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How Much Bank Loan You Can Take?


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Bank Loan LTV


Introduction

It is very important to know how much you can loan so that you can estimate how much cash you will need before you can make a purchase. The Loan-to-Valuation (LTV) limit is a percentage of the valuation price and it shows how much a buyer can loan to purchase a property base on their age, loan tenure and numner of housing mortgage taken. Older buyers and longer loan tenure may result in a lower LTV.


LTV and Minimum Cash Downpayment

Below is the LTV for different age and loan tenure. It also shows the minimum cash down payment required. These 2 components go hand-in-hand in a same policy.


bank loan ltv

Bank Loan LTV


As we can see, as the number of mortgage increases, with higher age and longer loan tenure, the LTV limit is lower. This is because as we grow older towards retirement, majority of the population will have reduced income to pay for the mortgage.

Do note that the mortgage LTV limit for non-individuals like companies and organizations is 20%. This will mean that non-individuals need to use a minimum of 80% cash to pay for a residential property. This is to deter companies and organizations to purchase residential properties.


Concept on LTV

It is the maximum the bank can loan to a buyer. Conservative banks can still grant amount below the LTV limit based on their own requirements, even when buyers met all the LTV limit requirements.


What LTV Limit is Based on

Do note that for new HDB transaction, the LTV limit will be based on the valuation and price of the unit itself.


How TDSR & MSR Affects the LTV Limit

While this article is on LTV limit, you will need to know how much you can loan based on your income. For a bank loan on HDB transaction, the Total Debt Servicing Ratio (TDSR) or Mortgage Servicing Ratio (MSR), whichever is less favorable to mortgagors, is used for assessment. If the amount that can be loan based on TDSR or MSR is higher than the LTV limit, then only the LTV limit amount can be used. If the amount that can be loan based on TDSR or MSR is lower than the LTV limit, then only the amount based on TDSR or MSR can be used. Only the lower of LTV limit or amount based on TDSR / MSR can be used. For more information on TDSR and MSR, please click here.


LTV Limit for EC, BTO & SBF Units

When buying a BTO flat, buyers can use the LTV limit and minimum cash downpayment based on the first loan.


Conclusion

Through this article, it clarifies some of the doubts that you might have, and it had helped you plan your finances better by knowing how much bank loan you can take for your next property. However, please do only use our information as a reference and for educational purpose, and consult an actual banker for your bank loan. A professional guiding you will always be better than consumers calculating their financial matters themselves.



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Connect With Us:

facebook page link

Share:

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Bank Loan LTV


Introduction

It is very important to know how much you can loan so that you can estimate how much cash you will need before you can make a purchase. The Loan-to-Valuation (LTV) limit is a percentage of the valuation price and it shows how much a buyer can loan to purchase a property base on their age, loan tenure and numner of housing mortgage taken. Older buyers and longer loan tenure may result in a lower LTV.


LTV and Minimum Cash Downpayment

Below is the LTV for different age and loan tenure. It also shows the minimum cash down payment required. These 2 components go hand-in-hand in a same policy.


bank loan ltv

Bank Loan LTV


As we can see, as the number of mortgage increases, with higher age and longer loan tenure, the LTV limit is lower. This is because as we grow older towards retirement, majority of the population will have reduced income to pay for the mortgage.

Do note that the mortgage LTV limit for non-individuals like companies and organizations is 20%. This will mean that non-individuals need to use a minimum of 80% cash to pay for a residential property. This is to deter companies and organizations to purchase residential properties.


Concept on LTV

It is the maximum the bank can loan to a buyer. Conservative banks can still grant amount below the LTV limit based on their own requirements, even when buyers met all the LTV limit requirements.

This is the guiding principle when it comes to LTV limit:

LTV (%) x Valuation, where the balance shall include the cash%

Or

[(100%-Cash%) x Valuation] – CPF

Whichever is lower.


What LTV Limit is Based on

Do note that for new HDB transaction, the LTV limit will be based on the valuation and price of the unit itself.


How TDSR & MSR Affects the LTV Limit

While this article is on LTV limit, you will need to know how much you can loan based on your income. For a bank loan on HDB transaction, the Total Debt Servicing Ratio (TDSR) or Mortgage Servicing Ratio (MSR), whichever is less favorable to mortgagors, is used for assessment. If the amount that can be loan based on TDSR or MSR is higher than the LTV limit, then only the LTV limit amount can be used. If the amount that can be loan based on TDSR or MSR is lower than the LTV limit, then only the amount based on TDSR or MSR can be used. Only the lower of LTV limit or amount based on TDSR / MSR can be used. For more information on TDSR and MSR, please click here.


LTV Limit for EC, BTO & SBF Units

When buying an EC, BTO or SBF flat, buyers can use the LTV limit and minimum cash downpayment based on the first loan.


Conclusion

Through this article, it clarifies some of the doubts that you might have, and it had helped you plan your finances better by knowing how much bank loan you can take for your next property. However, please do only use our information as a reference and for educational purpose, and consult an actual banker for your bank loan. A professional guiding you will always be better than consumers calculating their financial matters themselves.



Date first posted on 18 June 2019; Last Edited on 18 June 2019

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