Explainers
Published Date: 26 December 2018

Mortgage Equity Withdrawal Loan Rules

MAS sets maximum limits on loan tenure (35 years) and loan-to-value for mortgage equity withdrawal loans. Certain other rules apply, including total debt servicing ratio in most circumstances.

Applying for a New MWL

Mortgage equity withdrawal loans (MWLs) are loans secured against the value of the borrower's residential property. Certain facilities are excluded.

Maximum Loan Tenure

The loan tenure for MWLs is capped at 35 years.

Maximum Loan-To-Value

For an individual or a shell company, the MWL, together with amount outstanding of any loan secured on same residential property and CPF monies used, have the following LTV limits:

Outstanding housing loans for other residential properties LTV limit
None 75%
1 or more 45%

These limits apply to MWL applications made on or after 6 July 2018.

The limits do not apply to non-individual borrowers, excluding shell companies.

Borrower-Mortgagor and Guarantor-Borrower Requirements

The borrower-mortgagor requirement does not apply to borrowers who apply for an MWL.

The guarantor-borrower requirement applies to borrowers who apply for an MWL or refinancing of certain MWLs.

Mortgage Servicing Ratio

Mortgage servicing ratio (MSR) does not apply, as MWLs cannot be taken out on HDB flats and executive condominiums still within the minimum occupation period.

Total Debt Servicing Ratio

Total debt servicing ratio applies for borrowers who are individuals, sole proprietorships or shell companies.

It does not apply if the MWL amount, together with any other outstanding loan secured on the same property, is 50% or less of that property's current market valuation.

Example

Mrs Wong is seeking an MWL of $300,000 on her property worth $2,000,000. She has an outstanding bank loan of $150,000, secured on the same property. The total value of the two loans is 22.5% of the property's market value, so her TDSR does not need to be calculated.