afford a property before you commit to paying the option fee.
When a bank gives you an IPA, they are indicating the amount they are willing to lend you. This gives you a good indication of your downpayment, the loan tenure and approximate installment amounts you will need to pay.
An IPA is usually valid for 30 days so long as your financial situation and credit history stay the same.
You can apply for an IPA through PropertyGuru Finance with the help of our advisors’ personalised help. It’s free!

Checklist of Required Documents for Home Loan Applications

The home loan application process involves a lot of paperwork, so it is a good idea to start gathering all the necessary documents as soon as possible. Here is what you will need to submit with your application.
  • NRIC / Passport
  • HDB flat and financial information (if applicable)
  • Option to Purchase or Sales and Purchase Agreement
  • Value, confirmed by HDB (for HDB resale transactions)
  • Valuation report (for private property and EC transactions)
  • Latest Notice of Assessment (NOA) and past 12 months’ CPF contribution history
  • Latest 3 months’ pay slips
  • Latest 3 months’ salary crediting account statements (if working overseas)
  • CPF Property Withdrawal Statement
  • HDB Printout
  • Credit Card / Credit Line statements
  • Details on other loans
To be sure of the precise list of documents you need to furnish, always check with the bank you are applying to.

Bonus: Decoding Property and Mortgage Jargon

Not sure what that jargon means? Here’s a glossary of some of the most common terms you might come across.

ABSD

Additional Buyer’s Stamp Duty (ABSD) is a tax that must be paid by all Singapore citizens buying a second or subsequent residential property, and all PRs and foreigners buying any residential property.

COV

Cash Over Valuation (COV) is the difference between an HDB resale flat’s sale price and its valuation by the HDB. In other words, the COV is the amount the buyer is overpaying vis a vis the valuation. The maximum loan amount will be calculated based on the valuation of the property or the purchase price, whichever is lower. Hence, COV must be paid for in cash.

BSD

Buyer’s Stamp Duty (BSD) is a tax that must be paid by anyone buying property in Singapore. BSD is calculated based on the property price or market value of the property, whichever is higher.

LTV

Loan-To-Value (LTV) is a ratio indicating the maximum amount a bank or the HDB can legally lend to a buyer.

MSR

Mortgage Servicing Ratio (MSR) caps at 30% the percentage of a borrower’s gross monthly income that can be spent on all property loans, including the home loan he or she is applying for.

TDSR

Total Debt Servicing Ratio (TDSR) caps at 55% the percentage of a borrower’s gross monthly income that can be spent on all monthly debt repayments, including housing loans, student loans, car loans, personal loans and credit card debt.

Cooling Measures

Cooling measures are periodically put in place by the Singapore government to reduce demand for property. The most recent raft of cooling measures was put in place in December 2021.
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Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.
PropertyGuru will endeavour to update the website as needed. However, information can change without notice and we do not guarantee the accuracy of the information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyGuru does not give any warranty as to the accuracy, reliability or completeness of information which is contained on this website. Except insofar as any liability under statute cannot be excluded, PropertyGuru and its employees do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person.

    More FAQs on Home Loans in Singapore

    How much you can borrow for a property loan or mortgage in Singapore depends on the prevailing Total Debt Servicing Ratio (up to 55%), Mortgage Servicing Ratio (up to 30%, if applicable), Loan-to-Value limit (up to 85% for HDB loan and 75% for bank loans).

    Bank loans are typically pegged to benchmarks like SORA, and can be as low as 2%. HDB loans are pegged to +0.1% of the CPF Ordinary Account rate, and is now 2.6%.

    This depends on how much you eventually borrow, but the current LTV is up to 75% for bank loans and 85% for HDB loans. That means a minimum downpayment of 25% and 15% respectively.

    Home loan tenures are typically 20 to 35 years.