Property loans help business unlock the value of their residential of commercial properties, which could provide additional cash flow for operations or new investments.
How much you can cash out depends on a mixture of 3 key factors, namely, loan-to-valuation (LTV), Outstanding home loan amount and total CPF funds used. Of course you might be subjected to general regulatory limits like total debt servicing ratio (TDSR). Businesses should also show an ability to make good on future monthly debt repayments.
The LTV is calculated by the maximum loan a lender is able to provide over the valuation of your property. Example, a 70% LTV on a $1million property means the maximum loan you can take is $700,000. Therefore the higher the LTV, the more you can cash out. See table's LTVs for different property types.
With the LTV, your total cash out amount is now %LTV of your property minus your outstanding loan and the CPF used to purchase the property (with accrued interest).
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Example:
George has a condo currently valued at $1 million with an outstanding loan of $300,000. He also utilised a total of $100,000 including accrued interest to finance his condo. This means the maximum amount he can cash out is [LTV 70% x S$1,000,000 (market value)] - $300,000 (outstanding loan) - $100,000 (CPF Utilised) = $300,000.
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