View Full Version : 50-year home mortgage loan has just been launched
The_Way_I_See_It
21-07-12, 13:55
United Overseas Bank (UOB) has introduced a home loan that now allows the home owner to stretch his home mortgage to 50 years – that’s half a century.
UOB said they introduced this longer loan package as more customers have been asking for it.
The loan is currently applicable to private residential and HDB only. Also, there is a cut-off age but UOB declined to say what it is.
If the property is leasehold, it needs to have at least 35 years left on the lease at the end of the 50-year loan. That is, the property needs to have 85 years or more left on its lease before the owner can apply for this kind of home loan.
Having a longer term will result in a smaller monthly loan instalment and will be of help in the monthly cashflows. However a longer repayment period also means that more interest will be incurred.
By taking on such a long-term loan, it means the home owner will be servicing the loan into his retirement years which means he can’t afford to retire since he needs the cashflows to continue servicing his loan. If a couple, say, marries at 30 years old, it means they will be servicing their housing loan until the age of 80.
Homeowner Edward Ti, 28, said, “I would take a 50-year loan if interest rates are low. I would think that it is more efficient to use the money saved from the monthly mortgages to do something else.”
If a borrower takes out a 50-year loan for $1 million at an interest rate of 1.7 per cent, he would have to pay about $2,475 monthly for his mortgage, compared with $3,548 if the loan ran for 30 years.
Hence, this spells good news for the developers since the high-priced properties especially those at the million-dollar level become more ‘affordable’ due to lower monthly mortgage payments.
It is not known if an even longer-term home loan will be available in the market in future.
In Japan, especially during the bubble years, Japanese banks created a “Two Generation” mortgage loan. That is, the home loan is taken out by 2 generations of people, typically the father and the son. When the father can no longer service the monthly mortgage payments, the son takes over.
Will we start to see some creative banks coming out with “Two Generation” mortgage loan in Singapore soon?
.
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United Overseas Bank (UOB) has introduced a home loan that now allows the home owner to stretch his home mortgage to 50 years – that’s half a century.
UOB said they introduced this longer loan package as more customers have been asking for it.
The loan is currently applicable to private residential and HDB only. Also, there is a cut-off age but UOB declined to say what it is.
If the property is leasehold, it needs to have at least 35 years left on the lease at the end of the 50-year loan. That is, the property needs to have 85 years or more left on its lease before the owner can apply for this kind of home loan.
Having a longer term will result in a smaller monthly loan instalment and will be of help in the monthly cashflows. However a longer repayment period also means that more interest will be incurred.
By taking on such a long-term loan, it means the home owner will be servicing the loan into his retirement years which means he can’t afford to retire since he needs the cashflows to continue servicing his loan. If a couple, say, marries at 30 years old, it means they will be servicing their housing loan until the age of 80.
Homeowner Edward Ti, 28, said, “I would take a 50-year loan if interest rates are low. I would think that it is more efficient to use the money saved from the monthly mortgages to do something else.”
If a borrower takes out a 50-year loan for $1 million at an interest rate of 1.7 per cent, he would have to pay about $2,475 monthly for his mortgage, compared with $3,548 if the loan ran for 30 years.
Hence, this spells good news for the developers since the high-priced properties especially those at the million-dollar level become more ‘affordable’ due to lower monthly mortgage payments.
It is not known if an even longer-term home loan will be available in the market in future.
In Japan, especially during the bubble years, Japanese banks created a “Two Generation” mortgage loan. That is, the home loan is taken out by 2 generations of people, typically the father and the son. When the father can no longer service the monthly mortgage payments, the son takes over.
Will we start to see some creative banks coming out with “Two Generation” mortgage loan in Singapore soon?
.
Join our TRE facebook page here: http://www.facebook.com/TREmeritus
A quote from the same forum in TREMERITUS
I am sure Mr B will add salt and fuels to this one !
black_dot:
July 20, 2012 at 10:35 pm (Quote)
This news of 50 year mortgage confirms the peak of the property market for Singapore! Expect a serious and deep correction in the price this time and over many years!
