Australia Property Loans (Singapore) vs Australian Property Loans (Aussie)

Twin Australia map 1

 Features

Australia Property Loans

(Lenders in Singapore)

Australia Property Loans

(Lenders in Australia)

Interest Rate: From 2.27% (SGD) / 3.85% (AUD)*
From 4.39% (AUD)*
Base Currency Option: SGD or AUD AUD only
Currency Exchange Risk: Yes (SGD) / No (AUD) No
Quantum of Financing: SGD: 75% / AUD: 80% 80% / Up to 90% with Lender's Mortgage Insurance, applicable only for Australian PRs and Citizens.
Minimum Loan: $300,000 SGD $100,000 AUD
Interest Only Option: Yes (AUD / SGD) Yes
Currency Switch Option: Yes No
Property Type: Completed / Under Construction Developments
Completed / Land & House Construction
Deposit Offset Feature: No Yes
Min Build in Area: 40 sqm 40 sqm
Purpose: New Purchase / Refinancing / Cash out New Purchase / Refinancing / Cash out
Loan Tenure: Up to 30 years Up to 30 years
Maximum Age Limit: Up to age 75 Up to age 99
Bank Repayment: Bank account in Singapore Bank account in Australia
Eligibility: Singapore Citizens / PRs / Foreigners / Singapore Investment Holding Companies
Singapore Citizens / PRs / Foreigners / Australian Tax Residents
Lenders: Singapore and Australia Banks in Singapore Australia Banks in Australia*

*Based on today's cost of funds.

 

Let's review more in details on the features and options between a Singapore's Australia Property Loan vs Aussie's Australia Property Loan.

  • Interest Rate

Australia home loan mortgages offered in Singapore are commonly pegged to the Singapore Interbank Borrowing Offer Rate (SIBOR), bank’s board rate cost of funds and Australia’s bank bill swap rate. There are currently no fixed rate options available from lenders in Singapore.

Australia lenders offer customers the option of both fixed and variable rates.  Lending rates in Australia are closely referenced to RBA (Reserve Bank of Australia) interest rate.

  • Base Currency Option

Option to choose SGD or AUD finance for lenders in Singapore. Option for Australia lenders are restricted to Australian dollars (AUD) only.

  • Currency Exchange Risk

Financing your mortgage in a currency different from the currency of your base asset exposes a borrower to foreign exchange (FX) risk. Nevertheless, in most instances, FX risks are generally manageable. 

Example: Mr Alex Lee bought an Australia property at $1,000,000 AUD and takes up a SGD Australia property loan from a bank in Singapore at 70% financing quantum. This is equivalent to a mortgage of $700,000 AUD.

Assuming FX conversion rate is 1.16 AUD/SGD. At point of drawdown, the loan is converted to Singapore dollars (SGD) which is equivalent to $812,000 SGD.

Assuming 1 year later, due to a major financial crisis, the FX conversion rate for AUD/SGD drops to 1.05. The outstanding housing loan amount is about $789,549 SGD. This is equivalent to $751,951 AUD.

Assuming valuation remains unchanged at $1,000,000 AUD, this is equivalent to 75.19% loan-to-value ratio and exceeds earlier maximum bank lending limits of 70% loan-to-value ratio.

Depending on the bank’s policy, a borrower may be required to top up the difference in excess of the bank’s maximum lending limits. Most banks have a buffer limit of between 5% - 10% before a margin call may be activated.

  • Quantum of Financing

Up to 75% for SGD loans and Up to 80% for AUD loans with Australia and Singapore Lenders in Singapore. Up to 90% with Lender's Mortgage Insurance Coverage for Australian Citizens and Permanent Residents with Australian Banks in Australia.

  • Minimum Loan

Minimum loan for Singapore lenders are of at least $300,000 SGD while minimum loan amount for Australia lenders starts from only $100,000 AUD.

  • Interest Only Option

AUD mortgages offer borrowers the option of paying only interest on their mortgages for up to 10 years. It may be extended further subject to lender’s approval. SGD Australia property loans are offered with principal and interest repayment.

  • Currency Switch Option

Option to switch between Singapore dollar finance and Australian dollar finance during the tenure of your loan.

  • Property Types

Australia mortgages are offered for both completed and under construction units with Singapore banks while Australian banks (onshore and offshore) only offers mortgages typically 3 months to property completion.

  • Deposit Offset Feature

A value added feature to allow borrowers to offset its excess saving deposits held with the bank against its outstanding loan commitment. The interest earned on the deposits are matched against the interest payable on the loan, resulting in a direct 1 to 1 interest offset.

  • Build In Area

Build in area of a property unit are limited to a minimum of 40 sqm subject to lender’s approval. In many instances with Singapore lenders, the minimum preferred build in area is of at least 50 sqm.

  • Purpose

Applicable for new purchase, refinancing and additional cash out equity term loan. Australia lenders offers higher lending limits of up to 80% loan-to-value ratio for additional cash out equity term loans, new purchases and mortgage refinancing.

  • Bank Repayment

The monthly repayment of your Australia property loan is deducted through a Singapore bank account with a Singapore lender. The monthly repayment of your Australia property loan with an Australia lender is deducted from a bank account held in Australia.

  • Eligibility:

- Singapore Citizens
- Singapore Permanent Residents
- Foreigners on employment pass
- International applicants not living and working in Singapore subject to lender’s review & approval.

Mortgage Supermart provides Australia property finance from a range of Singapore and Australian banks to offer consumers a wide range of options, best deals and financing solutions for your Australia home loans. Applicable for completed, under construction, land and house financing for new purchase, refinancing and additional cash out equity term loan. Contact us today to find out more!