Lesson 17 Flashcards
1
Q
What are some payment obligations to look out for when purchasing a property?
A
Housing loan repayments
Conservancy charges / management fees
Fire insurance
Stamp duties
Property tax
Home Protection Scheme (HPS) insurance
2
Q
What is the purpose of Home Protection Scheme (HPS) insurance?
A
HPS is a mortgage-reducing insurance that is mandatory for using CPF savings to service an HDB loan.
3
Q
What are the main financial institutions that provide financing for property purchases?
A
Commercial banks
Finance companies
Insurance companies
Real Estate Investment Trusts (REITs)
4
Q
Which non-financial institutions provide financing for purchasing property?
A
HDB
CPF
5
Q
What factors determine how a borrower qualifies for a mortgage loan?
A
Type of property
Existing debts
Age
Loan quantum
Income
Employment status (Self-employed vs. Employed)
6
Q
What is the Loan Quantum based on?
A
Loan quantum is based on the Monetary Authority of Singapore (MAS) Mortgage Loan Rules.
7
Q
What is the loan-to-value (LTV) limit for a 1st housing loan?
A
The LTV limit is 75% for a loan tenure of less than 30 years.
8
Q
What is the LTV limit for a 2nd housing loan?
A
The LTV limit is 45% for a loan tenure of less than 30 years.
9
Q
What is the LTV limit for a 3rd housing loan?
A
The LTV limit is 35% for a loan tenure of less than 30 years.
10
Q
What is the minimum cash layout required for a loan with an LTV of 75%?
A
A minimum cash layout of 5% based on 75% LTV.
11
Q
What is the maximum LTV limit when the loan tenure extends beyond the borrower’s age of 65?
A
The LTV limit is 55%.
12
Q
What is the loan ceiling for HDB bank loans with a tenure of 25 years or less?
A
The loan ceiling is 75%.
13
Q
What is the LTV limit for HDB loans for loan periods that extend beyond the borrower’s age of 65?
A
The LTV limit is 55%.
14
Q
What is the purpose of the Total Debt Servicing Ratio (TDSR) framework?
A
TDSR prevents an individual from purchasing a property beyond their financial means.
15
Q
How is a company set up by an individual to buy property treated under TDSR?
A
It is treated as an individual for TDSR purposes.
16
Q
Who is referred to as the borrower in the context of TDSR?
A
The borrower is the buyer of the property.
17
Q
What is the interest rate floor used in TDSR calculations for residential properties?
A
The interest rate floor for residential properties is 4%
18
Q
What is the interest rate floor used in TDSR calculations for commercial and industrial properties?
A
The interest rate floor for commercial and industrial properties is 5%
19
Q
What is the maximum TDSR percentage allowed?
A
The maximum TDSR percentage allowed is 45%.
20
Q
How is TDSR calculated?
A
TDSR = (Monthly Total Debt / Gross Monthly Income) * 100%
21
Q
How do most financial institutions define debts?
A
Debts are defined in two manners: secured and unsecured loans.
22
Q
What are examples of secured debts?
A
Mortgage/home loan
Bridging loan
Construction loan
Term loan
Car loan
23
Q
What are examples of secured revolving debts?
A
Secured overdraft
Secured credit card
24
Q
What are examples of unsecured debts?
A
Education loan
Renovation loan
Personal loans
25
What are some examples of unsecured revolving debts?
Overdraft
Credit card
Charge card
Personal line of credit
26
To which refinanced loans do TDSR rules apply, and what are the exemptions?
TDSR rules apply to refinanced residential property loans, but exemptions include:
Owner-occupied property loans (e.g., HDB Flats, Executive Condominiums, Private Residential Property)
Investment property loans
27
What conditions must be met for investment property loan exemptions from TDSR?
Commit to a debt reduction plan with a repayment of at least 3% of the outstanding balance over 3 years.
Fulfill a credit assessment.
28
What is the Mortgage Service Ratio (MSR) rule for Bank Loans on HDB Flats & Executive Condominiums?
MSR should not exceed 30% of the gross monthly income.
29
How does TDSR apply to HDB flats and Executive Condominiums acquired directly from developers?