Singapore property prices moved upwards from the 60s and over the past 50 years has been rising by leaps and bounds inspite of several minor corrections! This is why people always says “Singapore property prices never goes down for long and will rebound and the prices will go even higher!”
This sentiment holds true but until now! Over the past quarter property sales volume already slowed which is always the precursor of a coming price correction. This is why the developers are asking the government for help to allow them to have more time to sell their developments.
Just imagine throwing a stone up to the sky. It will move up with strong inertia but it will slow and stop then start to drop to the ground.
So my advise is if you has miss the boat count yourself lucky because many will have their pockets burned!
A quote from the same forum in TREMERITUS
I am sure Mr B will add salt and fuels to this one !
black_dot:
July 20, 2012 at 10:35 pm (Quote)
This news of 50 year mortgage confirms the peak of the property market for Singapore! Expect a serious and deep correction in the price this time and over many years!
Singapore property prices moved upwards from the 60s and over the past 50 years has been rising by leaps and bounds inspite of several minor corrections! This is why people always says “Singapore property prices never goes down for long and will rebound and the prices will go even higher!”
This sentiment holds true but until now! Over the past quarter property sales volume already slowed which is always the precursor of a coming price correction. This is why the developers are asking the government for help to allow them to have more time to sell their developments.
Just imagine throwing a stone up to the sky. It will move up with strong inertia but it will slow and stop then start to drop to the ground.
So my advise is if you has miss the boat count yourself lucky because many will have their pockets burned!
May be Black Dot is Mr B himself /herself.
This will increase the demand for FH condo. Those who own good location FH condo can keep their property, because their price only compete with the new launch leasehold which is set at higher and higher price. Longer term loan also increase the holding power in case of interest rate shock. So much money now chasing so few assets.
I am also tempted by this 50yr loan .. I've learned that inflation erodes the value of money.
Taking a debt now and paying it back over 50yrs erodes your debt as well since rental will keep up with inflation while your debt remains the same.
If rental keeps up with inflation , property prices follows.
So how? Is govt going to clamp down on UOB or will they allowed other banks to join the bandwagon?
With a 50yr loan, it means people will find everything at the current market price suddenly becomes affordable again as the Debt-to-Service Ratio is moving back down. So how??
Govt is trying to push the market up to Japanese level and let it crashed hard?
is MAS going to take any action?
the longer the mortgage duration, the more equivalent it is to an interest-only mortgage, which was banned from 2009 onwards.
Now everyone on 30years loan have the opportunity to refinance to 50 years loan. Suddenly we all have a fall back plan in case of financial difficulties. On the other hand foreigners can take on the offer as well. They will find this offer delicious. With low repayment, they will negate the effect of ABSD. Banks need to put to work their excess liquidity, the gov will reap more stamp duties and property taxes, the developer will find it easier to sell to foreigners with 50 years loan package. The rest u can imagine the effect on property prices.
Leverage to the maxthis 50year loan...
developers give absd rebate and banks lengthen loan tenor, these have the capability of cooling the cooling measures. 1% interest plus 50 year loan has a very powerful leveraging effect.
GAME CHANGER. I am so excited by this change. Suddenly, the price point you are looking at suddenly becomes very affordable.
Those who are on 30yrs and managed to refinance to 50yrs will find EXTRA Cashflow.
Everything points to a spectarcular rise and even more spectacular fall in prices like Japan ..
Q3. What is the maximum loan repayment period?
Freehold Property
Up to 50 years or 80 years of age, whichever is earlier. For example, if you are 25 years old now and buying a freehold property, the maximum loan period is 50 years. The loan duration plus the age of the applicant must be less than or equal to 80 years.
Leasehold Property
Up to 50 years or 80 years of age at end of loan tenor, whichever is earlier, and remaining lease of at least 35 years at the end of loan tenor.
er... how will this affect the rental market?
all tenants will start converting to buyers since monthly installments come down?
rental$ decline while property price maintain or increase?
