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How Much Can You Borrow from Financial Institutions in Singapore?

In many situations, loans and credits save us from financial difficulties and troubles. They offer easy and convenient ways to have cash. Early on, the government had realized that incurring too much credit can be detrimental to a person’s finances and the country’s economy. They have been regulating the amount Singaporeans can borrow.

Today, the rule of thumb is that people are limited to borrow up to 12 times their monthly income. In this article, learn about other loan curbs to know the limits of each type of loan.

Home Loans

In terms of home loans, the general rule is that you are only allowed to apply for a loan based on the property value of the selling price of the home you are planning to buy or purchase. Banks and financial institutions have their own set of limits and regulations. Some banks have as little as a 55% limit.

Some generous banks give out an amount as much as 90% of the house’s value or the selling price, whichever is lower. Take note that these loans can be made if you purchase a flat or apartment, a condominium, or private property. Depending on your personal funds, look for a bank or financial institution in Singapore that offers the loan amount you need.

Let’s try this computation. If you are buying a house sold at $S 300,000 dollars, you can only apply for a home loan as much as $S 270,000 dollars. The remaining $S 30,000 dollars is called Cash Over Value (COV), which you have to pay in cash. Your COV can even increase depending on the personal loan amount given to you by the bank.

If you wish to know more about housing loans, you can visit the government’s official website here. This will give you insights into the standing rules and regulations for borrowing money for a home. It will also help you determine how much cash you need to raise in achieving your dream house.

Car Loans

For car loans, the amount you can borrow depends on the Open Market Value (OMV) of the vehicle. OMV refers to the price of your vehicle when it is sold in public. A higher OMV might mean that you will only be allowed to borrow a lower amount. The OMV is set by the Singapore Customs.

If the car you plan to purchase is less than or equal to $S 20,000 dollars, you can only apply as much as 70% of the OMV. Meanwhile, if the car is priced more than $S 20,000 dollars, your maximum loan limit is 60% of the OMV. Take note that in both situations, your maximum loan tenures is seven years.

To learn more about regulations on applying for a car loan, here is an explainer from the country’s Monetary Authority. Be sure to conduct your research before making any decisions regarding applying for a personal loan in Singapore.

Unsecured Loans

“Unsecured loan” is an umbrella term that pertains to any loan that requires no collateral, meaning the bank will not take anything away from you in case you fail to pay. Some examples of unsecured loans include credit cards, personal loans, educational loans, credit lines, and many more. In June 2019, the government set the loan limit to 12 times a person’s monthly income.

If you earn a monthly income of $S 5,000 dollars, you can only apply for an unsecured loan of around $S 60,000 dollars. This amount should include all your unsecured loans such as credit cards, personal loans, credit lines, etc. The unsecured loans you have incurred in the past, which are still unpaid, will be included in this cap.

For credit card owners, note that credit card companies often have different policies for borrowing money. In many cases, if you own credit cards, you are only allowed to borrow money either two or four times your monthly income. If you have credit cards, you should talk to a bank representative to better understand their bank loan policies.

As you may have noticed, the amount you can borrow for unsecured loans relies heavily on monthly income. If you wish to increase the amount you can borrow, you might want to increase your monthly income. Having a high income could help you in achieving your desired loan amount.

Furnishing and Renovation Loans

Do you know that you do not need a lot of cash to make your home better? If your home needs renovation or furnishing, the type of loan you need falls under furnishing or renovation loans. For furnishing loans, you can only borrow at most six times your monthly income or $S 30,000 dollars, whichever is lower. Furnishing loans include buying new appliances and items for your house.

Meanwhile, the same goes for renovation loans. Applicants are limited to borrow at most six times their monthly income or $S 30,000 dollars, whichever is lower. In most cases, a financial institution sets a minimum amount loan of S 10,000 dollars. Borrowing money for your house renovation does not require you to spend a lot of cash.

Remember that renovation and furnishing loans are treated separately. This means that you can borrow as much as S 60,000 dollars when you do renovations and furnishing in your home. This would mean that you do not need to shell out a lot of cash when renovating and furnishing projects. Also, take note that the loan tenures of these loans are at five years.

Without a doubt, getting a loan is helpful to overcome financial difficulties. If you need quick cash, applying for a loan might be the best option. But, the decision to borrow is not always the best solution to all-cash problems. It is essential that you have to be very confident about the limits, caps, and regulations of the loan you are applying for.

You should check the loan curbs so that you know how much to borrow. Knowing how much you can only borrow will also help you in budgeting and planning your cash. Step 1 to any loan application is to conduct your research about the topic. Today, there are different types and forms of personal loans in Singapore.

This does not mean, though, that all bank loans are made equal. Some banks can genuinely help you with your cash problems. Their policy would allow you to borrow a lot. This means that you do not have to shell out a lot of cash to attain your dream purchase. Reading about these various financial institutions can help you make the best decision.

You have to make sure that you are getting the best bank loans, bank deals, and low-interest rates available in the market. One way to do this is to compare loan offers to find the best loan suitable for you through free quotes from Instant Loan. Check out Instant Loan to know more about this awesome free deal!

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