The -Monetary Authority of Singapore- MAS made it clear that banks should consider deferred payment plans when calculating loan amounts for private property buyers, The Straits Times reported.
The authority gave clarification as various projects such as OUE Twin Peaks offered the scheme. Under the plan, buyers can occupy the house after paying little down payment and exercising purchase option. The amount remaining is paid after 2 to 3 years in most cases using a bank loan.
In standard purchases of completed properties, the whole amount is paid in 8 to ten weeks.
Last week, MAS sent the banks a circular explaining that consideration should be given to the scheme in the calculation of mortgage with the view that borrowers can utilize the deferred money in others ways in the deferral duration, such as investing and getting a return.
The directions of MAS are that banks should deduct the value of the occurring benefits from purchase price while computing how much a buyer can borrow. The authority went ahead and provided the banks with the formula for accounting these benefits.
“Under current rules on loans, if the ratio of loan-to-value is 80%, a purchaser can access $1.6m loan for a house valued $2m. However, under the scheme with 90% of the purchase price deferred for a year, the loan amount should reduce to $1,587,328,” MAS said.
The MAS added that another benefit to be considered in the calculation of loan amount is the rental guarantees, where developers assure buyers of rental earnings for the duration of time. A good example is Hilltops, where SC Global gives buyers a rental guarantee of 2 years.
OCBC spokesman said that property buyers should take into account that bank loans will be awarded on the basis of the adjusted purchase price or the property price arrived after deducting rebate, benefits or discounts.
‘’Those purchasing property under the scheme should know that they will get reduced loan amounts and should be ready to pay higher down payment,” said Tok Geok Peng, DBS Bank, Secured Lending Executive Director.
More T.O.P. or obtaining T.O.P. soon residential developments can be found at The Venue Residences at District 13 city fringe, Robin Residences; a freehold development at District 10, Terra Villas; a landed cluster terrace development at District 14 and Whitley Residences in District 11.