This means banks and government make more money since buyers who opt for such loans become renters.
It's like operating lease because pay until kick the bucket.
20-30 was a game changer. Now 35-50 will be another game changer.
developers give absd rebate and banks lengthen loan tenor, these have the capability of cooling the cooling measures. 1% interest plus 50 year loan has a very powerful leveraging effect.
Ha Ha .. in another word, it is also actually a disguised form of "Quantitative Easing" QE .. aka contionous easing of the pressure points ..juz like the west keep minting new money .. keep interest low .and affordable ...so definitely a sub prime in the making .all potential FT tenants buy MM . So the cycle continues perpetually until one day it becomes very difficult to find tenants and buyers ..and suddenly all people realise the potential crisis they are in and then . ka boom or boomz :doh: Sound like Mr B .. :doh:
Allthepies
22-07-12, 10:58
Follow the big boys, no way u can beat them, if they want price up, price will move in their direction. All of us know which price direction the big boys want today, we can choose to ignore and be left behind or follow them and reap some benefits. :cheers4:
Ha Ha .. in another word, it is also actually a disguised form of "Quantitative Easing" QE .. aka contionous easing of the pressure points ..juz like the west keep minting new money .. keep interest low .and affordable ...so definitely a sub prime in the making .all potential FT tenants buy MM . So the cycle continues perpetually until one day it becomes very difficult to find tenants and buyers ..and suddenly all people realise the potential crisis they are in and then . ka boom or boomz :doh: Sound like Mr B .. :doh:
Don't worry... Its all already planned well ahead:
1st stage: housing shortage + population explosion
2nd stage: houses increase to 1000 psf
3rd stage: various CMs + low interest rates
4rd stage: house increase to 1500 psf
5th stage: extending home loan period
6th stage: house increase to 2000 psf
7th stage: open imigration flood gate
8th stage: more house increase.....
Don't worry... Its all already planned well ahead:
1st stage: housing shortage + population explosion
2nd stage: houses increase to 1000 psf
3rd stage: various CMs + low interest rates
4rd stage: house increase to 1500 psf
5th stage: extending home loan period
6th stage: house increase to 2000 psf
7th stage: open imigration flood gate
8th stage: more house increase.....
I anxiously await Stage 6 with bated breath...
Allthepies
22-07-12, 11:19
I anxiously await Stage 6 with bated breath...
Those who sold their homes and renting now having colder and colder feet with each passing day.
more tenants will choose to buy with lower mortgage, or pay high rental.??
phantom_opera
22-07-12, 14:04
Many will choose to buy instead of rent in this case, why yowetan not excited over this? Go working for uob then can afford trizon
Many will choose to buy instead of rent in this case, why yowetan not excited over this? Go working for uob then can afford trizon
I am excited now.
more tenants will choose to buy with lower mortgage, or pay high rental.??
Why will rental goes higher (when demand for rental is diminished ) as more PR/ FT/Foreigners choose to buy rather than rent ? Supply of rental units > demand of rental units. Demand and Supply are mutually on opposite side of same equation. :doh:
Why will rental goes higher (when demand for rental is diminished ) as more PR/ FT/Foreigners choose to buy rather than rent ? Supply of rental units > demand of rental units. Demand and Supply are mutually on opposite side of same equation. :doh:
I mean at current time, high rental or lower mortgage for 50yrs:D
I mean at current time, high rental or lower mortgage for 50yrs:D
There is a grand design to increase singapore population by laying ground work for housing infrastructure. Once sufficient housing is established, then immigration will not be resisted so much. All these new mrt lines, new financial hubs, medical hubs, education hubs, new tourist attractions, u expect them to run by themselves?
