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Issue 270

Copyright 2011-2016 www.propwise.sg. All Rights Reserved.

CONTENTS
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FROM THE

EDITOR

Factors to Consider When Financing an

Welcome to the 270th edition of the


Singapore Property Weekly.

Australian Property Purchase


Hope you like it!

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Singapore Property News This Week

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Resale Property Transactions

Mr. Propwise

(July 9 July 15)

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SINGAPORE PROPERTY WEEKLY Issue 270

Factors to Consider When Financing an Australian


Property Purchase
By JoAn Tan (guest contributor)
Singaporeans have been increasingly looking
outside of Singapore to invest in real estate,
by getting their dream retirement home, a
place for their university-bound children stay
in, or as an investment.

The popular choices have been Australia,


United Kingdom, Thailand, Japan and
Malaysia. The strengthening of the Singapore
Dollar has increased interest in such
properties as they are deemed to be more
affordable.
Local
lenders
have
also
introduced financing of foreign property loans
in view of this trend.

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SINGAPORE PROPERTY WEEKLY Issue 270


In this article, we will focus on the intricacies
of taking up a mortgage loan for Australian
properties.
Financing a property purchase in Australia
While the local banks have recently forayed
into lending for overseas properties due to the
attractive margins, banks in Australia, through
their licensed mortgage brokers, have long
been offering loan packages to finance
investment properties.
If youre looking to take up a loan for an
Australian property, you have the following
choices:
1. Take the loan from a locally domiciled
bank (UOB, CIMB, OCBC, ANZ, NAB,
Westpac etc.) The Australian banks listed
here are based in Singapore, abiding by
the lending guidelines of MAS.

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2. Borrow from Australian Banks and lenders


in Australia.
While the biggest benefits of taking a loan
locally are the cheaper rates (in SGD) and
easier access, these two benefits are negated
completely by the restrictive lending products
and guidelines.
The combination of the peculiarity of each
banks lending criteria and adhering to the
overall lending guidelines in Singapore,
makes it cumbersome and taxing for a
borrower to take up a loan from a locallybased bank.
Cumbersome criteria when
from locally-based banks

borrowing

Some of the restrictive criteria include:


1. Differing loan quantums for inner and
outer city loans
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SINGAPORE PROPERTY WEEKLY Issue 270


2. Exclusion of rental from existing overseas
property when calculating income

10. Adverse currency fluctuations


require customers to top up loans

3. Rental of property to be purchased cant


be factored as income (whereas the
Australian lenders domiciled in Australia
are able to factor this in)

11. Locally-based banks do not finance land


and building contracts

4. Minimum loan size restrictions


5. Minimum acceptable size of the property
6. Minimum requirements on the income of
the borrowers
7. Limited or no interest-only options
8. The loan taken up will be subjected to
Total Debt Servicing Ratio (TDSR)
framework and would appear as a record
at the Credit Bureau
9. Generally lower quantum of financing for
overseas properties
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may

12. Generally short tenures of loans granted


Taking up a non-resident loan from an
Australian bank
One business development manager of an
Australian bank situated in Australia I met
recently commented they like doing nonresident loans (i.e. non Australian citizens or
permanent residents) as based on their
records, they have yet to encounter a single
default!

Nonetheless, they have begun to reduce their


exposure to non-residents lending. Some
have reduced the lending quantum, which is
also known as the loan to value ratio (LVR).
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SINGAPORE PROPERTY WEEKLY Issue 270


However, most banks in Australia generally
still grant up to an 80% LVR.
Most of my clients still opt for an Australian
Dollar (AUD) loan by an Australia based bank
(hence borrowing from offshore) despite the
higher interest rates, primarily due to the
TDSR as they may not be able to get the LVR
they desire. Even if the interest rate is higher
than an SGD loan, they do not want to fork
out the huge lump sum to bridge the
purchase due to the low loan quantum
approved by an onshore lender.
Other features such as a 100% offset account
offered by offshore banks as well as interestonly options up to 10 years are also deemed
attractive. They also have an anti-age
discrimination policy which is good news for
older folks trying to secure a longer loan

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tenure. One of my clients who is 61 years of


age managed to secure a 20 years loan
tenure. If he had approached a locally
domiciled bank, even if its an Australian
bank, the loan tenure would have been only
four years in total, and its highly likely his
loan application would have been rejected!

