LATEST!! How does the New Cooling Measure (Rates on or After 6 July 2018) affect you as a buyer/seller?

How does the New Cooling Measure (Rates on or After 6  July 2018) affect you as a buyer/seller?
1)  Residential Property:  Seller Stamp Duty (SSD) (on or after 11032017)

• Up to 1 year : 12% of price or market valuation, whichever is higher
• More than 1 year and up to 2 years: 8% of price or market valuation, whichever is higher
• More than 2 years and up to 3 years: 4% of price or market valuation, whichever is higher
• More than 3 years: NO SSD payable

2) Buyer Stamp Duty(BSD)

3) Residential Property: Additional Buyer Stamp Duty (ABSD)

¹  Whether owned wholly, partially or jointly with others.²  An Entity means a person who is not an individual. It includes the following:

• An unincorporated association,
• A trustee for a collective investment scheme when acting in that capacity,
• A trustee-manager for a business trust when acting in that capacity
• The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred or assigned is to be held as partnership property.

³ As entities, developers will also be subject to the ABSD rate of 25% for entities. Developers may apply for remission of this 25% ABSD, subject to conditions. 

⁴ Housing Developers refer to entities in the business of housing development (i.e. construction and sale of housing units) with respect to the subject property acquired. ⁵ This 5% ABSD for Housing Developers is in addition to the 25% ABSD for all entities. This 5% will not be remitted, and is to be paid upfront upon purchase of residential property. ⁵ ABSD is to be rounded down to the nearest dollar.

4) Loan to Value (LTV)

Should you have any question, do feel free to 

Call | SMS | Whatapp

Den Ng

Housing Matters

9176 7970

Total Debt Servicing Ratio (TDSR) - Pledged Deposit

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income

Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc

How to determine monthly income based if I were to pledge my cash with the bank for 48months?

Deposit Amount X 70%
___________________       =  Monthly Income

        48 months


Example:
Mr Tan ,aged 34 , has $500k in a Local bank but he is not working

Gross monthly income will be compute as:

$500,000 X 70%
______________     =  $7291.66/mth

     48 months


Based on TDSR, Mr Tan's commitment should not be more than:
$7291.66 X 60% = $4,374.99

Car Loan: $850/mth

Mr Tan will only be left with $3,524.99

Stress Test
Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability


Although Mr Tan might be paying only $2,700 +per month , across the banking industry, Bank will use $3,520.51 to calculate on Mr Tan's debt repayment ability.

 

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $784,000*, 30 years loan tenor.

*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute purely based on his car loan.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Total Debt Servicing Ratio (TDSR) - Unpledged Deposit

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income

Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc

How to determine monthly income based on my unpledged cash on hand?

Deposit Amount X 30%
___________________       =  Monthly Income

        48 months


Example:

Mr Tan ,aged 34 , has $500k in a Local bank but he is not working

Gross monthly income will be compute as:
$500,000 X 30%
______________     =  $3,125/mth

     48 months


Based on TDSR, Mr Tan's commitment should not be more than:
$3,125 X 60% = $1,875
Stress Test
Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability
Although Mr Tan might be paying only $1,410 +per month , across the banking industry, Bank will use $1,863.54 to calculate on Mr Tan's debt repayment ability.

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $415,000*, 30 years loan tenor.
*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute based on him having no other commitment.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Total Debt Servicing Ratio (TDSR) - Gross Income

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income


Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc


Gross Monthly Income consist of:
1) Consistent Fixed salary
2) Bonus /commission (30% haircut)
3) Rental Income (30% haircut)
Tenancy period must be still left with at least 6 month from application date


Example:

Mr Tan , age 39  with a declared income 2013

Employment: $100k
Commission: $60k
Rental : $40k (more than 6 month validity)

Gross yearly income will be compute as:
$100k + ($60k X 70%) + ($40k X 70%)
= $100k + $42k + $28k
= $170k

Gross monthly income will be compute as:
$170k / 12 = $14,166

Based on the TDSR, Mr Tan commitment should not exceed

$14,166 X 60% = $8,499.60

Car Loan $2,500/mth
Personal Loan $890/mth

Mr Tan will only be left with $5,109.60

Stress Test

Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability

Although Mr Tan might be paying only $4,000+per month , across the banking industry, Bank will use $5,106.36 to calculate on Mr Tan's debt repayment ability.