Why will rental goes higher (when demand for rental is diminished ) as more PR/ FT/Foreigners choose to buy rather than rent ? Supply of rental units > demand of rental units. Demand and Supply are mutually on opposite side of same equation. :doh:
If there's a sudden spike in demand due to the 40-50year loan tenor, all the good work of creating ample supply could be undone very quickly.
phantom_opera
22-07-12, 17:49
The most powerful anti CM is here, the dream of owning spacious 3brm realized
all the old 99lh remaining years may not get 50yrs loan.
new 99lh or fh rules
phantom_opera
22-07-12, 18:58
all the old 99lh remaining years may not get 50yrs loan.
new 99lh or fh rules
for uob, it is 50+35 =85 ... so any 99LH which is not older than 15y can qualify
the 1st step towards subprime crisis
Allthepies
22-07-12, 19:21
Few more good years to go! All investors will huat
MAS would have got the greenlight from garment to enable more people to own their dream home. :D
Uob started the trend of 40 year loans, now they start the new trend of 50 year loans?
40-yr loans already started by Maybank few years ago. Local banks always less competitive.
So will maybank do a 60year loan from BUC to kick start the trend?
So will maybank do a 60year loan from BUC to kick start the trend?
I actually don't mind taking a 100yr loan if they allowed me to. lol.
I actually don't mind taking a 100yr loan if they allowed me to. lol.
You get your kid to sign as guarantor in the offer letter. Lol.
flagship74
23-07-12, 11:21
You get your kid to sign as guarantor in the offer letter. Lol.
I guess most of the kids will object to this..they probably will tell their parents dun buy if you cannot afford it..:simmering:
when the government announce that taxi driver can drive till age of 75, I already anticipate this would happen.
the guest on 93.8fm was saying he choose to believe that property buyers are prudent with the investment. honestly if we are all prudent, then why do we need all these cooling measures?
felicia_sg
26-07-12, 07:34
To cool resale property transactions & incentivize new sales (relative to resale) which they have achieved successfully?
when the government announce that taxi driver can drive till age of 75, I already anticipate this would happen.
the guest on 93.8fm was saying he choose to believe that property buyers are prudent with the investment. honestly if we are all prudent, then why do we need all these cooling measures?
CHICAGO (MarketWatch)—Question: Here’s an idea for a “new”
mortgage. Since Americans are living 10 years longer or more
since the 30-year fixed-rate mortgage was introduced in the
1930s, I believe a 40-year fixed-rate mortgage at current low
interest rates (with the same tougher underwriting requirements in
place)—for new homes only—would spark a significant growth in
construction and all construction-related jobs, thus substantially
increasing economic growth along with increasing homeownership
availability for many who have been forced into lower-paying jobs.
This might also give an upward impetus to the stock market and
change the current fearful psychology pervasive in our economy.
Politically, I think the first party to endorse this idea would have a
hard time being defeated by the opposition. I hope I don’t come
across as a “wacko” and would like to hear your comments on this
idea. —S.C.
Answer: No, I don’t think you are a wacko. But I don’t think
much of your idea, either. At today’s record low loan rates and
suppressed prices, I don’t think affordability is the problem. I
think the problem is that the pendulum has swung so far back
the other way from no-down-payment, no-verification lending
“rules” that most people have difficulty qualifying for financing.
And that would remain the case under your scenario “with the
same tougher underwriting standards.”
That said, a 40-year loan does have some advantages, the main
one being that the payment is much easier on the pocketbook.
On a $200,000 loan at 4%, the monthly payment over 30 years
would be $954.83. But over 40 years, the payment would drop to
$835.88, a savings of $118.95 per month.
The main drawback, of course, is that over 40 years, you’d pay a
whale of a lot more interest. The total interest outlay on the 30-
year loan above is $143,739.01. But over 40 years, the total
interest cost jumps to $201,220.03. That’s a difference of $
57,481.02, which is a big price to pay for something you
probably can’t afford anyway if you need to amortize the
payments over four decades so you can handle the monthly
payment.
