How much money can you borrow in Singapore? The simple answer is that it depends.
The maximum credit amount varies depending on the type of loan, your creditworthiness, and the money lenders that you borrow from. It also depends on the Ministry of Law guidelines.
Bear in mind that the Monetary Authority of Singapore (MAS) limits how much you can borrow. In this case, if you want unsecured credit, you can only borrow up to 12 months of your monthly income.
This rule is meant to safeguard every Singaporean from financial difficulties that arise from over-borrowing. However, secured loans offer you more options as far as loan limits are concerned.
Who Can You Borrow From?
Now that you are aware of the basic MAS rules that guide borrowing in the country, you need to learn who you can borrow from.
Your goal should be to stick to those that are regulated. That’s because they adhere to the rules set on the interest rate, maximum credit amounts they can give you, and how to conduct themselves if you pay late interest and monthly payments. They also offer clear terms and conditions that let you know what your repayment schedule is. And this information is offered before you submit an application form.
Two main types of lenders exist:
- Banks and finance companies
Banks and finance companies
Banks and finance companies are some of the regulated lenders in Singapore. They are licensed by the MAS.
If you want to borrow from any of these regulated institutions, you need to find out if they are registered. The Financial Institutions Directory will enable you to verify whether you are dealing with licensed lenders of this nature or not.
Your goal when researching the right moneylender to borrow loans from is to get the money you need from licensed moneylenders in Singapore. You can find a list of licensed moneylenders from the Registry of Moneylenders on the Ministry of Law website.
If a moneylender is missing from this list, it means that institution is unlicensed and unregulated.
How Much You Can Borrow From Different Loans In Singapore?
Even though there are plenty of banks, finance companies, and licensed moneylenders in Singapore, each of them may offer different credit amounts. One major distinguishing factor may be the type of credit that you intend to get.
The lenders may also have different risk appetites despite operating under similar lending rules. But if you are aware of the basic guidelines set by the MAS, then you will find it much easier to apply for a loan and have it approved.
Here are some types of loans and their limits that you should be aware of:
1. Home loans
A home loan is a secured form of credit. The house that you buy with the loan that you borrow becomes a form of security. If you fail to pay off your debt, it can be sold so that the moneylender or bank can recover the balance. For this reason, the rules that guide borrowers that need unsecured loans like credit cards, don’t apply here.
The maximum loan amount will depend on whether you will be getting an HDB concessionary loan bank loans. The LTV ratio refers to the loan-to-value ratio, which is the percentage of your property value that will be advanced to you in the form of a loan.
If you intend to get an HDB concessionary loan, you can access an LTV limit of up to 90%. On the other hand, if you intend to borrow bank loans, you can only access an LTV limit of up to 75%.
The lender is what determines the maximum principal loan amount. So if you intend to get an HDB concessionary loan from a bank, the LTV maximum remains 75%.
Generally speaking, the home loan amount will vary from 55% to 90% of the property value or selling price of the house if you have no outstanding loans.
If you have an outstanding loan, your LTV limit will be anywhere from 25% to 45%. And if you have two or more outstanding loans, that limit could go lower to 15% to 35%.
However, these maximum borrowing limits do not apply to the following:
- Your loan tenure exceeds 30 years or 25 years for HDB flats
- The loan period you seek will mean that you are still paying the loan beyond 65 years of age
- You choose to borrow the house loan via a shell company (in that case the LTV limit will be 15%)
2. Car loans
Car loans are also secured. If you do not adhere to the loan contract, rather than deal with the late interest and principal payments, the moneylender can repossess your car and sell it. Then the money can be used to cover the loan balance.
A term you should be aware of when researching car loans is Open Market Value (OMV). This refers to the financial value of a vehicle as assessed by Singapore Customs. This value usually includes the buying price, insurance coverage, freight charges, and other charges involved in the importation and delivery of the vehicle.
The LTV limits for car loans range from 60% to 70% of the Open Market Value. And these limits apply to both new and used cars.
However, these maximum borrowing limits do not apply to the following:
- Disabled people as well as their caregivers
- Commercial vehicles
3. Unsecured loans
Unsecured loans are those debts that do not require borrowers to offer an asset as security in case they default. For this reason, they are riskier for moneylenders. That’s because if you fail to pay back what you owe them, they will not have any underlying security to sell off so that they can recover the money that you owe them.
Examples of these kinds of loans include credit cards, any personal loan, etc.
The basic rule of thumb is that licensed moneylenders (must be in the Registry of Moneylenders) cannot give you more than 12 months of your monthly income. But that is the maximum. Each moneylender will offer you different amounts. It’s quite common to see creditors offering credit amounts of 6 months.
Fortune Credit is a good example of a moneylender that offers this kind of loan.
About Fortune Credit
Fortune Credit is a top licensed moneylenders in the country and can be found in the Registry of Moneylenders on the Ministry of Law website. It offers unsecured loans to its clients, which means you don’t need to offer some kind of security to access the loan that you need.
You can access an unsecured personal loan of up to 6 times your monthly income. So, if you want $ 10 000 that covers 3 months of income, that’s available.
Also, you can borrow an unsecured business loan of up to $200,000. If you need more money for your business, you can offer an asset as security and your credit limit will increase significantly.
In accordance with the rules and regulations set by the Ministry of Law, Fortune Credit offers a low interest rate for personal loan. The rate varies from 1% to 4% per month. The interest rate moneylenders charge on business loans is usually higher. Fortune credit charges decent interest rates of 5% to 15%.
The online application is easy. And once you are preapproved, you will be required to go to the moneylender’s office with all the relevant documentation for verification. When that’s complete, your money will be given to you within hours or a business day.
The repayment terms including interest and other processing fees are transparent and flexible. That makes it easy for you to pay back what you owe. And if you are unable to pay back your debt on time, the late payment fees are regulated also.
Another plus concerning Fortune Credit Pte Ltd is the fact that having a poor credit history will not work against you. The company does not do any credit checking for any personal loan.
All they need is proof is your ability to pay the loan that you borrow. So if you can show that you have a reliable monthly income or a profitable business, then your loan is likely to be approved. A 3 months payslip history will suffice.
4. Renovation and furnishing loans
It’s one thing to buy a house, and another to turn it into a home. And that’s where renovation and furnishing loans come in.
You can use renovation loans to make changes to the structure and design of your house. They cater for the construction and material costs. This credit enables you to customize your home.
A furnishing loan is a niche loan that you can use to furnish your house. It’s meant to pay for the furniture.
Renovation and furnishing loans tend to differ.
You can access renovation loans of up to 6 months your monthly income or $30,000, whichever is higher. The interest charged is reasonable.
Furnishing loans can enable you to buy furniture and appliances. The interest rates vary depending on loan tenure. But the interest could end up being higher than personal loans that you can use for a similar purpose. Some have flexible repayment plans while others do not. And you may be able to get up to 5-6 times your monthly income as the maximum limit.
Most loan tenures for renovation and furniture loans are capped at 5 years. However, some may be as long as 7 years. And others are as short as 18 months or less.
If you want to borrow money from creditors, you need to know what to expect in terms of interest, limits, and other charges. It would be quite disappointing if you were to submit a loan application only for it to be rejected because you asked to borrow too much.
So, start by knowing whether you are eligible for a loan in the first place. This goes for foreigners too. Then take the time to find the loan limits that apply to the type of loan that you need including credit cards.
Also, make sure that every licensed moneylender that you shortlist is licensed and offers decent loan amounts for your needs. Loan sharks may not limit the amounts you can borrow, but that may cause you to face financial challenges in the future.