SME Loans

Equity loan Singapore, Home Equity loan Singapore

What is a cash out / equity loan?

Equity loans, commonly known as ‘cash out’, refers to obtaining additional funds from a property. For example, if a property is fully paid up, the owner may choose to re-mortgage it with the bank for a loan. The bank will assess the property and grant the loan accordingly.

Equity loans similar terms

Equity term loan, Cash out, Equity loan, mean the same and is used interchangeably, though the correct terminology should be Housing Equity Loan.

Are cash out / equity loans a good idea?

When it comes to comparing interest rates, a home equity loan has advantages over credit cards and other non-secured loans. Interest rates on home equity loans is lower than credit card and other non-secured loan interest rates. Most other types of loans carry no tax advantages.

What are the disadvantages of home equity loans?

One of the main disadvantages of home equity loans is that they require the property to be used as collateral, and the lender can foreclose on the property in case the borrower defaults on the loan. This is a risk to consider, but because there is collateral on the loan, the interest rates are typically lower.

How much cash out can I get from my property?

You can obtain up to 80% of the value of the property. For example, if the value of the property is at S$1,000,000 then the maximum amount of equity loan is S$800,000.

Consider the same scenario with an outstanding property loan of S$300,000 on the property, the maximum amount of equity loan would then be S$500,000*

The minimum loan amount is S$100,000

What should you know before applying for a home equity or term loan?

If the value of your property appreciates greatly, banks will be more agreeable to lending you more money – because your home is used as collateral for a home equity or term loan.

These loans are an easy way to free up cash at a low mortgage interest rate so you can strengthen your investment portfolio, start business, or handle financial emergency.

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