Singapore Mortgage - Chapter 1: To understand what the bank want

My clients and prospects always say, "my property worth $Xmil, and the loan is so small, why the bank doesn't want to approve my mortgage? there is no risk at bank!"

Well, we always have to remember, all banks follow MAS mortgage regulation. Banks don't approve your mortgage base on your property value alone. Property quality and value is only part of the approval criteria.

Another part of the approval criteria is depending on the borrower credit stand, income, age etc.

Assuming you stay in a property worth $5mil. The outstanding loan is only $500k. You intend to apply a equity cash out of $200k only for some other investment or working capital.
In this case, the Loan-to-valuation (LTV) , it is way below 50% valuation. This looks ok for bank.

With this low LTV, the bank will still want to look into your monthly income. This is called "income based" approval.
If you doesn't show a good income to pass TDSR (Total-debt-servicing-ratio), your case will definitely rejected by bank.

If you really unable to show good income, the next method is to show the bank your liquidity asset. We called "asset-based" approval route. Liquidity asset includes bank saving, share, bonds etc. These type of asset can convert to cash fast.
Another term we use is called AUM, asset under management. The asset must be hold under Singapore financial institution.

Without showing the source of servicing the monthly installment and the ability for the repayment, banks will just reject you.

You may ask, "why bank so KiaSu and Kia Si? the value to the property is so high!".

Yes, bank also in business, the bank need to monitor closely on the risk exposure.

Property is not a liquid asset. Banks take time, effort and legal cost to get back their money. These are risk for banks. Put yourself in the shoe of bank credit approval department, and you will understand this.

We all like quality business, banks also like quality business. To bank, quality of both borrower and property is equally important.

Feel free to reach MxRICH Pte Ltd at www.mx-rich.com or call 94526048. 

There is no additional fee payable to MxRICH for mortgage application. We assure you that, all your info and documents will be handled with absolute P&C.