MAS New Measures to Cap Loan Tenure - Oct 2012

New measures were introduced by the Government which will take immediate effect on 6 October 2012. These measures will impact on housing loans granted by Financial Institutions for both HDB properties and private residential properties : 

The rules will apply to new loans granted to individuals and non-individual borrowers, if the date when the option to purchase was granted or, where there is no option to purchase, the date of the sale and purchase agreement, is on or after 6 October 2012. 

For Re-financing facilities, the rules will apply where the application date of such facilities is on or after 6 October 2012.

Restriction on loan tenure

  • Maximum loan tenure shall not exceed 35 years for all loans for both HDB and private residential properties;
  • Apply to both Individuals and non-individual borrowers;
  • Apply to refinancing loans as well - The sum of the tenure of the refinancing facility and the no. of years since the first residential property loan granted to the borrower for the purchase of that residential property was first disbursed, cannot exceed 35 years.

Loan-to-Value revision for individual borrowers (new residential properties only)

40% for a borrower with one or more outstanding residential property loans; and

60% for a borrower with no outstanding residential property loan

IF

The tenure of the credit facility exceeds 30 years; or

Sum of the tenure of the credit facility and the age of the borrower, at the time of applying for the credit facility, exceeds 65 years

Loan-to-Value revision for non-individual borrowers

The LTV ratio for residential property loans to non-individual borrowers from 50% to 40%

Please see below table for summary :

 

To determine maximum loan tenure :

Considerations are :

Loan Tenure & Age of Borrower at loan maturity

LTV (for a borrower with one or more outstanding residential property loans)

LTV (for a borrower with no outstanding residential property loans)

Individuals

Borrower(s)

 

Up to 30 years or up to age 65 of borrower whichever is earlier

60%

80%

Up to 35 years or when borrower exceeds age of 65 whichever is earlier

40%

60%

 

LTV

Non-individuals

Borrower(s)

 

40%