In Singapore, you can sell a private property with a pre-existing loan that is not fully paid off. However, the buyer cannot directly take over your loan tenure from you. Here are the typical scenarios and options involved:
Scenarios and Options:
Buyer Secures New Loan: The most common scenario is that the buyer obtains their own mortgage loan to finance the purchase. Your outstanding loan will be fully redeemed using the sale proceeds, and any remaining amount will be paid to you.
Seller Redeems Loan Before Sale: Before putting your property on the market, you can choose to fully redeem your existing loan using your own funds or savings. This allows you to sell the property without any outstanding loan, making it more attractive to potential buyers.
Contra: In rare cases, a buyer might agree to a contra arrangement where they take over your existing loan and pay you the difference in cash. However, this is less common and requires agreement from both the buyer and the bank.
Considerations for Selling with an Outstanding Loan:
Seller's Stamp Duty (SSD): If you sell your property within three years of purchasing it, you may be liable to pay SSD.
Total Debt Servicing Ratio (TDSR): The buyer's ability to secure a loan will be subject to TDSR rules, which limit the amount they can borrow based on their income and other debt obligations.
Valuation: The property will need to be valued to determine its market value, which may affect the loan amount the buyer can obtain.
Key Takeaway:
While selling a private property with an outstanding loan is possible, it's important to understand the various options and associated costs. It is advisable to consult with a mortgage broker or financial advisor to understand the best course of action for your specific situation.
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