www.propertyguru.com.sg | 21 Aug 2013
With stricter loan requirements set for private property, many buyers are now finding cheaper alternatives in the executive condominium (EC) market, media reports said. The shift is mainly due to the introduction of the Total Debt Servicing Ratio (TDSR) framework, which covers a borrower's total debt repayment including mortgages. Banks now need to ensure that borrowers' total monthly debt repayments do not exceed 60 percent of their gross monthly income.This buying trend became evident when two recent launches reportedly saw bullish sales.
The 495-unit Sea Horizon EC in Pasir Ris was three times oversubscribed
The 495-unit Sea Horizon EC in Pasir Ris was three times oversubscribed
| TDSR. A new 4-letter word that can scare any Singapore adult out of his life. -- Courtesy of Google PHOTO | after receiving 1,500 e-applications, the highest for an EC launched in 2013 to date. At the same time, CDL's Lush Acres (pictured) in Sengkang sold 76 percent of its 380 units over the weekend. |
According to OrangeTee's Research Head Christine Li, owners with existing HDB flats and who are applying for an EC unit have more chances to obtain the maximum loan quantum for a mortgage.
Buyers are required to sell their flats upon completion of an EC development under current HDB rules. This means banks will only consider the monthly payment on the EC and other debt obligations when evaluating the buyer's loan eligibility.
But this is not the case for private property mortgages. "Even if an upgrader is thinking of selling his HDB flat after buying a private property, the bank will still include the monthly mortgage instalment of the HDB flat together with the new commitment towards the private property when calculating the loan quantum he is eligible for at the point of application," said Li.
Buyers are required to sell their flats upon completion of an EC development under current HDB rules. This means banks will only consider the monthly payment on the EC and other debt obligations when evaluating the buyer's loan eligibility.
But this is not the case for private property mortgages. "Even if an upgrader is thinking of selling his HDB flat after buying a private property, the bank will still include the monthly mortgage instalment of the HDB flat together with the new commitment towards the private property when calculating the loan quantum he is eligible for at the point of application," said Li.
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