Got this question from Mr Tay and I wish to post to share with my readers:
Q: Hi Mortgage Sense, i intend to get a second property as an investment. However, i already got a existing HDB property and still have an outstanding loan of 120k. I understand that if i buy a private property, my loan available is only 60%.
May i check the following:
1) Can i use my brother in law name to take a loan for a new studio apartment? He do not have any existing property. My plan is to buy a house under my name but loan is under his name. As he do not have any outstanding loan, he is entitled to 80% loan right?
2) Can we both use our CPF to finance?
My email reply to him
1) For some banks, the mortgagor(owner of the property) must be the borrower (owner of the loan). For others, it is not necessary. However, all banks will check who the mortgagors are and if any of the mortgagor has an existing home loan. If any of the mortgagor (not the borrower) has an existing home loan, the home loan available is capped at 60%.
2) CPF can only use if you are the owner of the house. For the senario you illustrated, your brother in law is not the owner, therefore, he cannot use his CPF to finance the house. Since you are the owner of the house, you can use your CPF to finance but take note that if you used your CPF to pay for your HDB before, you need to keep a minimum sum in your CPF ordinary account + special account. You may click here for more details – http://ask-us.cpf.gov.sg/Home/Hybrid/themes/CPF/Uploads/Housing/RPS_Eg_on_2ndPty.pdf