Even with shorter leases, some banks in Singapore are willing to finance such properties, but buyers would have to pay off these mortgages more quickly or borrow less, according to The Straits Times.
This follows the Urban Redevelopment Authority’s (URA) announcement of the launch of its first residential site for sale with different lease options of 30, 45 or 60 years. The 1.02-ha reserve list site at Jalan Jurong Kechil could be used for retirement housing, the URA said.
According to lenders, a mortgage is granted based on criteria such as the acceptability of the collateral, borrower’s income and credit worthiness, the property’s value and the loan-to-value ratio.
However, one bank said it will not offer financing to buyers of residential property with a 30-year lease.
Chia Siew Cheng, Head of Secured Loans (Personal Financial Services) at United Overseas Bank (UOB), said that the maximum mortgage term depends on the applicant’s age. If the residential property is leasehold, the remaining lease period should be at least 35 years.
“In this instance, UOB’s criteria would apply only to the 45-year and 60-year leasehold properties, and the maximum loan tenor the bank could potentially offer for these would be 10 years and 25 years respectively.”
Nonetheless, several lenders including DBS Bank stated that they will offer loans for such properties on a case-by-case basis.
Lui Su Kian, Managing Director and Head of Deposits and Secured Lending at DBS Bank, said: “The introduction of shorter-lease residential properties is relatively new to the market, and we are reviewing the demand for such leases.”
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