This glossary is for general information only, in the context of housing loans. It should not be relied upon as legal or professional advice. Whilst reasonable care has been taken to ensure the accuracy of the information herein, no warranty or representation is made as to its correctness or completeness. Content herein may be modified at any time without notice.
|Accrued Interest||Accrued Interest is interest that has been incurred but not paid.|
|Amortization||The gradual reduction in the principal amount owed on a debt. During the earlier years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal, unless there has been negative amortisation.|
|Annual Value (AV)||The Annual Value of a property (AV) is the estimated annual rent of a property, excluding the rent for furniture, fittings and service charge. The IRAS (Income Revenue Authority of Singapore) determines the AV of the property by analysing rents of comparable properties.|
|Approval-in-principle (AIP)||An indication by the Bank of the amount of home loan that a prospective purchaser is eligible for. However, an AIP does not equate to a formal approval. The purchaser must still submit a Home Loan application, and the Banks approval is dependent upon various factors, including property valuation, credit checks and other criteria. It is advisable to know your AIP amount before committing to a property.|
|AssetLine||AssetLine is a secured short-term loan facility that allows the customer to access cash using his property as property. There are no restrictions on how the funds may be used.|
|Bankruptcy Search||A search conducted to determine if any bankruptcy proceedings and other legal proceedings have been filed against the borrower. A bankrupt may not transfer his interest to a purchaser or mortgage his property to a bank, without the Official Assignees consent.|
|Borrower||Borrower(s) refers to the person(s) that is/are taking the home loan from the Bank. All owner(s) of the pledged property (mortgage) must be borrowers. However, not every borrower is a mortgagor. A non-owner may be included in the loan application as a co-borrower to fulfil the loan requirements|
|Bridging Loan||A credit facility granted for the purchase of residential property by the borrower, pending the receipt of proceeds of sale of another residential property owned or co-owned by the borrower. Loans will only be disbursed after the buyer of your existing property has signed an Option to Purchase (OTP) or executed a Sale and Purchase (S&P) Agreement or confirmation of the first appointment from HDB. The loan has to be repaid to the Bank in full within 6 months after its first disbursement.|
|Caveat||A caveat serves as a public notice that the person lodging it is claiming an interest in the property and lapses in 5 years from the date of lodgement unless it is discharged or renewed|
|Certificate of Statutory Completion (CSC)||Certificate of Statutory Completion (CSC) / Temporary Occupancy Permit (TOP) is issued by the Commissioner of Building Control to a building project when the building works are completed. The building can only be occupied after a CSC or TOP has been granted.
Application may be made directly for a CSC when all the requirements have been complied with. Otherwise, if only certain requisites have been complied with, application for a TOP may be made first before finally complying with all requirements and obtaining CSC. CSC is usually issued one year after TOP.
|Claw-back Period||The period during which, if you fully redeem your mortgage, the bank will reclaim the cost of "freebies" issued to you when you took on a loan with them. These typically includes the legal subsidy and in some cases, valuation fees and fire insurance premiums.|
|Collateral||An asset or security pledged for the payment of a loan.|
|Conservancy / Maintenance Fees||Fees collected for the purpose of maintenance and use of common property.|
|Construction Loan||Construction Loan is a short term loan for financing the construction of a new property, or the reconstruction, addition or alteration of your existing property.|
|CPF Housing Withdrawal Limit||CPF Housing Withdrawal Limit involves two types of limits, Valuation Limit (VL) and Withdrawal Limit (WL)
Valuation Limit (VL)
Valuation Limit (VL) is the lower of the purchase price of the property, and the value of the property at the time of purchase. Owner(s) can use the Ordinary Account (OA) savings up to the VL to buy the property and/or pay the monthly instalments of the home loan, without having to meet any condition on the CPF balances.
It is possible for your housing loan to be outstanding when your CPF withdrawal has reached the 100% VL. This is largely because you are using CPF to pay both the home loans principal amount as well as the interest charges. The higher the interest on the home loan, the faster the 100% VL will be reached.