Also with a 40-year loan, it takes way longer to start building
meaningful equity with your payments. You pretty much have to
hope that the market will turn north and start picking up some
speed. Otherwise, when the time comes to sell or refinance, you
might not have much more in the place than what you put down
years ago.
Of course, most people don’t keep their mortgages 30 years
these days, let alone 40. So the fictional buyer above would
probably move on to another house and another mortgage, or
trade in his 40-year sucker for something more reasonable.
However, there is no guarantee that rates won’t be so much
higher that the cost of change could be too much to bear.
Nevertheless, if you believe this is a good product, you can
probably find a lender or two or three who makes such loans.
But for my money, I wouldn’t go any longer than 30 years.
There’s a reason the 30-year fixed-rate mortgage has been the
gold standard for a long time.
iwantgizmos
03-08-12, 10:58
Source: http://www.todayonline.com/Business/Property/EDC120803-0000062/UOB-offers-instant-loan-approvals-at-showflats
UOB offers instant loan approvals at showflats
by Sumita Sreedharan 04:45 AM Aug 03, 2012
SINGAPORE - Home buyers can now receive instant assessment of their loan approval eligibility with a new service launched by United Overseas Bank (UOB) yesterday.
Currently, home loan applications and approvals could take up to 60 minutes. UOB said its new service can assess the customer's eligibility for a home loan instantly at the showflat. The customer will need to visit a UOB branch to sign the letter of offer. UOB's new service will be made available at more than 70 showflats and the buyer has seven days to consider the loan and submit all supporting documents.
The home loan market is valued at about S$110 billion to S$120 billion and represents about 24 per cent of total gross loans, according to SIAS Research lead analyst Ng Kian Teck. "It represents a significant chunk of the bank's customers," he said.
Although the application for the loan happens at the showflat, the loan is approved at UOB's head office and buyers will receive a verbal confirmation at the showflat.
Buyers will get information on the loan amount, tenor, monthly repayment payable and interest rate package as soon as their personal and financial details are entered into UOB's loan approval system, which will be available to mortgage bankers on site via the iPad.
Ms Chia Siew Cheng, Head of the Loans Division at UOB, assured that there are security measures in place to ensure the safety of the buyer's details, which are transmitted wirelessly directly to the bank's system at the head office.
I thought the instant loan thing is not new? in the past like IPA and at most maybe within the day.... if so unsure whether can afford then better not visit showflat or go viewing!!!
phantom_opera
03-08-12, 11:58
I thought the instant loan thing is not new? in the past like IPA and at most maybe within the day.... if so unsure whether can afford then better not visit showflat or go viewing!!!
Instant approval (more like 30 minutes) will further encourage you to make rash rash decision ON THE SPOT ... 50y monthly mortgage looks real low and affordable ... so 50y loan with instant approval is a secret weapon from UOB :2cents:
Instant approval (more like 30 minutes) will further encourage you to make rash rash decision ON THE SPOT ... 50y monthly mortgage looks real low and affordable ... so 50y loan with instant approval is a secret weapon from UOB :2cents:
Agree. A potent mix. They should throw in 'instant guaranteed approval for reno/car loan' on top of the home loan.
http://a5.sphotos.ak.fbcdn.net/hphotos-ak-snc7/291320_10151970354040244_1985013693_o.jpg
This is SIBOR btw.
Allthepies
03-08-12, 22:31
Any idea which bank currently offers SIBOR spread tat is lower than 0.75% for at least 3 years? Thinking of refinancing
iwantgizmos
06-08-12, 10:34
Source: http://www.asiaone.com/News/Latest%2BNews/Singapore/Story/A1Story20120806-363575.html
ASIAONE > NEWS > SINGAPORE
Monday, Aug 06, 2012
50-year home-loan a 'gimmick': Khaw
SINGAPORE - For those thinking of taking up long-term loans in order to buy their dream home, National Development Minister Khaw Boon Wan has this message for you: Don't do it.
