RES exam question on Financing: Daniel and Serene, married Singapore Citizens both aged 44, jointly buy a $2,400,000…
Daniel and Serene, married Singapore Citizens both aged 44, jointly buy a $2,400,000 condominium as joint owners and joint borrowers on a new bank loan over 25 years. Daniel already owns another condominium in his sole name with a housing loan outstanding. Serene owns no property. (i) As it is Daniel's second residential property, ABSD at 20% applies to the joint purchase. (ii) That ABSD comes to $480,000, being 20% of the full $2,400,000 price they pay. (iii) Since Serene has no loan outstanding, the new loan takes the first-loan limit of 75%. (iv) Their 25-year tenure does not lower the LTV further, as it is within 30 years. (v) At least 25% of the price must be paid in cash, and TDSR of 55% applies to the loan. Which of the statements above is/are correct?
- A(i), (ii) and (v) only
- B(i), (ii), (iii) and (v) only
- C(i) and (ii) only
- D(i), (ii), (iv) and (v) only
Show answer & explanation
Answer
A. (i), (ii) and (v) only
Explanation
Answer: (i), (ii) and (v) only. Daniel's outstanding loan makes this a second loan, and their average age pushes the tenure past 65.(i) True. ABSD follows the buyer with the highest profile; an SC buying a second residential property pays 20%.(ii) True. 20% x $2,400,000 = $480,000.(v) True. At least 25% must be paid in cash, and TDSR is 55%.Watch out: A loan outstanding in either joint borrower's name counts against both.Rule: For joint borrowers, a loan outstanding in either name counts, and the age test uses their income-weighted average age. A second loan is capped at 45%, or 25% if the tenure exceeds 30 years or runs past 65.Source: IRAS, ABSD from 27 Apr 2023; MAS Notice 632, para 2(ac); MAS, LTV from 6 Jul 2018; MAS, TDSR from 16 Dec 2021
Why the other options are wrong
- (iii) False. Daniel's loan makes this a second loan; Serene's clean record does not lift the tier.
- (iv) False. At an average age of 44 the loan ends at 69, past 65, so the cap falls to 25%.
Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR
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