Withdrawal Limit (WL)
Withdrawal Limit (WL) is the maximum amount of CPF beyond the VL that the owner(s) can use for the property. Once the WL is reached, no further withdrawal of CPF is allowed. From 2008 onwards, the WL is 120% of VL.
The WL is the available CPF OA balances less the prevailing Minimum Sum cash component.
|Credit Report||A credit report records an individual's credit history and is used by banks to determine a loan applicant's creditworthiness.|
|Debt Servicing Ratio||A computation of total monthly debt obligations to total monthly gross income. This helps to assess the repayment ability of the borrower over a specific loan tenure.|
|Default||A breach of your obligations to the bank, which may allow the bank to recall your loan, such as failure to make mortgage payments on time|
|Deferred Payment||A scheme whereby the usual progress payments are deferred to a later date. For example, the scheme may allow you to make an initial payment of 20% to the property developer, with the balance due only upon T.O.P. being obtained from the relevant authorities.|
|Down Payment||A portion of the purchase price that a buyer is required to pay in cash and CPF savings.|
|Early Redemption||Early redemption refers to the repayment of the loan (principal and interest) before the maturity of the loan. There are two main types of loan redemption, partial redemption and full redemption. If you plan to repay your loan early, do seek clarification on any fees and charges that may be imposed|
|Encumbrance||Any lien against a property or any restriction in its use, such as an easement; a right or interest in a property held by one who is not the legal owner.|
|Equity||The difference between the current market value of your home and your outstanding mortgage balances and other liens.|
|Fair Market Value||The likely selling price of a property between a willing buyer and a willing seller in the open market. In a mortgage or a home equity loan, the fair market value is usually determined by a valuation done by a certified valuer.|
|Fire Insurance||The insurance on your property against fire damage, which commonly covers at least the reinstatement value or outstanding loan, whichever is higher.|
|Fixed Rate Housing Loans||The interest rate on such loans is fixed for a set period, during which charges are often imposed for early redemption. Being protected against interest rate increases allows for easy monthly budgeting. However, if market rates were to fall during the fixed interest period, you may be left paying a comparatively higher rate.|
|Floating or Variable Rate Housing Loans||The interest rate on such loans may fluctuate or change periodically, often in relation to a reference rate. When the reference rate changes, payments may increase or decrease accordingly. Examples of reference rates are the Banks prime lending rate, SIBOR, Swap Offer Rate or rates offered by the CPF Board.|
|Home Loan||Home Loan / Mortgage Loan is a loan secured by the borrowers property.|
|Housing Agent Commission||A fee paid to the housing agent engaged to buy/sell the property. The quantum or amount of the commission is usually a percentage of the sale price.|
|Guarantor||Guarantor refers to the person who agrees to be responsible for another persons liabilities in the event of that persons default.|
|Interest Rate||Interest Rate is the rate of interest that is charged on the loan. It can be fixed, variable, or a combination of both over the loan period|
|Investment Property||Property that is purchased to generate rental income or to be sold once it has appreciated in value.|
|Joint-tenancy Ownership||This is a term that describes joint ownership of a property by two or more owners, without division of the shares. Upon the death of any joint holder, his interest becomes vested in the survivor(s).|
|Land Title Search||A search which shows whether a property has any prior encumbrance or lodgement; details of owners; area of the property, and whether the owner has used CPF savings or taken a bank loan.|
|Legal Fees||The costs for legal services rendered in the purchase, sale, mortgage and/or redemption of a property, including with respect to withdrawal of CPF funds. Costs often include disbursements such as registration fees on transfers; lodgement fees for caveat; legal requisitions; search fees etc. You may use cash or CPF savings to pay legal fees.|
|Legal Requisitions||Searches conducted at various government departments inquiring into the status of a property, for example, encumbrances, whether the property is affected by any works or if notices have been issued in respect of the property.|
|Letter of Offer||A letter issued by the Bank stating the terms and conditions upon which the Bank makes a formal offer of loan to the borrower.|
|Lien||A claim by one party against the property of another as security for a debt. This must be discharged when the property is sold. A mortgage is a form of lien.|
|Loan Quantum||The loan quantum or principal is the amount of money that you borrow.|
|Loan Tenure||The period of time that you may take to fully repay your loan.|
|Loan-to-value (LTV)||The housing loan amount represented as a percentage of the property's value. Thus, a house worth S$500,000 with a mortgage of S$250,000 would have a LTV of 50%.
