Home Loan Guide – uncompleted property lock in period
For uncompleted project (building under construction – BUC), most Singapore home loan packages state no lock in. Is it true?
Take note that there is a clause in the contract – cancellation clause.
Cancellation clause – the loan that is not disbursed is subjected to a cancellation fee of 1% or 1.5% penalty.
Example: Total loan is 800k
Year 1: 3m Sibor + 0.25% ->10% disbursed
Year 2: 3m Sibor + 0.50% -> 10% + another 15% = 25% disbursed
Year 3: 3m Sibor + 0.75% -> 25% + another 25% = 50% –> client cancel loan
Year 4: 3m Sibor + 1%
Thereafter: 3m Sibor + 1.25%
No lock in
If client decided to cancel his loan at Year 3 where only 400k (50% of 800k) is disbursed, the remaining 50% is subjected to the cancellation clause.
So penalty involved is 1% (or 1.5%) x 400k = $4000 (or $6000).
If the package comes with lock in period, the additional penalty 1.5% will impact on your disbursed amount.
Thus, you total penalty involved are:
400k disbursed amount x 1.5% penalty + 400k not disbursed amount x 1% penalty.
Talk to a Singapore mortgage broker today for your home loan needs.