RES exam question on Financing: the refinancing
Mr Kang, a Singapore Citizen, wants to move the loan on the private condominium he lives in from Bank A to Bank B. It is his only housing loan. His salesperson makes four statements about the refinancing. Which is/are correct? (i) Since Bank B is granting a new loan, it is subject to the 55% Total Debt Servicing Ratio. (ii) Since refinancing creates a new mortgage, the Seller's Stamp Duty holding period restarts from the refinancing date. (iii) If the Bank A loan is still in its lock-in period, redeeming it may attract a prepayment penalty. (iv) Since it is his only housing loan, Bank B may lend no more than 75% of the property's value.
- A(iii) only
- B(i) and (iii) only
- C(iii) and (iv) only
- D(i), (iii) and (iv) only
Show answer & explanation
Answer
A. (iii) only
Explanation
Answer: (iii) only. Refinancing the home he lives in escapes both TDSR and LTV and leaves the SSD clock alone; only the prepayment penalty point holds.(iii) True. A loan redeemed within its lock-in may attract the prepayment penalty in the loan contract.Watch out: A refinancing is a new loan, but that does not bring in the rules for loans to buy property.Rule: Refinancing an owner-occupied home loan is exempt from TDSR and has no LTV limit, and Seller's Stamp Duty still runs from purchase. Redeeming a loan within its lock-in may cost the contract's prepayment penalty.Source: MAS, refinancing rules for housing loans, as at Oct 2026; IRAS, Seller's Stamp Duty
Why the other options are wrong
- (i) False. Bank B is granting a new loan, but it refinances the home he lives in. MAS exempts that refinancing from the 55% Total Debt Servicing Ratio.
- (ii) False. Seller's Stamp Duty runs from the date he bought the property. A new mortgage does not restart the holding period.
- (iv) False. MAS applies no loan-to-value limit to refinancing an owner-occupied home. The 75% tier governs loans to buy property.
Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR
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