Property Buyer FAQ: What is Asset Based Lending in Singapore property lending?

Property Buyer FAQ: What is Asset based lending in Singapore property lending

Most banks in Singapore lend based on criteria such as debt to servicing ratio. The usual debt servicing ratio is capped at 50% to 60%.

(Note: This is different from the financial planning guideline of setting the debt at 35% of monthly income.)

Singapore banks who lend money based on asset based lending will assess your property valuation and lend you money based on your assets.

However many banks do not engage in asset based lending as they deemed it risky. For those few banks that do asset based lending, they want to make sure that you can service the loan by asking for proof of cash or assets under management of 24 months.

Traditional asset based lending

Someone with a fully paid up property valued at $3.2m. He goes to the bank to borrow 50% of $3.2m. He gets $1.6m in cash for an equity term loan (Cash out). The bank will usually want to see proof of liquid assets of 24 months of the installment amount.

Illustration: -

Age of owner = 50 years old
Property valuation = $3,200,000
Loan to value = 50%
Loan tenor = 20 years
Interest rate = 1.5%

Loan amount = $1,600,000
Monthly Installment = $7,720

In this scenario, the owner would most likely be asked to show proof of 24 months of monthly repayment in liquid assets of $185,280.

Alternative asset based lending in Singapore

Another form of asset based lending lends out to 70% to 75% of the property asset valuation.

Who should read this?

This is applicable for refinancing or new purchase of completed properties. This loan is also very effective for Singaporeans buying a second property.

Scenario of a Rich Foreigner Refinancing his Singapore property

Scenario: Rich foreigner 50 years old who has a paid up properties and no outstanding loan. The rich foreigner earns an income of only $25,000 a month in his home country.

Property valuation = $6,000,000

Status = Fully Paid up

Loan to value = Can to up to 70% (up to 75% subject to approval)

Loan tenor = up to 25 years

Loan amount = $4,200,000

He will be eligible to borrow up to $4,216,000 based on his asset and some proof of income instead of $2,529,000.

Under normal lending criteria, this Rich Foreigner will only be able to refinance with cash out (Term loan) of only $2,529,000 and NOT $4,216,000. In this way, cash is freed up for other needs.

Eligibility of Asset based lending: -

Age = up to 75 years old

Tenor = up to 40 years

Min Income = $8,000 per month

Special Feature – LOW monthly Repayment

Some banks offer you a means to vary the monthly repayment (Subjected to a minimum sum). If you are a New couple, recently married and need to build up cash after incurring expense of an expensive property, then you could consider setting a LOW Repayment. This Low repayment feature can be built into this package. Contact us at (SMS) 9782-8606 for more information. If you are a Mortgage Broker or Mortgage consultant, do contact us, we are happy to avail this to you or your customers.

Documents required for Asset based lending

NRIC = front and back copy. (For foreigners who are NON-PR, copy of passport)

Income = Proof of income via Company letter only

(NO need to go to Notary public in their respective country)

OR

3 Months salary slip

OR

2 years of Notice of Assessment (NOA) – from IRAS.

Outstanding home loan

= 6 months to 12 months bank statement showing outstanding loan amount. (if fully paid, copy of title deed)

Option to purchase = Required for a purchase of a completed property. (Not needed if
refinancing)

Contact : loans@propertybuyer.com.sg
Mobile (sms) : +65 9782 8606
Get Asset Based Lending home loan
Get Asset Based Lending Refinance Home Loan

If you are a Mortgage Broker, do contact us, we will avail this to you and your clients. (Only for Mortgage Broker and Consultants)

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1. Is your HDB flat an Asset?