The government introduced property cooling measures on December 15th 2021 in an effort to dampen the scorching real estate market. A rise in Additional Buyer’s Stamp Duty (ABSD) of 5% to 15% was implemented from 16 December 2021, as was a tightening of the Total Debt Servicing Ratio (TDSR) threshold from 60% to 55% and a lowering in the Loan-To-Value (LTV) limit for HDB home loans from 90% to 85%.
Some HDB homebuyers and upgraders may have been impacted in some manner by these policies, despite the fact that they were not the original target of these measures.
HDB homebuyers must now put down a larger down payment of at least 15% of the purchase price as a result of government property cooling measures.
If you’re a first-time HDB house buyer, you’re likely to take out a HDB housing loan that permits you to borrow 90% of the purchase price or value of your HDB apartment. A 10% down payment is required, which may be paid for using their CPFOA.
With a lower maximum Loan-To-Value (LTV) for HDB housing loans (down from 90% to 85%), a larger down payment will be required in the future. Minimum down payment requirements have been increased from $50,000 to $75,000 for a HDB resale apartment valued at $500,000.
Owners’ borrowing power will be curtailed as a result.
After meeting the 15% minimum down payment requirement, HDB purchasers must make sure they don’t fall short of their target debt-to-income ratio (TDSR). There is a limit to how much we may use from our monthly income for debt repayments, including interest-free instalments on credit cards, school loans, vehicle loans, and current mortgages.
The TDSR threshold used to be 60 percent. It has been lowered to 55% in the future.
HDB Owners who want to move to a private residence are also affected.
Many Singaporeans want to move from public to private housing, and this is an ideal that many of them hold dear.
There are two options for persons who want to move from a public housing unit to a private property: selling their HDB apartment first and then acquiring private property, or the other way around. Choosing the latter will need payment of ABSD (first).
Because many people don’t realize that even if they plan to sell their HDB apartment within six months of purchasing a private property, the ABSD must be paid before they can move into their new home. When acquiring a private home before selling their HDB unit, they would have to fork out a large sum of money for ABSD, even though they would ultimately receive their money back from the sale of their HDB flat.
Singapore citizens who purchase a second residential property will now be subject to an ABSD of 17 percent. Foreigners (25 percent) and Permanent Residents (25 percent) are more likely to be affected (30 percent ). Of course, selling our current home before acquiring a new one is an option to prevent ABSD in the first place. In the event of a pandemic, moving out of one’s current residence while one’s replacement residence is still under construction might prove to be a major inconvenience for families.
When it comes to the newest cooling measures, first-time homebuyers and current property owners alike should keep in mind how they can be impacted and how much money they’ll need to acquire the perfect residences they desire, even if they weren’t originally intended to harm them.