Banks may exclude the monthly repayment installment concerning the borrower's outstanding credit facility for an existing residential property.
30
What is allowed with a Mortgage Equity Withdrawal Loan (MEWL) without TDSR calculation?
If the new loan (including existing loans) borrowed is below 50% of the property's value, TDSR calculation is not required.
31
What are the conditions for a Mortgage Equity Withdrawal Loan (MEWL)?
a) One property and one outstanding loan on the same property
b) No CPF money involved in purchasing the property
c) Meet the credit assessment
d) Max MEWL is 75% Loan to Value (LTV)
e) More than one property - MEWL is 45% LTV
f) Max Loan Tenure: 35 years
32
In Example 3, what is the maximum amount a property owner can borrow without TDSR calculation on a $1 million home with a $100,000 outstanding loan?
The owner can borrow up to $400,000 without TDSR calculation, as this amount is within 50% of the property's value.
33
In Example 4, can the property owner borrow $900,000 with a $100,000 outstanding loan?
No, the maximum amount the owner can borrow is $650,000, including the existing loan, as it exceeds the 50% threshold and is subject to TDSR calculation.
34
What account is used for purchasing residential property with CPF money?
CPF Ordinary Accounts (OA).
35
What is the minimum remaining lease requirement to use CPF money to buy a residential property?
The remaining lease must be at least 20 years.
36
What does the CPF Housing Scheme enable members to do?
Buy Housing and Development Board (HDB) flats.
Buy or build private residential properties in Singapore.
37
What other expenses can CPF OA funds be used for?
Costs of the recess area outside the HDB flat.
Pay for flat upgrading costs under HDB Upgrading Programmes & Town Council Lift Upgrading Programme (TCLUP).
38
At what age does the restriction on property requirements apply for CPF members?
55 years old.
39
What happens to the CPF OA and SA money when a member turns 55?
It is transferred to the Retirement Account to meet the Full Retirement Sum (FRS).
40
What is CPF LIFE?
CPF LIFE is a mandatory national longevity insurance annuity scheme that provides lifelong monthly payouts.
41
What is the Basic Retirement Sum (BRS) related to CPF savings and property pledging?
Members can pledge their property purchased with CPF savings to set aside the Basic Retirement Sum.
42
What is the minimum remaining lease required when pledging a property for the BRS?
The property must have a remaining lease of at least 40 years.
43
What must be done if the remaining lease of the second property plus the age is 95 or more?
What must be done if the remaining lease of the second property plus the age is 95 or more?
44
What must be done if the remaining lease of the second property plus the age is less than 95?
Set aside the Full Retirement Sum and use the balance in the CPF Ordinary Account (OA).
45
What can Singapore Citizens or Permanent Residents do with their CPF money after age 55?
Purchase Property
Pay Outstanding Mortgage Loan
Redeem Loan
46
What is Rule 1 regarding the withdrawal of CPF money for property purposes?
The remaining lease plus the age of the mortgagor must be greater than 95.
47
What is Rule 2 for using CPF money related to retirement sums?
Set aside the Basic Retirement Sum.
48
What is Rule 3 concerning the use of the Retirement Account?
Members can use Retirement Account money to pay the loan.
49
What option does a CPF member have before their 55th birthday regarding their Ordinary Account?
Apply to reserve an amount in their Ordinary Account, which will not be transferred to the Retirement Account, and continue using it to pay the housing loan after turning 55.
50
Which types of residential properties are included under CPF Housing Withdrawal Limits?
HDB Flats
Executive Condominiums
Private Residential Property
51
What is the rule regarding HDB loans and property leases?
HDB loans will not be granted to fund the purchase of flats with 20 years or less left on the lease.
52
What is Rule 1 for utilizing CPF Ordinary Account (OA) money?
For properties with leases greater than 20 years, buyers may use CPF OA money if:
Youngest buyer’s age + remaining lease > 95.
53
What must be considered under Rule 2A for BTO / SBF / Open Booking flats utilizing CPF OA?
No Loan – 100% of the purchase price can be covered by CPF OA.
HDB Loan – Up to the purchase price of the flat or housing loan taken.
Bank Loan:
Cannot set aside Basic Retirement Sum (BRS) → Up to Valuation Limit.