Heres a guide for the current maximum LTV limits as regulated by MAS:
60% for borrowers who have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.
80% for borrowers who do not have any outstanding housing loans.
|Lock-in period||The time period during which you will have to pay an early redemption charge (usually expressed as a percentage of the loan quantum) if you repay your loan in full. Banks may also impose a charge for partial payments beyond your monthly instalments within this period.|
|Maturity Date||The day on which all outstanding principal, interest and fees must be repaid.|
|Mortgage||Transfer of an interest in your property to a lender (bank) as security for the loan granted to you for the purchase.|
|Mortgage Insurance||A reducing premium term life insurance that protects the insured's (borrower) family against liability under the housing loan in the event of his death, total or permanent disability, or terminal illness.
The Central Provident Fund Board (CPF) Home Protection Scheme is compulsory for all HDB flat owners who are using their CPF to repay their housing loans. Although it is not compulsory for private property owners to purchase mortgage insurance, it is advisable that they do so to prepare for unfortunate events and provide financial protection for themselves and their families.
|Mortgagor||Borrower or home owner.|
|Option Fee||A fee paid to the seller as consideration for the option to purchase a property. The Option to Purchase will be granted upon the payment of this fee.|
|Option to Purchase||A right granted by the seller to the purchaser, to buy the property within a time frame upon payment of an Option Fee usually 1% of the purchase price.|
|Prepayment||Lump sum payments made in addition to your monthly instalments.|
|Prepayment Penalty||A fee charged to a borrower who partially or fully repays the loan in full within the loans lock-in period. (sometimes also referred to as a redemption penalty)|
|Progress Payment||Payment amount(s) predetermined and scheduled by the developer to correspond with the propertys different stages of development. Upon completion of each stage of construction, the developer will call for the required payment.|
|Property Tax||A tax levied on immovable properties. All property owners are liable to pay property tax. The property tax rate for owner-occupied residential premises is 4% and for other properties, 10% of annual value.|
|Refinancing||Moving a loan (including any undisbursed amount) from one bank to another bank Before refinancing your loan, you should check on the charges you may incur (e.g. lock-in period, claw-back period) upon cancellation of your existing loan.|
|Repricing||This commonly refers to the switch from one interest rate package to another with the same bank.|
|Sale & Purchase (S&P) Agreement||A formal contract for sale and purchase of a property|
|SIBOR||Singapore Inter Bank Offered Rate - The interest rate at which Banks borrow from one another.|
|Stamp Duty||A tax payable upon the purchase of a property.
For completed properties, Stamp Duty must be paid within 14 days from the date of signing the Sale and Purchase Agreement if the document is executed in Singapore.
For uncompleted properties, Stamp Duty must be paid within 14 days from the date of exercising the Option to Purchase.
|Stamp Duty on Transfer of Property||Duty payable ad valorem on the purchase price (PP):
First $180,000 1%
Next $180,000 2%
Beyond $360,000 3%
Calculation Formula Purchase Price (PP) x 3% less $5,400 (where PP is > $360,000)
|Temporary Occupation Permit (TOP)||Only applicable to uncompleted properties. Receipt of TOP means keys can be collected and the property is ready for occupation.|
|Tenants-in-Common||Joint holding of a property, where each owner has a distinct share in the property. Shares owned need not be in equal portions. Upon the death of a joint owner, his interest will be disposed of according to his will or under laws of intestacy.|
|Title Deed||A legal document showing a person's ownership of a property.|
|Title Search||An examination of records used to determine the legal ownership of property and all liens and encumbrances on it. Usually performed by a lawyer.|
|Valuation||Market value of a property indicated by a licensed valuer.|