What is the loan-to-value (LTV) ratio?
The LTV decides the highest amount of money you can borrow to fund your house.
This affects how much cash or CPF Ordinary Account savings you must pay as a down payment. It’s applicable whenever you take a home loan to finance your property purchase, regardless of whether it’s your first, second, or subsequent mortgage.
For example, if your LTV ratio is 70%, you can borrow as much as 70% of the value of your property, or the price you pay to purchase it, whichever is lower.
Remember that for newly launched properties such as new HDB flats, new executive condos (ECs), and new launch condominiums, the LTV ratio will always be based on the purchase price.
LTV ratios are implemented as a precaution to prevent borrowers from borrowing too much money and becoming over-leveraged.
The Monetary Authority of Singapore (MAS) establishes the LTV limits, which differ based on whether you obtain a bank or HDB loan.
What types of loan-to-value (LTV) ratios are there?
There are two primary types of LTV to consider when buying a property locally.
- The HDB housing loan LTV (Updated on August 20th, 2024)
If you’re buying an HDB property, including BTO flats, sales of balance flats, re-offer of balance flats, or resale flats, you can get a maximum LTV ratio of 75% from HDB. This means you can borrow up to 75% of the property’s value from HDB.
You can use cash or a mix of cash and savings from your CPF OA to pay the down payment.
- The bank loan LTV
If you want a bank loan instead of an HDB loan, the maximum LTV ratio is also 75% for the first loan. When paying the remaining 25% of the property price, you must pay 5% of it in cash. The remaining 20% can be paid using cash and savings from your CPF OA.
Note that the HDB or banks are not obligated to approve the full LTV amount. They may approve a lower LTV limit or even reject your application completely.
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The information provided was accurate at the time of publication. For the latest changes and updates, head over to the official websites.
What factors affect the loan-to-value (LTV) ratio?
The following are the main factors that will establish your LTV limit, including:
- Your age
- The number of housing loans you currently have
- Your loan duration
- The property’s condition or location
- Your credit score or rating
Recommended article: Guide to loan-to-value (LTV) limits, based on type and number of housing loans you have
