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Cash Out Home Equity Loans or HDB Flat as Collateral? Nope.

I learnt something new today.  That it is actually possible to take a cash out or credit facility on your home by refinancing it.  People can use this additional leverage when they have largely paid up property and wish to make use of the lower home mortgage rates to pay off either existing loans or even invest in other instruments (e.g. REITs) which might give a higher returns. '

These are quite common overseas, here is a typical example
https://www.hsbc.com.au/1/2/home-loans/products/equity

But also realised that one is also not allowed to take a credit loan out of your HDB flat.  Basically:

"HDB flats can only be mortgaged to banks or financial institutions to finance the purchase. HDB owners are not allowed to use their HDB flat, which has been fully paid for, as collateral to raise credit facilities."

So unless you own a private property, you most probably cannot take a cash out home loan to tap on the low mortgage rates now.
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10 comments:

  1. GuruFebruary 24, 2012 at 5:44 PM

    Any idea how many % we need to pay up for the property before we can take this loan?

    ReplyDelete
    Replies
    1. sgfinancialfreedomMay 31, 2016 at 10:13 PM

      Banks will probably be willing to lend you an amount that is as if you are buying your own home. All the normal credit checks should apply. My guess only.

      Delete
  2. fundhubFebruary 26, 2012 at 4:03 AM

    No hard & fast rule. General rule of thumb, the amount likely to be extended will be 70-80% loan to current valuation of your private property minus current outstanding loan

    ReplyDelete
  3. Executive Job Search in SingaporeFebruary 26, 2012 at 10:02 PM

    So unless you own a private property, you most probably cannot take a cash out home loan to tap on the low mortgage rates now.

    ReplyDelete
  4. quick loans guruJune 5, 2012 at 10:04 PM

    It was an excellent effort made by you through your nice piece of writing, holding the quality and knowledge together for the readers.

    ReplyDelete
    Replies
    1. sgfinancialfreedomMay 31, 2016 at 10:11 PM

      Thanks! I am glad you found this article on home equity loans useful.

      Delete
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  6. FFJune 29, 2012 at 12:47 AM

    Hi Scott,

    Thanks for dropping by and visiting.

    ReplyDelete
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  8. MatthewNovember 24, 2012 at 10:11 PM

    If you live the high life even though you can't afford it, it will hurt you in the end. Renting out an expensive apartment and going over your monthly budget will only haunt you when you need a mortgage. You have to have a paper trail that proves you are a responsible spender. If you don't have this, then your chances of getting a mortgage will be severely diminished.

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    ReplyDelete