Loan to Value

Loan to Value

The Loan-to-Value (LTV) ratio is a critical measure in Singapore’s real estate financing, dictating the maximum loan amount a borrower can secure relative to the property’s value. It directly influences the down payment amount required, incorporating both cash and CPF funds. Specifically, for newly launched properties, the LTV is based on the purchase price. This mechanism, governed by the Monetary Authority of Singapore (MAS), aims to prevent excessive borrowing and ensure financial prudence among buyers.

For Housing Development Board (HDB) properties, including Build-To-Order (BTO) flats and resale options, borrowers can obtain an LTV up to 80%, reflecting a recent adjustment from a higher threshold as part of the government’s cooling measures to maintain market stability. In contrast, bank loans offer a maximum LTV of 75% for the first loan, with specific cash payment requirements for the down payment.

Factors influencing LTV include the borrower’s age, the number of existing housing loans, loan duration, and the borrower’s credit score. It’s crucial for potential homeowners to understand these aspects for informed financial planning and decision-making in acquiring their home.

In essence, the LTV ratio encapsulates a borrower’s leverage in property investments, serving as a safeguard against financial overextension and a barometer for loan approval and terms. With the dynamic adjustments in LTV limits by MAS, potential homeowners must stay informed of these changes to navigate Singapore’s property market effectively.


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