Before I discuss how to get a mortgage as a foreigner in Singapore, let me first clarify that I am not a foreigner in Singapore. My family came to this country with the help of the United States government. So, I am considering a US Citizen. This means that my right to an immigration visa is on the table and that I can freely move to and from Singapore with my family. However, when I was in high school, I was also asked to take up part-time studies at the National Institute of Advanced Studies, which was housed at the University of Singapore.
With Singapore harboring a stable economy, the available options appear to be quite an investor-friendly.
What Is A Foreigner Loan?
Needless to say, for surviving and working in another top country, financial assistance from an authentic foundation or non-hypocritical individual/ broker is quite obvious. It is the loan offered to the natives of other countries (foreigners), resident or non-resident, working in Singapore for their financial needs. Foreigner loan is also called as ‘Personal Loans for Work Permit Holders.’ Find out more from a1credit.
That is, the non- native people employed in Singapore have access to this type of loan.
Mortgages Accessible In Singapore
Mortgages in Singapore can be of two types: Fixed and Variable Rates.
There is a concept of Loan To Valuation ratio (LTV) in which the buyer is supposed to fill in the leftover money in monetary assets or from CPF (Central Provident Fund) account at the top, after banks loaning up to 60% to 80% of the valuation price.
Next in the picture is the idea of Total Debt Servicing Ratio (TDSR). This is a very reasonable concept that limits your monthly debt liabilities. It is framed, keeping in mind a person’s salary, property loans, and credit card invoice. The maximum TDSR is kept at 60%.
Stable rate mortgage with the interest rates between one percent to two percent and staying persistent for a span of time are the simplest type of package. High stability but reduced flexibility on loan redemptions – are the two distinct factors in this.
A mortgage with a fluctuating rate involves the ideation of SIBOR (Singapore Interbank Borrowing Offer Rate) or SOR (Swap Offer Rate). SIBOR is rooted in Singapore’s interbank exchange, while SOR affects Singapore and the US dollar exchange rate. As noted, SIBOR is suppler than SOR when it comes to foreign fluctuations.
The other available option is Interest-only Mortgage (not rate- based mortgage). This is particularly suitable when you are planning to start your career. Also, it means that you hold high expectations of earning extravagant amount in the near future for the complete loan repayment. Technically speaking, it implies that just the returns are to be paid at the beginning of the loan.
As a foreigner, what you should bear in mind is the ideology of refraining from unlicensed lenders. Good research in terms of offered interest rate, transparency, flexibility, stability, and credibility are the keystones when it comes to foreigner loans.
Bank Or Broker?
The growing competition often proves favorable for the borrowers. Banks in the haste of increasing their customer burden usually provide negotiable and comparable interest rates. Indeed, banks appear to be the righteous option, in contrast with brokers; however, you can also employ a broker for the same. The only disadvantage in the latter is that it rules out the chance of judging between different banks as the broker gets commission from one single bank to bring in the customers.
The major banks providing a mortgage for foreigners in Singapore include:
- DBS Bank
- UOB Bank
- HSBC Bank
- OCBC Bank
- Citi Bank etc.
Owing to the tag of ‘Foreigner’ or ‘Non- Resident,’ there are only certain Singapore Land Authority (SDA) approved properties that could be purchased by you. As a general rule, a certain additional amount (called the Stamp Duty) is also to be paid for the same, which is largely decided by SDA. However, Natives from the US, Switzerland, Norway, Iceland, and Liechtenstein are spared from paying Stamp Duty. This happens because of the Free Trade Agreements.
Once approved, the subsequent procedure stays one and unaffected for the residents as well as foreigners.
To purchase a property in Singapore, you need an exorbitant upfront amount beforehand. This involves sundry varieties of fees, stamp duty, and insurance.
The Required Documentation:
For the quite obvious and undeniable reasons, age, residency, employment status, and income source define a lot about your potency for mortgaging affairs.
Banks demand Identity and documents supporting your income to judge the highest limit that could be sanctioned to you.
- For self- employed applicants, three up to the date computerized payslips or bank statements: This is to ascertain your financial stand via some authentic papers.
- Annual Income Tax Assessments: 2 most recent
- For permanent residents/ resident foreigners of Singapore, Passport or Identity card is must
- Newest CPF statement presenting the account balance (if applicable).
- The below mentioned are the additional paperwork required after the property is confirmed:
- The signed Sales and Purchase Agreement or OTP (Option to Purchase); You would need a lawyer for it; Also, keep in mind that the stamp duty is to be paid within 14 days of signing the OTP.
- HDB verification page from online portal
- Official Valuation Report
With the resilient policies and the debtor-friendly options, Singapore stays in the limelight for mortgage affairs. Better interest rates in the scenario of growing competition amongst banks, along with the concept of LTV ratio and TDSR, are the most lucrative strategies. Minimized hustle for the foreigners, coupled with stability, lies in the core of Singapore’s prosperity.
Stay ready with your documents, lawyer and bank formalities, and Singapore will never stop you in making desired deals.