LTV or Loan to Value
When you want to borrow money to buy a property in Singapore, whether it’s from HDB or a bank, there are limits on how much you can borrow. These limits are called Loan-to-Value (LTV) ratios, and they are set by the Singapore government to control the maximum amount of money you can borrow for a property.
The LTV ratio decides the most money you can borrow and the upfront payment you need to make in cash or from your CPF savings. This applies to all home loans, no matter if it’s your first or second time buying a property.
In September 2022, the government changed the LTV limits to help cool down the property market. Currently, the maximum LTV ratio for bank loans is 75%, and for HDB loans, it’s 80%.
This blog is here to help you understand what the LTV ratio is, why it matters, and the specific LTV ratios for HDB and bank loans.
LTV Ratio: What You Need to Know
The LTV ratio is the amount of money you can borrow to buy a home. For example, if the LTV ratio is 80%, it means you can borrow up to 80% of the property’s value or purchase price, whichever is lower. LTV ratios are in place to prevent people from borrowing too much money. If you buy a new property like a new HDB flat or condo, the LTV ratio is based on the purchase price. But if you buy a resale property and pay more than its valuation, you have to pay the extra amount in cash.
The LTV ratio is different for HDB loans and bank loans.
HDB Housing LTV (up to 80%)
If you get an HDB Concessionary Loan, which is available for BTO flats, SBF flats, open booking of flats, and resale flats, you can borrow up to 80% of the property’s value or purchase price. You can use cash, CPF savings, or both for the downpayment, and there’s no minimum cash requirement.
Bank LTV (up to 75%)
For bank loans, the maximum LTV ratio is 75% for the first loan (if you don’t have any other home loans). Out of the remaining 25%, you have to pay 5% in cash, and the rest can be covered with cash or CPF savings. The bank’s LTV ratio was reduced from 80% to 75% in 2018, and it hasn’t changed since then.
Why You Might Not Qualify for the Maximum LTV
It's important to know that HDBs and banks have the power to approve a lower LTV limit or reject your loan application, even if you meet the maximum LTV ratio. Here are some reasons why you might not qualify for the maximum LTV:
Low Remaining Lease of the Property: If a leasehold property has only 30 to 40 years left on its lease, the LTV ratio might be lower, around 60%. Banks consider properties with shorter leases to be less valuable. Also, in most cases, you can't use CPF savings to pay for such properties.
Poor Location and Condition of the Property: The LTV ratio can be reduced significantly based on where the property is located and its condition. Properties in less desirable neighborhoods or those with legal issues or major defects might have lower LTV ratios.
High Age and Long Loan Tenure: If your loan period goes beyond 65 years of age, the LTV ratio will be limited. Similarly, if your loan period is longer than 30 years, the LTV ratio will also be restricted.