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What Does the Loan-to-Value Ratio in Singapore Mean for You?

The loan-to-value ratio Singapore governs how ordinary citizens and property investors take out loans to buy real estate compared to the value of the property. Loan-to-value ratios essentially calculate how much money you can borrow against the value of your property. Several considerations come into play if you want to get extra cash on hand for your property, or if you want to invest in another house. Don’t let loan-to-value ratios in Singapore scare you out of making a worthwhile investment.


First, some background on why loan-to-value ratios exist. The housing market in the United States collapsed in 2007 and 2008, and many mortgage lenders faced bankruptcies. To prevent the property bubble from forming in Singapore, the government instituted several cooling measures to help keep the bullish real estate market afloat. These rules allow banks to recoup any losses on foreclosures without going under themselves, and the loan-to-value ratios let banks get some money bank in case the property owner can’t afford payments in the future. Here’s how loan-to-value ratios in Singapore work.

First Loan

Your first loan can’t exceed 80 percent of a home’s value, and you can only borrow money for a certain amount of time.

  • $1 million home price is an $800,000 loan
  • $200,000 down payment comes from you
  •  30-year loan

If the property goes into foreclosure, the bank has a better chance to get its money back from the sale of the asset based on the original loan value and any property price fluctuations. Other regulations come into effect on first loans with the loan-to-value ratio in Singapore. If you are over the age of 65, you have slightly different figures.

  • 60 percent LTV, subject to bank approval
  • $1 million property has a loan of $600,000
  • $400,000 down payment.

Second loans have other stipulations.

Second Loan

A second loan means you take out more than one mortgage in your name. A second loan could go towards a second property, or it could go towards the home you already own if the value of the property goes up while you own it.

The loan-to-value ratio in Singapore for a second loan:

  • 50 percent loan-to-value ratio for 30 years or less
  • $1 million property is a $500,000 loan

Second loans, such as refinancing, work if you want to make home improvements, borrow extra money against the increased value of your house or if you need extra money. Your ability to obtain a first or second loan depends on your creditworthiness, maximum total debt servicing ratio (TDSR) and ability to make regular payments. You can employ a few strategies that can help you get the maximum amount of money from a loan based on your home’s value.

Interest Rates and Property Values

Consider taking out a first or second loan when interest rates are lower. Right now, there has never been a better time to buy a home because central banks around the world have yet to raise interest rates for borrowing money. The same goes for interest rates in Singapore. Property prices have recently bottomed out in the housing market, so this combination means the time to act is now.

Banks see a lot of transactions, and they want to stay busy. If you can set aside money for a down payment and a home loan, now might be a good time to buy before property values start to rise, and interest rates finally go back up. Once you secure a loan, you can take advantage of any fluctuations in the housing market later in life. Home prices in Singapore have more than doubled since the early 1990s, which outpaces the growth of inflation. Going forward, buying property is one of the best hedge against rising inflation.

Money for Later

You might be able to get a lower interest rate in the future if your financial standing improves and you show your bank you can make regular payments during your first loan period. Making timely payments and paying more of the base amount of the mortgage might get the attention of your bank’s loan officer. He might be able to get you a lower rate based on your better credit with the bank.

Real Estate Salesperson

A qualified real estate salesperson can guide you through the process of buying a condo for sale, and he can help you understand loan-to-value ratios in Singapore. A real estate salesperson can also show you how your TDSR affects your ability to obtain a loan. This professional knows the laws, finances, and regulations behind the numbers so you can feel comfortable with your decision to get a property loan.

Understanding the loan-to-value ratio in Singapore is of paramount importance to owning property as it might just affect your future loan. Get advice on how can you do it right thanks to Dylan.

Contact him today by email or phone, 9456-7022. His experience and know-how can help you get into a home.