Mortgage limits may deter older investors

Mortgage limits may deter older investors

The latest changes to mortgage rules could deter many house-hunters from buying a new property - or at least give them serious pause, analysts and property market watchers said yesterday.
Chief among this group will be older investors looking to buy a second or third investment property, they noted.

And HDB upgraders who want to get on the private property ladder will also not be spared.
From today, the Monetary Authority of Singapore (MAS) will cap all new housing loans at a maximum allowable tenure of 35 years.

Tighter rules will also apply to borrowers taking loans longer than 30 years, or have their loan periods extend beyond the retirement age of 65.

If they have no outstanding mortgage, the cash down payment is now 40 per cent of the property's valuation instead of the usual 20 per cent.

If they already have an existing mortgage and want to take another one for another property, the cash down payment is 60 per cent, instead of the current 40 per cent.

For these borrowers, the only way to avoid paying the additional 20 per cent cash down payment is to opt for shorter loan tenures that do not extend past the age of 65.
But this will mean higher monthly installments.

Source: The Straits Times – 6 October 2012