RES exam question on Financing: A buyer assembles the cash/CPF for a $1,500,000 private condo with his first bank…
A buyer assembles the cash/CPF for a $1,500,000 private condo with his first bank housing loan at 75% LTV. His maximum loan is $1,125,000 and his total downpayment is $375,000 (25%), of which at least 5% of the price must be in cash. Which is/are correct? (i) The minimum cash portion is $75,000 (5% of $1,500,000) (ii) The entire 25% downpayment must be paid in cash (iii) The remaining $300,000 of the downpayment may be paid via cash and/or CPF OA (iv) The maximum bank loan is $1,125,000
- A(i), (ii), (iii) and (iv)
- B(i), (iii) and (iv) only
- C(i), (ii) and (iv) only
- D(ii), (iii) and (iv) only
Show answer & explanation
Answer
B. (i), (iii) and (iv) only
Explanation
(i) is correct: the minimum cash portion is 5% of $1,500,000, i.e. $75,000. (iv) is correct: at 75% LTV the maximum bank loan is $1,125,000. (iii) is correct: the remaining 20% ($300,000) of the 25% downpayment can be paid by cash and/or CPF OA. So (i), (iii) and (iv) only. The 75% LTV limit and 5% minimum cash for a first housing loan are MAS rules (MAS, LTV limits for OTPs granted from 6 Jul 2018).
Why the other options are wrong
- (ii) is wrong: the full 25% need not be in cash; only 5% must be cash, with the rest payable via CPF.
Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR
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