While taking a loan from an offshore bank is a


viable, it does have its share of issues. Some
clients have had to deal with ill-equipped
mortgage brokers that do not do due
diligence on the clients and property
purchased and hence present the case
wrongly to the offshore banks, which resulted
in a long-drawn and worrisome application
process that at times overshot the settlement
date, and the borrowers were then penalised
with hefty late charges.

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SINGAPORE PROPERTY WEEKLY Issue 270


Factors to consider when taking a
mortgage loan for an Australian property
So what should a prospective buyer consider
before investing in an Australian property with
regards to financing?
1. Ensure that the project is deemed
financeable by local or offshore banks
2. Determine your ability to service the loan
instalment in the event of an interest rate
increase

3. Scrutinise the loan agreement for any


unreasonably
detrimental
clauses
imposed by the lenders
4. Ensure one have sufficient funds (cash) to
bridge the purchase as well as other
incidental charges relating to the property
purchase such as set up fees, valuation
fees, government charges, legal fees etc.
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5. Determine the appropriate timing to seek


financing (depending on the completion
stage of the property or settlement date of
the purchase contract)
6. Ensure you understand the volatility of
mortgage interest rates so you are
prepared for fluctuations
7. Determine the availability of other
features such as offset accounts that help
you to save on interest
8. Understand the long term outlook of the
currency of the loan obtained as a
mortgage loan is a long term commitment
9. Seek a reliable bank officer in charge of
international property loans or get the
assistance of a reputable mortgage
broker, who will assist you in due
diligence and present your loan

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SINGAPORE PROPERTY WEEKLY Issue 270


application to maximize your chance of
approval, and match the right features of
the various lenders loan packages to the
needs of the client.
An international mortgage loan is more
complex than a Singapore one as more due
diligence is required, and it involves
understanding the loan packages of
overseas-based lenders and dealing with
rules and regulations of a foreign country.

and international financial institutions and


deal with the banks on the consumers behalf.
The team at Redbrick has handled over 2,000
properties and over SGD$2 billion in
mortgages.

While it is not as straightforward, investors


can make the right choice if they consider the
above
factors
carefully
and
clearly
understand the details of the loan.
By guest contributor JoAn Tan, Associate
Director of Redbrick Mortgage Advisory,
which assists investors and homeowners in
sourcing for the best financing option catered
for their needs. They partner with major local
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SINGAPORE PROPERTY WEEKLY Issue 270

Singapore Property This Week


Residential

Commercial

New sales of private home increased by


10% in H1

Coldwell Banker adds 7 franchisees

New private home sales halved to 536 units


in June from 1,058 units in May as new
launches dried up amid the June school
holidays. However, some market watchers
believe that market is close to bottoming out
as the June sales figure is 42.9 per cent
higher than a year ago, signaling a more
positive outlook.

US real estate franchisor Coldwell Banker


has signed up seven more franchisees in
Singapore, bringing the total count to 11. The
11 franchisees have 66 salespeople. The
group aims to assist small-scale and growing
real estate agencies to form a bigger
platform, in hopes of leading to economies of
scale in training and other activities.
(Source: Business Times)

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 270


Surbana Jurong to set up Sri Lanka
consultancy
Surbana Jurong has signed a memorandum
of understanding (MOU) with Sri Lanka's
investment promotion agency to set up a
technical consultancy services company. The
consultancy will provide professional services
to help in the urbanisation and infrastructure
projects in Sri Lanka and overseas. Surbana
Jurong Group CEO Wong Heang Fine hopes
to tap on and build up a core local Sri Lankan
technical base.
(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 270

