DBS Home Equity Loan | Property Loans in Singapore
Home Loans | Loansby Priyadarshini 30 November 2021
But, when you’ve spent all of your money on your house, what happens when you’re elderly and need money to retire on? Do you really want to rent out your rooms to strangers with questionable hygiene standards? Or do you want to downsize and go to a ulu neighbourhood? Read about the DBS Home Equity Loan here.
This is where the DBS Home Equity Income Loan comes into play. DBS has created this new loan in collaboration with the CPF Board to allow private property owners to monetize their houses without having to sell them.
DBS Home Equity Loan
What Exactly is a Home Equity Loan?
A reverse mortgage, often known as a home equity loan, allows you to borrow money against the value of your home. Why would you want to do that? In this situation, putting up collateral (your property) allows the bank to offer you a reduced interest rate. That is why the interest rate on your house loan is so much cheaper than the interest rate on an unsecured loan. For instance, a personal loan. The bank is ready to offer you a reduced interest rate since they can swoop in and sell your home if you don’t pay up.
Property Equity Loans
Property equity loans allow you to borrow money at a lower interest rate by using your home as collateral. You can then utilize this money to supplement your retirement income. And pay for cosmetic surgery, and so on.
Home equity loans are intended for private property owners. HDB unit owners, on the other hand, can take advantage of the HDB Lease Buyback Scheme. And this is comparable. Before signing up for a home equity loan, you should pay attention to the interest rates and compare them across multiple loan providers and packages. In other words, don’t grab the first product you see on the shelf because there may be a cheaper one nearby.
What makes the DBS Home Equity Income Loan Unique?
The CPF Board and DBS have collaborated to offer the DBS Home Equity Income Loan. Because the gah’men are engaged, you can be certain that the scheme will be limited to the groups being targeted by the powers that be. The target population for this new loan is seniors who are asset-rich but cash-poor. And need to supplement their retirement income.
As a result, it is limited to Singapore Citizens and PRs aged 65 to 79. Those who possess only one fully paid-up home with at least 30 years left on the lease. Applicants are not permitted to own any other property in Singapore or anywhere in the world. The main difference between this new loan and your standard reverse mortgage is that the money borrowed through the loan. It will be disbursed by monthly payouts from CPF LIFE rather than cash. As a result, you won’t have a large sum of money to spend at Singapore Pools.
What is the maximum amount you can borrow with the DBS Home Equity Income Loan?
The loan amount is limited to the difference between your CPF Retirement Account (RA) balance and the Enhanced Retirement Sum (currently $279,000). For example, if you have $200,000 in your Retirement Account, you can borrow up to $79,000. This $79,000 will be used for your CPF LIFE premium> It will increase your monthly dividends. Because CPF LIFE benefits are permanent. So, you don’t have to worry about your extra $79,000 “going out.” You will not be able to join the plan if you have already reached the Enhanced Retirement Sum in your CPF RA.
What You Should Know About the DBS Home Equity Loan
The following are some relevant figures regarding the DBS Home Equity Income Loan:
The maximum loan term is until the youngest borrower reaches the age of 95.
Throughout the loan tenure, a set interest rate (currently 2.88 percent pa) will be locked in.
There is a difference between your CPF Retirement Account balance and the Full Retirement Sum ($192,000 in 2021) is the minimum loan tenure.
The difference between your CPF Retirement Account balance and the Enhanced Retirement Sum ($279,000 in 2021) determines the minimum loan tenure.
Also, there will be no penalty fees if you decide to sell the property at any moment throughout the loan, but you will have to refund the money disbursed along with interest.