Singapore embraces financial tech and revolutionary developments whenever it can. It’s one of the biggest, forward-thinking principles Singaporeans and foreigners praise about their government and financial institutions.
However, numerous financing avenues and routes have the Monetary Authority of Singapore (MAS) observing and looking through all possible areas of abuse and over-borrowing.
The prolific trade of unsecured loans has become popular because of its convenience. Currently, the MAS limits all unsecured loans up to 12 times a borrower’s monthly income. This preventative measure guarantees Singaporeans and foreigners will not fall into deep debt, especially due to the high-interest rates of unsecured loans.
If you’re asking “how much loan can I take” from Singaporean lenders, such as banks, financial institutions, and licensed moneylenders, we’ve done the legwork and calculations to help you find the answer.
HDB’s in-house service can pay for 90% of your total property worth
How much you can borrow from house loan services depends on the property’s overall worth. Truthfully, both the HDB concessionary loan and banks can only pay a percentage. HDB’s in-house service can pay for 90% of your total property worth.
At first glance, it seems that HDB concessionary loans are your best options with its maximum loan to value ratio of 90% being higher than banks. However, how much you can borrow can become expensive due to its fixed interest rate.
Banks can pay for 75% or lower than your property’s worth.
On the other hand, banks can only pay 75% or lower than your property’s worth. By the end of your mortgage, you can take another low-interest financing to pay for the remaining sum through your CPF fund or cash only. Financial experts and institutions call these percentages the loan-to-value (LTV) ratio available for homebuyers.
Banks can present you with a low-interest HDB property mortgage that has a 70% LTV ratio. Unfortunately, banks can change the interest yearly. The industry ties its interest to the year’s SIBOR and SOR rates, which are bank offered rates (BOR) when borrowing money from each other.
Average cost of a 5-room HDB flat: On average, a 5-room HDB flat in Singapore can cost about S $500,000- S$600,000. The following are the available LTV ratios for both HDB concessionary loans and banks.
Property Price: S $500,000-S$600,000
loan LTV: HDB Flats Value x 0.90 = S $450,000 – S $540,000
Banks: Property Value x 0.75 (maximum loan offer) = S $375,000 – S $450,000
All car loans use the open market value (OMV) available during the purchasing period. OMV isn’t the total worth of a vehicle. Instead, it’s the amount importers pay when getting a vehicle from overseas.
Depending on a vehicle’s OMV, banks can offer different loan maximums accordingly. Fortunately, your successful car loan will pay for all the taxes involved, including Certificate of Entitlement (permitting you to purchase a vehicle) fees you might have.
Vehicle with OMV values below S $20,000 allows banks to lend borrowers 70% of the total OMV. With an OMV below threshold, how much you can borrow is up to 70% in car loans for a Toyota Altis 1.6. Therefore, you can borrow up to S $67,822 from your chosen bank. However, keep in mind that some banks will ask you for a 40-50% down payment, which in this case is S $38,755 (40%)
Vehicles going beyond this OMV permits banks to finance it up to 60% of its total value. If you’re buying a vehicle with an OMV of S $18,900, such as a Toyota Altis 1.6, you’ll need to pay S $96,888 as of current pricing inclusive of all taxes, registration fees, and other obligatory payments.
You can easily use a car loan to finance any vehicle. Truthfully, Singapore’s lenders are embracing car loan borrowers because they’re only a handful. The reason: Singapore has a car ownership lottery or raffle, like their HDB ownership selection method.
No-collateral unsecured loans might leave you worrying about how much you can borrow because without collateral, you can be sure it’s only a small amount. Unsecured loans come in the following forms offered by banks, financial institutions, and licensed moneylenders.
- Personal Loans
- Credit Card
- Payday Financing
- Quick Cash Services
- Education Loans
- Renovation Loans
These financial products require no collateral, but they have an enormous interest. It’s the same with an unsecured bank loan. Unsecured bank loans see rapid approval rates but are highly-likely to have huge interest rates and limit your loan amount to 6-12 months of your salary.
The MAS dictates these limitations to Singaporean and in-country foreign workers to prevent their spiral into deep debt. High-interest unsecured financing coupled with stellar loan limits will create an inescapable debt cycle for borrowers across Singapore.
How much you can borrow from a typical personal loan is from S $18,000 to S $36,000 if you earn S $3,000 monthly income. However, most banks and licensed moneylenders accompany this with a 4% starting (or maximum, for licensed moneylenders) interest because of its unsecured nature. Truthfully, credit cards have the same interest rate level, but usually, just have credit limits within 1-3 months of your monthly income.
HDB has no in-house loan service for renovation loans — only banks, financial institutions, and licensed moneylenders offer this service.
A renovation loan requires borrowers to state their renovation project details. This process involves making an accounting table of all expenses involving labor and materials. The HDB has a list of remodeling limitations, which involve no destruction of rooms or drastic renovations.
With this in mind, banks, financial institutions, and licensed moneylenders deem that it’s sufficient to provide borrowers with six months worth of their monthly income to fix electrical wiring, plumbing, and update all essential areas to make their living space worthwhile.
Applying for a Bank vs Moneylender
You’ve read so far that you can use banks and licensed moneylenders to apply for any loan listed here. Most people prefer banks because of their higher loan limits. However, they have hundreds of thousands of applicants going through their processes. Plus, they’ll need to investigate your collateral, especially when it comes to house and car loans.
On the other hand, licensed moneylenders can only offer unsecured loans. While their loan limits are lower than banks, they offer a great alternative financing service, especially for borrowers who have poor credit scores and require emergency financing. Additionally, you only have a 4% interest cap with licensed moneylenders and can get your financing the same day you submit all your requirements completely.
Here is a helpful table you can use to compare the loan amount you can borrow in Singapore
|Loan Type||Amount You Can Borrow|
|Home Loan||55-90% of Selling Price|
|Car Loan||60-70% of Car’s Open Market Value|
|Unsecured Loan||6-12 Times Your Monthly Salary|
|Renovation Loan||6 Times Your Monthly Income|
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