Set BRS → Up to 120% Valuation Limit.
54
What does the Valuation Limit mean?
Valuation Limit refers to the lower of the purchase price or the valuation.
55
What is Rule 2B for utilizing CPF OA with resale flats?
No Loan – 100% up to the Valuation Limit.
HDB Loan:
Cannot set aside BRS → Up to Valuation Limit.
Set BRS → Up to housing loan taken.
Bank Loan:
Cannot set aside BRS → Up to Valuation Limit.
Set BRS → Up to 120% Valuation Limit.
56
What are the CPF OA utilization rules for private properties?
No Loan – 100% up to the Valuation Limit.
Bank Loan:
Cannot set aside BRS → Up to Valuation Limit.
Set BRS → Up to 120% Valuation Limit.
57
What is the significance of the remaining lease in relation to the youngest buyer's age?
The sum of the youngest buyer’s age and the remaining lease must exceed 95 years for CPF OA to be utilized.
58
What is Rule 3 regarding CPF usage for any property?
If the youngest buyer’s age + remaining lease of the property is less than 95 years, the allowable valuation limit is calculated.
59
How is the allowable valuation limit calculated when the youngest buyer’s age + remaining lease < 95 years?
Allowable Valuation Limit = (Remaining Lease of Property - 20) × (100% / (95 - Youngest Age - 20))
60
What does "Valuation Limit" refer to?
Valuation Limit refers to the lower of the purchase price or the valuation.
61
If the remaining lease is 45 years and the youngest buyer is 35 years old, what is the maximum CPF usage?
The maximum CPF usage is 62.5% of the Valuation Limit (VL).
62
If the remaining lease is 65 years and the youngest buyer is 25 years old, what is the maximum CPF usage?
The maximum CPF usage is 90% of the Valuation Limit (VL).
63
If the remaining lease is 100 years, what is the maximum CPF usage for the youngest buyer?
The maximum CPF usage is 100% of the Valuation Limit (VL).
64
What is the HDB loan percentage based on the Valuation Limit for a maximum CPF usage of 62.5%?
The loan percentage is 50% of LTV.
65
What is the HDB loan percentage based on the Valuation Limit for a maximum CPF usage of 90%?
The loan percentage is 72% of LTV.
66
What is the HDB loan percentage based on the Valuation Limit for a maximum CPF usage of 100%?
The loan percentage is 80% of LTV.
67
What is the first priority for the sale proceeds from HDB flats bought with an HDB Concessionary Loan?
1. Outstanding loan.
68
What is the second priority for the sale proceeds from HDB flats bought with an HDB Concessionary Loan?
2. HDB resale levy (if any).
69
What is the third priority for the sale proceeds from HDB flats bought with an HDB Concessionary Loan?
3. Required CPF refund.
70
What is the first priority for the sale proceeds from HDB flats bought with a Bank Loan?
1. Outstanding loan.
71
What is the second priority for the sale proceeds from HDB flats bought with a Bank Loan?
2. Required CPF refund.
72
What is the third priority for the sale proceeds from HDB flats bought with a Bank Loan?
3. HDB resale levy (if any).
73
What is the top repayment priority when the property is sold?
1. Bank - repayment of the outstanding housing loan.
74
What is the second repayment priority upon the sale of the property?
2. CPF - principal sum up to 100% of the Valuation Limit (VL) + CPF savings used for legal costs, stamp duty, and survey fees.
75
What is the third repayment priority upon the sale of the property?
3.
i) CPF principal sum beyond 100% of the VL and CPF accrued interest.
ii) Repayment of the outstanding balance of the housing loan interests.
76
What is the fourth repayment priority upon the sale of the property?
4.
i) Repayment of the Board's legal costs and expenses.
ii) Repayment of the financier's legal costs and expenses.
77
What is the relationship between repayment priorities 3 and 4?
They are of equal ranking (pari passu).
78
What is the fifth repayment priority after selling the property?
5. Repayment of any other money owing to the financier under the mortgage.
79
What is property tax?
Property tax is a tax levied on immovable properties such as land, buildings, strata units, and HDB flats.
80
Who is responsible for paying property tax?
The property owner is responsible for paying property tax at all times, whether the property is vacant, occupied, or rented.