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $1.02mil*, 25 years loan tenor.

*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute purely based on his car and personal loan.

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Completed Property: Grab your fixed interest rate now before it goes up further

For those who are planning to finance or refinance your property, grab the chance to get low fixed rate now before it start hiking up.

Some banks have removed their fixed package while others increase quietly.

Do drop me a call/sms at 9176 7970 or email me at den@housingmatters.com.sg for a no obligation discussion.


Den Ng
Housing Matters
http://www.housingmatters.com.sg

Don't always get "Cheated" by "Good rates" offered!!

Based on the Proposal, which Bank is offering a better package if there isn't any special clauses involved?

Of course is Bank B!!

Bank A

Bank B

 But Wait!!!

For BUC property if the project complete within 2 year ( which is quite rare ) you are still bound to pay a Cancellation Fee of the undisbursed fund if you were to refinance!!

Bank A
1) Interest paid: $5390.65
2) Principal paid: $12,761.64
3) Principal at end of 2 years: $337,238.36

Bank B 
1) Interest paid: $5019.78
2) Principal paid: $12973.76
3) Principal at end of 2 years: $337,026.24

Difference?
1) Interest : $5390.65 - $5019.78 = $370.87
2) Principal: $12,761.64 - $12,973.76 = $212.12
3) Prinicipal at end of 2 years: $337,238.36 - $337,026.24 = $212.12

Total Difference: $370.87 + $212.12 + $212.12 = $795.11

If you reprice and get a Good rate with Bank B, Congrats!!! You are saving $795.11 but if you were  to switch a bank (as bank B is not giving a good reprice rate)

Cancellation fee involved:
$130,000 * 0.75% = $975

$975 - $795.11 = ($179.89)

So in Fact, Are you actually SAVING?

Wait!!! Normally Uncompleted Project will complete within 3 years...

 What's Bank A and B 3 years rates instead?

Bank A

Bank B

Bank A
1) Interest paid: $11,330.34
2) Principal paid: $27,636.43
3) Principal at end of 3 years: $622,369.57

Bank B 
1) Interest paid: $12,903.11
2) Principal paid: $27,009.91
3) Principal at end of 2 years: $622,990.09

Difference?
1) Interest : $11,330.34 - $12,903.11 = $1,572.77
2) Principal: $27,636,43 - $27,009.91 = $626.52
3) Prinicipal at end of 2 years: $622,369.57 - $622,990.09 = $620.52

Total Difference: $1,572.77 + $626.52 + $620.52 = $2819.81

Getting a Loan from Bank A will save you $2,819.81 after 3 years!!

 So which Bank you prefer now?

This illustration is not to show you how much you can save, but to show you that the attractive figure might not be cost saving in the end.

"Play with the numbers and don't let the number play you out :)"

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Clauses to Look out for when refinancing a newly TOP Property

There are a few clauses to look out for when refinancing a newly TOP Property.

1) Cancellation fee on the undisbursed amount
2) Legal Clawback ( Only Applicable for those who enjoy Legal Subsidy )

1) Cancellation Fee:
Do take note that after your project TOP , there is still  13% of your fund undisbursed until the "Expiry of the defects liability period ended. If you were to switch a bank right after the TOP , you are bound to a cancellation fee of either 0.75% or 1.5% depending on the contract you sign.

Ie:
Right after TOP
PP: $1mil
13% of $1mil is $130,000

Cancellation fee:
a) 0.75% of $130,000  = $975
b) 1.5% of $130,000   = $1,950

Banker always mention that they can give Free Conversion 3month upon TOP, but
1) Can anyone predict what will be the rate like in 2-3 years time?
2) Will the current bank be providing you a competitive rate?
3) Do you know ,if you missed the conversion 3month upon TOP, you will have to pay a fee for the conversion?


2) Legal Clawback:
Based on the older scheme , bank actually subsidize legal fee. If you were to enjoy the legal subsidy and refinance within 3 years , most bank will want you to pay back the Legal subsidy.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg