New to the world of borrowing? One of the most important things you need to know when it comes to taking on loans is how much you are eligible to borrow from a money lender. In this case, the lender could be traditional banks or licensed money lenders in Singapore.
Just a word of caution: do not borrow money from loan sharks no matter how desperate you may be. There are multiple legal options available if you require a loan to be approved and disbursed quickly.
Despite the name, a loan quantum is simply defined as the amount of money you can borrow from a lender. By extension, the maximum loan quantum refers to the maximum amount of money you can borrow from the lender. On the other hand, ‘loan tenure’ refers to the length of time that you have to repay the loan.
As you might expect, the maximum amount of money that one can borrow varies from person to person and the specific type of loan that they are looking to take up.
Additionally, how much you earn is a huge determining factor when it comes to your loan quantum. The higher your monthly income the more money lenders are willing to loan to you — it really is as simple as that!
And if you have an excellent credit score along with that, expect lower interest rates and other preferential terms for your loan too.
If you don’t already know, driving is incredibly expensive in Singapore. In general, the maximum quantum for a car loan is 60% to 70% of your car’s Open Market Value (OMV).
Here’s a quick reference for the maximum quantum you stand to receive for your car loan:
A motor vehicle with OMV ≤ S$20,000: maximum loan quantum of 70%
A motor vehicle with OMV > S$20,000: maximum loan quantum of 60%
For the uninitiated, a mortgage loan is also known as a home loan or housing loan.
For individuals who own an HDB flat, the maximum amount that you can borrow via the HDB Concessionary Loan is up to 85% of your flat’s value or selling price, whichever is lower.
If you want to take up a bank loan to finance your HDB flat instead, the maximum amount that you can borrow is up to 75% of your flat’s value or selling price, whichever is lower.
For Executive Condominium and private property homeowners, you’ll only be able to take up loans from banks. The maximum amount that you can borrow via a bank’s private home loan is up to 75% of your property’s value or selling price, whichever is lower.
Do keep in mind that home loans are subject to Total Debt Servicing Ratio rules that limit how much you can actually spend on loan repayments every month.
Borrowers in Singapore are not allowed to spend more than 55% of their gross monthly income on loan repayments. This includes things like your monthly home loan repayment, student loan repayment, car loan repayment, personal loan repayment, renovation loan repayment, and even credit card bills.
The maximum loan quantum for a renovation loan is usually capped at 6x your monthly income or S$30,000, whichever is lower. Additionally, this loan must be used solely for your home’s renovation needs. This includes the installation of built-in cabinets, electrical and wiring works, and flooring and tiling.
While banks in Singapore are more than happy to let their wealthy customers borrow up to S$200,000, a safer range that is accessible to most people is 4x their monthly income. Please note that the maximum loan quantum for a bank’s personal loan is subject to their discretion at the end of the day.
Even if you do meet the minimum income requirement for a high maximum loan quantum, the bank might not offer it to you for a variety of reasons.
When it comes to unsecured loans, the maximum loan amount you can obtain from licensed money lenders in Singapore is as follows:
- Up to S$500: If your annual income is less than S$10,000 (Foreigners residing in Singapore);
- Up to S$3,000: If your annual income is between S$10,000 and S$20,000 (Foreigners residing in Singapore);
- Up to S$3,000: If your annual income is less than S$20,000 (Singapore Citizens and Permanent Residents);
- 6x your monthly income: If you earn more than S$20,000 (Singapore Citizens, Permanent Residents, and Foreigners residing in Singapore)
However, if you’re taking on a secured loan instead, these rules above do not apply. You will be able to receive a loan of any amount, but the final amount that is offered is subject to the licensed money lender’s discretion.
If you’re looking to take on a loan, whether it’s a personal or business one, MM Credit is here to help. We have been a licensed money lender ever since we were established in 2013. Simply reach out to us via the Online Loan Form on our homepage and our experienced loan officers will get back to you with a personalised quote.