Essential terms of mortgage and their common variations – Singapore property sale
The essential terms of a mortgage and their common variations usually include the following: Singapore property sale.
- The particulars of the property: The physical property being financed – Singapore property sale.
- Who is the mortgagor: The person borrowing who is the owner with interest in the property
- Who is the mortgagee: This is the lender who is usually a bank or financial institution
- What is the principal loan amount: The original size of the loan
- How long is the loan period: The maximum loan tenure is now 35 years.
- What is the interest payable: This is an interest charge for use of the lender’s money. How interest will be charged – will it be fixed or variable rates. If variable, will it be based on SIBOR (Singapore Inter-Bank Offered Rate) or SOR (Singapore Swap Offer Rate)? Will the interest be calculated based on monthly or yearly rest (reducing balance loan)?
- How much is the monthly instalment: How it is calculated, when it is due and late interest charges.
- The actual valuation of the property.
- Any legal fee subsidies: Legal fee subsidies are provided by some banks as incentive to take loan from them. Banks usually have their own panel of appointed lawyers. If you want to use your own lawyer, please check to ensure that the subsidies on legal fees are not compromised if you do not engage the bank’s appointed lawyers.
- Usage of CPF money: If CPF money is used, the bank will normally have the first charge.
- Who will hold the title: The mortgagee shall keep the original title as security for the loan.
- Provisions to provide remedies in the event of default in repayment by mortgagor, such as:
- Foreclosure or repossession: The mortgagee shall have the right to apply to the Court to foreclose, repossess and sell the property – Singapore property sale.
- Forced sale: The mortgagee shall have the right to apply to the Court to have the power to sell the property to recover the loan.
- To appoint a receiver: The mortgagee shall have the right to appoint a receiver to hold and manage the property to maximize the property’s income or value through maintenance, improvements or appreciation.
- To grant a lease: The mortgagee in possession of the property shall have the right to grant an occupation lease
- Right to redeem mortgage before maturity: The mortgagor shall have the right to recover possession of his property title by repayment of the full loan any time before maturity – Singapore property sale.
- Penalty for early redemption of mortgage (if any): Most mortgagees may impose a penalty (usually 1% to 1.5% of the loan) on mortgagors who fully repay their loans and redeem their mortgages within the first 1 to 2 years.
- Mortgage restrictions: The security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase fire insurance and mortgage insurance, or pay off outstanding debt before selling the property.
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