Understanding Loan-to-Value (LTV) Limits in Singapore – What Every Property Buyer Needs to Know

Introduction

When buying a property in Singapore, one of the most important financial terms you will encounter is the Loan-to-Value (LTV) ratio. It determines how much you can borrow from a bank or financial institution based on the property’s value, and directly impacts how much cash or CPF you need to pay upfront.

Many property buyers in Singapore, especially first-time homeowners, are unaware of how LTV limits work, how they vary based on your loan history and financial standing, and how they influence your overall housing affordability. Not understanding LTV rules can lead to surprises during your mortgage application—like being offered a smaller loan than expected or having to fork out a higher downpayment.

In this article, we will explain what LTV is, how it’s calculated in Singapore, the current MAS guidelines, and how to structure your finances to optimise your borrowing. We’ll also explore how mortgage brokers like https://mortgageloanbroker.sg/ can guide you through the complexities of securing a mortgage within the LTV framework.

What is the Loan-to-Value (LTV) Ratio?

The Loan-to-Value (LTV) ratio refers to the maximum percentage of a property’s value that a financial institution is allowed to lend to you. In simpler terms, it is the portion of the property price that can be financed through a loan.

Formula:
LTV = (Loan Amount ÷ Property Value) × 100%

For example, if you are buying a property valued at $1,000,000 and your LTV is 75%, you can borrow up to $750,000. The remaining $250,000 must be covered through cash and/or CPF.

Why LTV Matters

The LTV ratio affects:

• Your downpayment amount

• How much cash you must prepare upfront

• How large your monthly mortgage instalments will be

• Your ability to invest in additional properties

As LTV determines how much you can borrow, it plays a critical role in shaping your affordability and purchase decisions.

MAS Guidelines on LTV Limits (As of Current Regulations)

The Monetary Authority of Singapore (MAS) imposes LTV limits based on:

1. Number of housing loans you already have

2. Loan tenure

3. Age of the borrower

Here’s a breakdown of current LTV limits:

Note: These limits apply only to bank loans. HDB loans have different rules (up to 80% LTV, with at least 20% downpayment).

How Age and Tenure Affect LTV

Your loan tenure and borrower age are additional factors affecting your maximum LTV.

• If the loan tenure exceeds 30 years, or

• If the loan period goes beyond age 65,

Then the LTV limit may be reduced further (for example, 55% or 25%), regardless of your loan history.

Banks will calculate the income-weighted average age if there are multiple borrowers.

How Property Valuation Affects LTV

LTV is calculated based on the lower of:

• Purchase price

• Official bank valuation of the property

If you buy a property above market valuation, the difference must be paid fully in cash, not CPF.

Example:

• Purchase price: $1,000,000

• Bank valuation: $950,000

• LTV (75%): $712,500 (75% of $950,000)

• Cash to cover valuation shortfall: $50,000 (difference between price and valuation)

LTV for HDB Loans

If you’re applying for an HDB loan (instead of a bank loan), the LTV limit is up to 80%, but you must meet additional HDB eligibility conditions, including:

• Buyer must be a Singapore citizen

• Income ceiling must be within limits

• Must not own or have recently disposed of private property

• Cannot have more than two HDB loans

The remaining 20% can be paid using CPF or cash. No minimum cash component is required for HDB loans.

Minimum Cash Downpayment Requirements

One of the most important parts of the LTV rules is the minimum cash downpayment:

• For a first housing loan, 5% must be paid in cash

• For second and subsequent housing loans, 25% must be in cash

CPF can be used only for the portion that exceeds the minimum cash requirement, and only up to the allowed LTV cap.

LTV vs TDSR: What’s the Difference?

While LTV caps how much you can borrow based on the property’s value, the Total Debt Servicing Ratio (TDSR) limits how much you can borrow based on your monthly income and existing debt obligations.

In other words:

• LTV = based on property value

• TDSR = based on your ability to repay

To secure your desired loan amount, you must qualify under both LTV and TDSR simultaneously.

LTV and Bridging Loans

For buyers who need to sell their current property to fund the new one, bridging loans are often used. However, bridging loans may affect your LTV calculation if not managed properly, as they are considered part of your overall housing loan exposure.

Working with an experienced mortgage broker can help ensure that your bridging and primary loans are structured in a way that maximises your LTV eligibility.

Strategies to Maximise Your LTV Limit

1. Clear Existing Loans First

   • Selling or fully paying off another property can restore your eligibility for the full 75% LTV.

2. Shorten Loan Tenure

   • Keep the loan tenure within 30 years and ensure it doesn’t stretch beyond age 65 to avoid stricter LTV caps.

3. Add a Younger Co-Borrower

   • Lower the income-weighted average age to qualify for higher LTV limits.

4. Improve Your TDSR

   • Reduce other debts (e.g., car loans, credit card balances) to qualify for a larger loan.

5. Use a Mortgage Broker

   • A broker like https://mortgageloanbroker.sg/ can help restructure your finances and recommend banks more flexible with their LTV interpretations.

How Mortgage Brokers Help with LTV Planning

Mortgage loan brokers are valuable partners in navigating the LTV rules. They can:

• Help you calculate your eligible LTV across different banks

• Find lenders with more favourable LTV interpretations for unique situations

• Recommend ways to optimise CPF, cash, and bridging structures

• Guide you in selecting the most suitable loan package for your borrowing profile

• Help you prepare documentation for valuation appeals (if needed)

Because brokers are paid by banks, they offer these services at no cost to the borrower.

Mistakes to Avoid When Dealing with LTV

1. Assuming Valuation Equals Purchase Price

   • Always check the bank’s valuation. Paying above it means more cash outlay.

2. Forgetting About Loan Tenure Impact

   • A longer loan tenure may actually reduce your LTV eligibility.

3. Not Preparing Enough Cash

   • Especially for second or third loans where the cash component rises to 25%.

4. Misunderstanding CPF Usage

   • CPF cannot be used for the minimum cash downpayment or valuation shortfalls.

5. Applying to One Bank Only

   • Each bank may have slightly different valuation practices. Get comparisons through a broker.

FAQs About LTV in Singapore

Q: Can I appeal if the bank’s property valuation is too low?
A: Yes. You can submit comparative market reports or request a revaluation, but banks rarely reverse valuations unless evidence is strong.

Q: How is LTV affected if I am buying jointly with someone who has another housing loan?
A: The lowest LTV across all co-borrowers applies. If one borrower has an existing loan, the maximum LTV may be capped at 45% or 35%.

Q: Can I borrow more than the LTV if I have enough income?
A: No. The LTV is a regulatory cap. You cannot exceed it regardless of your income.

Conclusion

Understanding Loan-to-Value (LTV) limits is essential for any property buyer in Singapore. These rules govern how much you can borrow, how much you need to pay in cash or CPF, and your overall affordability. Ignoring or misunderstanding LTV restrictions can result in costly surprises, loan rejections, or lost deposits.

Whether you’re buying your first home, upgrading to a private condo, or refinancing an existing mortgage, working with a professional mortgage loan broker like https://mortgageloanbroker.sg/ ensures that you navigate the LTV framework with clarity and confidence.

The right understanding of LTV can be the difference between a smooth property purchase and a financial headache. Plan wisely, borrow responsibly, and let the professionals guide you through one of life’s biggest investments.