RES exam question on Financing: Daniel and Serene are married Singapore Citizens, both aged 44

HardProperty Finance & Financial Calculations · Paper 2

Case study: Daniel and Serene are married Singapore Citizens, both aged 44. Daniel already owns a private condominium in his sole name with an outstanding housing loan. The couple now jointly buy a second private property, a $2,400,000 condominium, as joint owners and joint borrowers on a new bank loan with a 25-year tenure. Which is/are correct? (i) As both buyers are SCs and it is Daniel's second residential property, ABSD at 20% applies to the purchase (ii) That ABSD is $480,000 (iii) Because Daniel has an outstanding housing loan, the LTV on the new loan is 45%, not 75% (iv) Their 25-year tenure running to age 69 does not reduce the LTV further, since the 45% second-loan cap already applies (v) TDSR of 55% applies, and the couple must meet a minimum cash down-payment of 25% of the price

A(i), (ii), (iii) and (v) only
B(i) and (ii) only
C(i), (ii), (iii), (iv) and (v)
D(i), (ii) and (v) only

Show answer & explanation

Answer

D. (i), (ii) and (v) only

Explanation

Issue: which ABSD, LTV and cash rules apply to a married SC couple buying a second property while one has a loan. Rule: ABSD for an SC buying a second residential property is 20% (IRAS, rates from 27 April 2023). A second housing loan has an LTV limit of 45%, falling to 25% if the tenure exceeds 30 years or the loan runs past age 65; for joint borrowers, age is the income-weighted average age. Either way the minimum cash down-payment is 25% (MAS, 'Loan Tenure and Loan-to-Value Limits'). TDSR is capped at 55% for an Option to Purchase granted on or after 16 December 2021 (MAS). Application: ABSD is 20% × $2,400,000 = $480,000, so (i) and (ii) are correct. (v) is correct. Conclusion: (i), (ii) and (v).

Why the other options are wrong

Both are 44, so the weighted average age is 44 whatever their incomes, and a 25-year loan runs to 69, past 65: the LTV is 25%, not 45%, so (iii) and (iv) are wrong.

Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR

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Original study material mapped to the public CEA RES syllabus. Verify any rate-based figures against current IRAS/CPF/MAS rules before relying on them.