Instead, Singaporeans should exercise prudence, especially amid the uncertain global financial climate, he said.
He advised against taking up 50-year housing loans, which at least one bank here began offering recently.
Mr Khaw said: "There is now some gimmick, a bank offering 50-year loans. Please don't fall for that. It doesn't make sense."
He was speaking to reporters in Woodlands Drive yesterday, during the launch of the National Community Emergency Response Team (Cert)-on-Patrol Week for Sembawang GRC.
Last month, The Straits Times reported that United Overseas Bank had introduced a 50-year home loan. The report said that borrowers above a certain age are not eligible.
Other banks, such as OCBC, offer a maximum loan period for private and HDB homes of 40 years, or up to the age of 75, whichever is earlier.
Mr Khaw said it is important that people live within their means and buy only what they can afford.
He said that he first rented a room in a flat when he moved from Malaysia to Singapore. He then bought a small 30-year-old house in a private estate and upgraded subsequently.
Mr Khaw said: "If you want to immediately come out of school and think you want a five-room flat, and...a 50-year loan will help you achieve that, I don't think that is very wise."
Take-up rates for the loan have been low, a "good sign that Singaporeans know we should always be prudent", he said.
phantom_opera
06-08-12, 11:04
He said that he first rented a room in a flat when he moved from Malaysia to Singapore. He then bought a small 30-year-old house in a private estate and upgraded subsequently.
=> Wah his pay must be so high that he can jump straight from renting one room to landed property
creme de la creme
How about high flyers just left school ?? Cannot straight go 5r HDB or condo with 50y loan meh ...;)
phantom_opera
12-08-12, 15:31
http://www.cbc.ca/news/business/story/2012/06/20/mortgage-rules-tightened.html
Canadian garmen tightened home loan period to 25y yet Singapore stretches it to 50y??
Singapore props are too expensive to make it manageable for the medium income households.
http://www.cbc.ca/news/business/story/2012/06/20/mortgage-rules-tightened.html
Canadian garmen tightened home loan period to 25y yet Singapore stretches it to 50y??
Allthepies
12-08-12, 19:38
Singapore props are too expensive to make it manageable for the medium income households.
Condo not meant for the median household income, more for the top 20%.:doh: :doh: if ur income not in the top 20% and u die die want to stay condo, who can u blame but urself?
condo got different makes and pricing what
Know of middle household income people who has bought a small condo apt 8 years ago are very happy now. It is rather risky to do the same thing now.
Allthepies
12-08-12, 22:38
Know of middle household income people who has bought a small condo apt 8 years ago are very happy now. It is rather risky to do the same thing now.
Good for this family, no risk no returns. For all others who cannot take any risk, buy and stay in HDB if ur income not up to mark:)
I had a discussion with someone recently and want to find out...
So if one has taken this 50 year loan then intend to sell after 5 yrs (of course expecting property price to move up), does it make more sense to take this 50 year loan than a 30 year loan since the monthly you'll cough up less and you pay a smaller amount to the bank on the whole for the 5 years you intend to live in it. You're able to make money especially since the lock in period is short.
I had a discussion with someone recently and want to find out...
So if one has taken this 50 year loan then intend to sell after 5 yrs (of course expecting property price to move up), does it make more sense to take this 50 year loan than a 30 year loan since the monthly you'll cough up less and you pay a smaller amount to the bank on the whole for the 5 years you intend to live in it. You're able to make money especially since the lock in period is short.
With the current cooling measures, if you want to loan beyond age 65 or 30 yrs, u hv to down 40% and loan 60% only even if it is your 1st property. So LPPL right?
propertychap
03-04-13, 17:31
Does this apply if I am refinancing my existing loan ? Can I still loan beyond 65 years old and still get 80% loan which was originally the terms of the loan?
Does this apply if I am refinancing my existing loan ? Can I still loan beyond 65 years old and still get 80% loan which was originally the terms of the loan?
For refinancing, you can loan up to 75 years depending on the bank and your age.
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