81
Who is considered a property owner for tax purposes?
1. Legal Owner
2. Person receiving rent from the premises (e.g., Agent, Trustee, or Receiver)
3. Names registered in the Valuation List
4. Subsidiary Proprietor (Strata Title Owners)
5. Lessee for a period exceeding 3 years (under State Lease or property by a public authority like JTC, HDB, SLA, BCA)
82
When is property tax payment due?
Property tax must be paid by 31st January of every year or within one month of the service of a new notice.
83
How is property tax calculated?
Property Tax = Annual Value x Tax Rates.
84
What is “Annual Value”?
Annual Value is the estimated annual rental income assessed by the IRAS Chief Assessor, recorded in the Electronic Valuation List, and may not reflect the actual rental income received.
85
What does Annual Value exclude?
Rental income from furniture and furnishings
Maintenance fees, such as MCST/Town Council services and conservancy charges.
86
What is the property tax exemption threshold based on Annual Value?
If the Annual Value is less than $18 per year, there is no need to pay property tax (as per S6 Property Tax Act).
87
When can Annual Value be revised?
Annual Value can be revised upon:
Completion of a new building
Demolition/re-development of an existing building
Change in rental market conditions.
88
What is the role of the Comptroller of Property Tax?
The Comptroller is in charge of the collection of property tax and processing exemptions, concessions, refunds, and remissions of property tax.
89
When can owners object to the property tax rate?
Objections can be made within 30 days from the date of the Valuation Notice.
90
Can owners object if no Valuation Notice has been received?
Yes, owners can object at any time if they have not received a Valuation Notice.
91
What can owners object to regarding property tax?
Owners can object to:
Annual Value
Effective Date of Assessment
92
Who may decide on the objection made by owners?
Either the Chief Assessor or the Comptroller may disallow or allow the objection in whole, in part, or in a manner agreed with the owner.
93
What is the timeframe for owners to appeal to the Valuation Review Board (VRB)?
Owners may appeal within 30 days of IRAS’s decision to disallow or partially allow the objection.
94
What can an owner do if dissatisfied with a decision made by the VRB?
An owner can appeal to the High Court within 21 days of the date of the VRB’s decision.
95
Can the Chief Assessor or Comptroller also appeal to the High Court?
Yes, they may appeal to the High Court within 21 days of the VRB’s decision.
96
What is the tax rate for owner-occupied properties on the first $8,000 of Annual Value?
The tax rate is 0% on the first $8,000.
97
What is the tax rate for owner-occupied properties on the next $22,000 of Annual Value ($8,001 to $30,000)?
The tax rate is 4%, which amounts to $880.
98
What is the tax rate for owner-occupied properties on the next $10,000 of Annual Value ($30,001 to $40,000)?
The tax rate is 6%, which amounts to $600.
99
What is the tax rate for owner-occupied properties on the next $15,000 of Annual Value ($40,001 to $55,000)?
The tax rate is 10%, which amounts to $1,500.
100
What is the tax rate for owner-occupied properties on the next $15,000 of Annual Value ($55,001 to $70,000)?
The tax rate is 14%, which amounts to $2,100.
101
What is the tax rate for owner-occupied properties on the next $15,000 of Annual Value ($70,001 to $85,000)?
The tax rate is 20%, which amounts to $3,000.
102
What is the tax rate for owner-occupied properties on the next $15,000 of Annual Value ($85,001 to $100,000)?
The tax rate is 26%, which amounts to $3,900.
103
What is the tax rate for owner-occupied properties on Annual Value exceeding $100,000?
The tax rate is 32%.
104
What is the tax rate for non-owner occupied properties on the first $30,000 of Annual Value?
The tax rate is 12%, amounting to $3,600.
105
What is the tax rate for non-owner occupied properties on the next $15,000 of Annual Value ($30,001 to $45,000)?
The tax rate is 20%, amounting to $3,000.
106
What is the tax rate for non-owner occupied properties on the next $15,000 of Annual Value ($45,001 to $60,000)?
The tax rate is 28%, amounting to $4,200.
107
What is the tax rate for non-owner occupied properties on Annual Value exceeding $60,000?
The tax rate is 36%.
