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Dealings with Interests in Land - Part 1 (Trust (Created by.. (By Express…
Dealings with Interests in Land - Part 1
Mortgage
Types
Legal Mortgage
: a registered transfer of legal ownership
Equitable Mortgage
: A simple deposit of title deeds + no transfer of ownership
Rights
... of the Mortgagee (Lender)
Right of Possession
Right to Insure
Right consolidate
Right to foreclose - creditor's rights over property
... Rights of the Mortgagor (Borrower)
Right to Sell Property
Right to Inspect Title Deeds
Right to Redemption
Right to compel transfer of Mortgage
Right to enjoyment of Property
Note keywords: Redemption penalty + Lock-in period // [min. 2 years] + 3 months notice
Essential Terms
Types of Housing Loans
Term Loan
: Over a period of time
Overdraft
: Revolving loan allows use of money as and when required, repayment is made when funds are available. Loan facility may be recalled by bank anytime
Bridging Loan
: Short-term loan to bridge payment for another house. Max. is 6 months
Mortgage
Note: Capacity to contract
21 years of age
Sound mind
Not bankrupt
CPF Laws Relating to the Disposal of Private Properties
1 September 2002
Before: 1) CPF 2) Bank
On and After: 1) Bank 2) CPF - partial waiver
Reversal of CPF Board's First Priority
Mortgage 2
Floating v. Fixed-Rate
Fixed Rate Packages
Variable Rate Packages
SIBOR - Singapore Interbank Offer Rates + Spread
SOR - SWAP Offer Rates - volatile
Application Procedures and Considerations prior Approval
Credit assessment checks that you will be subject to upon request for loan
Proof of regular income
Credit Bureau checks
Note: Mortgage Service Ratio (
MSR
) - 30%
TDSR
New restrictions w.e.f.
29th June 2013
Use Income-Weighted Average Age to determine Loan Tenure
Haircut of 30% for all variable income
standardization of TDSR
: 60% of income can go toward servicing home loan. Note:
Insurance/investment
policy premiums not considered debts
Borrowers to be Mortgagors/ Guarantors to be Joint-Borrowers
Raising the interest rate benchmark for stress testing
3.5%
for Residential &
4.5%
for Commercial Loans
TDSR Rules on Refinancing Fine-tuned
w.e.f.
1st September 2016
Refinancing of
owner-occupied housing
loans: Exempted from 60% rule regardless of when he bought the property
Refinancing of
investment property loans
:
Does TDSR/ MSR limit apply? Yes except when borrower...
commits, at the point of refinancing, to debt reduction plan with his financial Institution (FI) compromising a repayment of at least 3 % if the outstanding balance over a period <3 years and
fulfil's FI's credit assessment
Approval-In Principle
Gift
during Donor's lifetime
is valid and irrevocable
However...
If the Grantor dies within 5 years from the date inserted in the Deed of Gift, estate duty will be attracted on the whole of the property as if it is part of Grantor's estate (s. 8, Estate Duty Act Cap.97)
Donor > Donee
(5 years window period for bank loan)>
Buyer
Grantor becomes bankrupt 5 years from the Deed of Gift > instrument voidable at the option of the Official Assignee
Trust
Trust is a legal arrangement
Trustor (Settlor) - Trustee - Beneficiary
Trustees Act limits the no. of trustees for land to 4
Beneficial interest under a trust for land must be evidenced in writing (s.7 and 9, Statue of Frauds
Created by..
By Express Declaration
Implied by Law - implied or resulting trust (
resalire
)
By Will - Testamentary Trust vs Constructive Trust (Issued by Court)
Requirements..
A vesting of the land in the trustee
The presence of '3 certainties'
Intention to create
Subject matter of the trust
Beneficiaries of the trust
There must be a declaration of trust
It is illegal for any Singaporean to hold in trust a landed residential property for the benefit of a foreigner. Such will be null and void