Results 1 to 8 of 8

Thread: Pledge and unpledge using cash.

  1. #1
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Pledge and unpledge using cash.

    In the past, asset-based lending was widespread and investors with a few hundred thousand dollars in the bank were eligible for multi-million dollar loans without the need to ascertain their loan servicing eligibility. This was scrapped with the introduction of the Total Debt Servicing Ratio (TDSR) framework in June 2013. As such, the days of easy credit are over.

    There are two types of pledged assets, namely liquid assets such as Singapore dollar deposits, and savings and other securities like stocks, bonds, foreign currency deposits, and gold.

    This strategy of property financing works when buyers have zero or insufficient income to support their loan application. Although they may be cash-rich, the lack of income proves an obstacle for banks to grant a loan. Hence, asset pledging helps to increase their income to levels that are in line with the TDSR criteria and allows them to qualify for purchasing the property which they might otherwise not be able to do.

    Assets that are pledged for at least four years are taken at 100 percent of their value. If they are pledged for less than four years, an immediate haircut of 70 percent of their value is applied.

    For instance, in the case of an unemployed person, for every loan of $100,000, about $36,000 in liquid assets must be pledged for four years, but this rises to $120,000 if it is pledged for less than four years.

    To utilize this strategy, buyers would need to have a significant amount of savings, assets or financial support.

    In summary, the optimal use of funds and structuring of financing strategies is an area that investors should continually explore to put their savings to work. Property investment is a lifelong journey of learning and fine-tuning strategies that pays huge dividends for investors.

  2. #2
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    for every loan of $100,000, about $36,000 ($35,923.2) in liquid assets must be pledged for four years,




  3. #3
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    for every loan of $100,000, about $119,744 in liquid assets must be unpledged.


  4. #4
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    https://www.mas.gov.sg/regulation/ex...lculating-tdsr

    Note: For unpledged assets, FIs must also ensure that the assets are still accounted for in the borrower’s bank account statements before disbursing funds under the property loan. This is to ensure that the unpledged assets used in the TDSR computation do not include funds used in making the downpayment for the property loan.

  5. #5
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    Property price at $1,200,000

    Cash = $50,000

    CPF OA = $100,000

    Age 36.

    Loan Tenure = 65-36 =29 years

  6. #6
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    Property price at $1,200,000

    Cash = $50,000

    CPF OA = $100,000

    Age 36.

    Loan Tenure = 65-36 =29 years

    Near a monthly loan repayment of $4,120.48



  7. #7
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    Property price at $1,200,000

    Income = $6,000

    Cash = $50,000

    CPF OA = $100,000

    Age 36.

    Loan Tenure = 65-36 =29 years

    Near a monthly loan repayment of $4,120.48

    Need a monthly salary of $6867.47 ($4,120.48/0.6)

    Income short fall $6000-$6867.47=$867.47


  8. #8
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,485

    Default Re: Pledge and unpledge using cash.

    Property price at $1,200,000

    Income = $6,000

    Cash = $50,000

    CPF OA = $100,000

    Age 36.

    Loan Tenure = 65-36 =29 years

    Need a monthly loan repayment of $4,120.48

    Need a monthly salary of $6867.47 ($4,120.48/0.6)

    Income shortfall $6867.47 - $6000 =$867.47

    To get the loan for $1,200,000 need an extra income of $867.47 a month

    To pledge the cash need is $867.47 x 48 = $41,638.39

    To show fund 2 times the cash needed is $41,638.39/0.3=$138,794.67

    Last edited by Arcachon; 03-02-20 at 16:13.

Similar Threads

  1. Cash is King or is it.
    By Arcachon in forum Coffeeshop Talk
    Replies: 0
    -: 20-07-18, 19:19
  2. Pledge to keep flats affordable for all
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 04-06-14, 16:59
  3. SGD 1M Cash
    By kellogs in forum Coffeeshop Talk
    Replies: 16
    -: 21-08-11, 23:04
  4. Replies: 0
    -: 02-06-11, 00:55
  5. POSB discount pledge for home loans
    By mr funny in forum Finance and Legal
    Replies: 0
    -: 04-05-10, 21:50

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •