Special Situations and Scenarios

Foreign Buyers

Foreigners can purchase private residential properties in Singapore but face restrictions on HDB flats and landed properties. Foreigners are not eligible to purchase HDB flats, and the purchase of landed residential property requires prior approval from the Land Dealings Approval Unit. Since the introduction of the increased ABSD rates in April 2023, foreigners pay 60% ABSD on any residential property purchase, which significantly affects the financial viability of investing in Singapore real estate.

When it comes to financing, foreigners can obtain mortgages from local banks on similar terms to citizens and permanent residents, with a maximum LTV of 75% for a first property. Interest rates are not systematically higher for foreign borrowers — pricing is based on creditworthiness and loan profile rather than nationality. However, foreign buyers may face more extensive documentation requirements, particularly around proof of income and employment stability.

Joint Applications

Joint home loan applications are common in Singapore, particularly among couples and family members. Combining incomes can increase the total loan quantum available, as both applicants' incomes are assessed under the Total Debt Servicing Ratio framework, which is capped at 55% of gross monthly income.

All joint borrowers are equally liable for the mortgage. If one party is unable to meet repayments, the other remains fully responsible. It is important to consider the long-term implications of joint liability, particularly in the event of a relationship breakdown or change in financial circumstances. If repayment difficulties arise, borrowers should contact their lender promptly to explore options such as loan restructuring, tenure extension, or temporary deferment arrangements.

Property Valuation

Banks will conduct an independent valuation of the property before approving a mortgage. The loan quantum is based on the lower of the purchase price or the valuation — if the property is valued below the agreed purchase price, the shortfall must be covered in cash. Accurate valuation is therefore important to avoid unexpected gaps in financing.

Ownership Decoupling

Decoupling is a strategy where one co-owner transfers their share of a jointly owned property to the other, leaving one party as the sole owner. This is primarily used to free up the exiting owner's property count, allowing them to purchase another property at a lower ABSD rate or without incurring ABSD as a first-time buyer.

It is important to understand that decoupling is not a cost-free exercise. The acquiring party must pay Buyer's Stamp Duty on the share being transferred, based on the market value of that share. The existing mortgage will also need to be restructured, and the remaining owner must qualify for the full loan independently under TDSR. Legal fees and valuation costs apply. Given the costs involved, decoupling requires careful financial modelling to determine whether the ABSD savings justify the transaction costs.