Explainers
 Published Date: 05 July 2018

Rules for New Housing Loans

When granting a housing loan, financial institutions (FIs) should base the loan amount on the residential property's adjusted purchase price, which is the price after the deduction of any discounts, rebates or other benefits.

Applies to: Full Bank (Locally Incorporated) , Full Bank (Branch) , Finance Company , Merchant Bank (Locally Incorporated) , Merchant Bank (Branch)

Deducting Discounts, Rebates or Benefits

When arriving at the adjusted purchase price of a residential property, financial institutions (FIs) must:

Discounts, rebates or benefits could include:

  • The payment of valuation fees.
  • The payment of legal or stamp fees for the purchase.
  • Deferred payment schemes for completed private residential properties.

Deferred payment schemes are considered a benefit for the borrower, as the borrower can use the deferred amount for other purposes during the deferral period. For example, they can invest the deferred amount in Singapore Government Securities for a return.

Example

Property Developer XYZ offers to pay legal fees of $20,000 for a $750,000 flat. Even though the borrower's purchase price is $750,000, the adjusted purchase price is $730,000.

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