Home ownership is a long-term commitment that requires you to set aside a significant sum of money as a deposit and to then make regular mortgage repayments over the tenor of the loan. Before you decide to upgrade to a larger or private property, you should speak to your bank to confirm how much you can borrow to upgrade to a new property.
For example, the maximum home loan quantum that you can borrow from a bank is determined by the Loan-to-Value ratio or LTV. The LTV considers three factors – the loan tenor, your age and the number of outstanding home loans you have. However, there is an exception if you are upgrading from your HDB flat. In such cases, the outstanding home loan on your HDB flat will not affect the maximum home loan amount for the new property as long as you can provide the necessary documentation to show that your flat has been sold. These include a copy of the approval letter by HDB and a copy of the Borrower’s letter of undertaking to complete the sale of the existing HDB flat.
With these documents, your bank can provide you with an In-Principle Approval so that you can have certainty on your eligible loan amount and monthly mortgage repayment amount. This will help guide you to determine the down payment amount needed to purchase a new property and if you can commit to the monthly mortgage repayments.
With UOB Instant Home loan approval, you can get an in principle approval online, in the comfort of your home within minutes.