Non-Landed Residential Resale Property Transactions for the Week of Jul 9 Jul 15

Postal
District
3
4
4
4
4
4
4
4
4
5
5
5
5
9
9
9
9
9
10
10
10

Project Name
EMERALD PARK
SKYLINE RESIDENCES
SKYLINE RESIDENCES
SKYLINE RESIDENCES
CARIBBEAN AT KEPPEL BAY
THE PEARL @ MOUNT FABER
THE INTERLACE
THE INTERLACE
THE INTERLACE
CLEMENTIWOODS CONDOMINIUM
DOVER PARKVIEW
DOVER PARKVIEW
VARSITY PARK CONDOMINIUM
RIVERGATE
THE IMPERIAL
THE TRILLIUM
RIVERGATE
ASPEN HEIGHTS
ARDMORE THREE
MELROSE PARK
THE MARBELLA

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Area
(sqft)
1,001
484
484
484
1,485
1,173
2,056
3,692
4,144
1,055
1,249
1,249
2,379
1,033
1,733
1,798
2,077
1,324
1,744
1,292
1,582

Transacted
Price ($)
1,010,000
970,000
964,000
930,000
2,060,000
1,378,000
2,245,000
2,442,000
2,673,000
1,130,000
1,300,000
1,260,000
2,300,000
2,250,000
3,300,000
3,200,000
3,500,000
2,180,000
6,170,065
2,230,000
2,300,000

Price
Tenure
($ psf)
1,009
99
2,003
FH
1,990
FH
1,920
FH
1,387
99
1,174
99
1,092
99
661
99
645
99
1,071
99
1,041
99
1,009
99
967
99
2,177
FH
1,904
FH
1,780
FH
1,685
FH
1,647 999
3,538
FH
1,726 999
1,454
FH

Postal
District
11
11
11
11
11
11
12
15
15
16
16
18
18
18
18
18
18
19
19
19
19

Project Name
PARK INFINIA AT WEE NAM
SOLEIL @ SINARAN
TRILIGHT
MULBERRY TREE
THOMSON 800
THE SPINNAKER
RIVERSIDE MELODIES
MODA
MANDARIN GARDEN CONDOMINIUM
BREEZE BY THE EAST
TANAMERA CREST
SEA ESTA
WATERVIEW
SEASTRAND
LIVIA
CHANGI RISE CONDOMINIUM
TAMPINES COURT
OASIS GARDEN
THE QUARTZ
RESIDENCES @ JANSEN
FORTUNE PARK

Area
(sqft)
560
958
2,099
1,087
1,625
2,250
1,421
646
1,572
1,755
1,195
1,367
1,184
1,109
915
1,259
1,711
1,238
1,195
1,216
1,216

Transacted
Price ($)
1,080,000
1,750,000
3,550,000
1,515,000
1,918,000
2,250,000
1,662,570
850,000
1,455,000
1,930,000
970,000
1,530,000
1,225,000
1,080,000
810,000
1,030,000
915,000
1,260,000
1,140,000
1,150,000
950,000

Price
Tenure
($ psf)
1,930
FH
1,827
99
1,691
FH
1,394
FH
1,180
FH
1,000
FH
1,170
FH
1,316
FH
926
99
1,100
FH
812
99
1,119
99
1,035
99
974
99
885
99
818
99
535
101
1,018
FH
954
99
945
999
781
FH

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SINGAPORE PROPERTY WEEKLY Issue 270


Postal
District
19
19
21
21
23
23
23
23
23
23
23
27
28

Project Name
COMPASS HEIGHTS
FLORENCE REGENCY
SYMPHONY HEIGHTS
ASTOR GREEN
FORESQUE RESIDENCES
HILLVIEW HEIGHTS
GUILIN VIEW
HILLVIEW RESIDENCE
REGENT HEIGHTS
NORTHVALE
PALM GARDENS
THE ESTUARY
GRANDE VISTA

Area
(sqft)
2,497
1,679
926
1,378
1,421
1,679
861
1,690
1,163
1,518
1,216
592
1,647

Transacted
Price ($)
1,600,000
868,000
988,000
1,280,000
1,590,000
1,600,000
725,000
1,400,000
868,000
1,120,000
845,000
633,000
1,298,000

Price
Tenure
($ psf)
641
99
517
103
1,067 FH
929
99
1,119 99
953
FH
842
99
828
999
747
99
738
99
695
99
1,069 99
788
999

NOTE: This data only covers non-landed residential resale property


transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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