Banks and financial institutions are going to provide for such deferments, but it is up for their customers to opt-in for it.
The Monetary Authority of Singapore (MAS) announced that individuals may request for the deferment of loan repayments which include commercial and industrial property loans, education, renovation, and motor vehicle loans starting 6 May 2020, reported TODAY.
Banks and financial institutions are going to provide for such deferments, but it is up for their customers to opt-in for it.
The measure is part of the second relief package rolled out by MAS in order to aid Singaporeans who are financially burdened due to the Covid-19 pandemic.
This came after the central bank announced its first package last month, which provided relief measures for mortgages and unsecured revolving credit facilities – the obligations that make up a significant portion of Singaporeans’ debt.
Related: Covid-19 Home Loan Deferment: What Is It, What’s the Catch and How Do I Apply for It?
Thus, MAS opted to roll out another measure to cater to Singaporeans which were not covered by the previous package. For instance, individuals with renovation loans or student loans not covered by the Ministry of Education may apply to postpone both principal and interest repayments until the end of the year.
No interest will be charged on the deferred interest payments. Interest will only accrue on the principal amount.
Furthermore, MAS noted that borrowers need not demonstrate any impact from Covid-19 to qualify for deferment and their credit scores will not be affected.
Eligible borrowers affected by Covid-19 on debt consolidation plans may also apply to their banks for the extension of loan tenure for up to five years with respect to their existing plans.
“MAS and the (finance) industry will continue to work together to see how best to help individuals and businesses ease their cash flow challenges or reduce their debt burden,” said MAS Managing Director Ravi Menon.
In regards to motor vehicle loans and hire-purchase agreements, individuals in need of deferment may discuss with their respective banks and financial institutions the suitable repayment plans for their cases.
“If a deferment is granted, individuals can discuss with their bank or finance company on extending the loan tenure by up to the corresponding deferment period. This will ease their monthly instalments when they resume regular repayments,” said MAS.
For refinancing loans and fee waivers, on the other hand, those with investment property loans may apply to refinance or reprice their loans without being subject to Total Debt Servicing Ratio (TDSR) and the Mortgage Serving Ratio (MSR). This covers loans taken to buy residential, commercial and industries properties as well as mortgage equity withdrawal loans secured against the value of such properties. This is intended to lessen the debt obligations of borrowers.
If the loan, however, remains within the lock-in period, contractual penalties still apply.
As regards commercial and industrial property loans, requests for deferment is qualified for approval as long as the loan repayments were current as at 1 February.
Warnings, however, were given in view of the possible higher overall interest costs due to payments deferments and loan tenure extensions. Careful deliberation must be made by borrowers, considering the accumulated interest costs that they will eventually have to bear.
Banks, for their part, also show support to the measures rolled out by MAS and urge individuals involved to approach its bank officers early.
“Today, more than two million Singapore residents already have fall-below fees waived on their DBS or POSB accounts. These include those on social assistance schemes, operationally ready national servicemen, the young, the elderly and ex-offenders,” said Head of Consumer Banking Group of Singapore at DBS Jeremy Soo.
The bank has already approved the deferment of close to 8,000 mortgage principal and interest payment applications, amounting to approximately $4.7 billion in loans.
“We’ve also provided free insurance protection against Covid-19 infections for close to one million customers and their family members in Singapore,” added Soo.
OCBC, for its part, has approved the deferment of $4 billion repayment loans, mostly for mortgages.
“The economic impact of the Covid-19 outbreak spares no one and so, our measures should also not leave any stone unturned. We hope that the latest tranche of support for our customers will go some way towards easing the financial strain,” said Sunny Quek, Head of Consumer Financial Services Singapore at OCBC.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg