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Thread: Bank may ask you to pay off some of the outstanding loan

  1. #1
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    Default Bank may ask you to pay off some of the outstanding loan

    Read about this bank request loan pay off at a gov website, if value of your property fall and the original loan to value ratio is exceeded.

    I had brought an OCR private condo at 2011, now I have just checked it's bank valuation and shockingly found out it has dropped about 10%, my bank surely knew about it too. So will the bank ask me to pay off 10%? If so, many owners will be hit badly if this happen. When will they request me to pay off? How much do I need to prepare for such pay off?

    Then what about CCR properties, had dropped a lot more, some cases like 20%, 30%. Will the bank request these owners to pay fully in cash? 30% cash look like a lot if it really happen. Anybody can share if such things happened before?

    The website says - Also note that your lender may ask you to pay off some of the outstanding loan should the value of your property fall and the original loan to value ratio is exceeded. You may have to be prepared to dip into your savings for this purpose.
    http://www.moneysense.gov.sg/life-ev...ng-a-home.aspx

  2. #2
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    Quote Originally Posted by rsrunner123 View Post
    Read about this bank request loan pay off at a gov website, if value of your property fall and the original loan to value ratio is exceeded.

    I had brought an OCR private condo at 2011, now I have just checked it's bank valuation and shockingly found out it has dropped about 10%, my bank surely knew about it too. So will the bank ask me to pay off 10%? If so, many owners will be hit badly if this happen. When will they request me to pay off? How much do I need to prepare for such pay off?

    Then what about CCR properties, had dropped a lot more, some cases like 20%, 30%. Will the bank request these owners to pay fully in cash? 30% cash look like a lot if it really happen. Anybody can share if such things happened before?

    The website says - Also note that your lender may ask you to pay off some of the outstanding loan should the value of your property fall and the original loan to value ratio is exceeded. You may have to be prepared to dip into your savings for this purpose.
    http://www.moneysense.gov.sg/life-ev...ng-a-home.aspx
    If you are the Bank, what will you do.

    How do Bank made money when they start recalling loan. The more loan they issue the more they made.

    When you know Bank print money, MAS control money supply you will know what will Bank do.

    Still don't know, spend 4 hours on this video.

  3. #3
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    Quote Originally Posted by rsrunner123 View Post
    Read about this bank request loan pay off at a gov website, if value of your property fall and the original loan to value ratio is exceeded.

    I had brought an OCR private condo at 2011, now I have just checked it's bank valuation and shockingly found out it has dropped about 10%, my bank surely knew about it too. So will the bank ask me to pay off 10%? If so, many owners will be hit badly if this happen. When will they request me to pay off? How much do I need to prepare for such pay off?

    Then what about CCR properties, had dropped a lot more, some cases like 20%, 30%. Will the bank request these owners to pay fully in cash? 30% cash look like a lot if it really happen. Anybody can share if such things happened before?

    The website says - Also note that your lender may ask you to pay off some of the outstanding loan should the value of your property fall and the original loan to value ratio is exceeded. You may have to be prepared to dip into your savings for this purpose.
    http://www.moneysense.gov.sg/life-ev...ng-a-home.aspx
    Your reason to be caution is not invalid. Banks will not ask you to top up the difference if you are able to diligently pay your monthly installments. You should make sure that you pay on time and never miss any payment.

    However, if there is a major crisis or a prolong recession, banks may decide to ask clients to top up to shore up their own balance sheets. This happen many times in history and you should always be prepared to have the cash to top up. However, if you borrow only say 60% of LTV, you are quite safe since the valuation will still meets the bank's stress test.

  4. #4
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    Good answer amber.

  5. #5
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    I took a maximum LTV (loan to Valuation ratio) 80% like many others who believed interest rate is low. Make good use of low rate.

    Did a quick check and learnt that this knew as On-Margin Call. Some sources said during a sustained property down-cycle, look similar to now, and drops (20% or more) in property market values, this On-Margin Calls are be expected. Usually owners of luxury properties that suffer the most price volatility has higher chance receiving On-margin call, given the recent news of losses sustained by home sellers in Sentosa Cove of as high as 50. Properties most at risk are those in the high-end luxury segment where prices were inflated during the up-cycle.

    I don't have good confident that banks are so generous loaning out money easily, without calculating the risk exposed, all banks are going after money, the banks can force to impose penalties on the homeowners, this could include repossessing and offloading the properties.

    To be at the safe side, keeping a saving for margin call is good, just in case I am the unlucky one of few property owners faced with a margin call.

  6. #6
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    Quote Originally Posted by rsrunner123 View Post
    I took a maximum LTV (loan to Valuation ratio) 80% like many others who believed interest rate is low. Make good use of low rate.

    Did a quick check and learnt that this knew as On-Margin Call. Some sources said during a sustained property down-cycle, look similar to now, and drops (20% or more) in property market values, this On-Margin Calls are be expected. Usually owners of luxury properties that suffer the most price volatility has higher chance receiving On-margin call, given the recent news of losses sustained by home sellers in Sentosa Cove of as high as 50. Properties most at risk are those in the high-end luxury segment where prices were inflated during the up-cycle.

    I don't have good confident that banks are so generous loaning out money easily, without calculating the risk exposed, all banks are going after money, the banks can force to impose penalties on the homeowners, this could include repossessing and offloading the properties.

    To be at the safe side, keeping a saving for margin call is good, just in case I am the unlucky one of few property owners faced with a margin call.
    indeed. ccr price correction has been because of TDSR refinancing restrictions and fear/actual margin call threats. it has been ongoing for years and still ongoing but too a lesser degree now than the initial shock in 2014. i would be surprised that any units in OCR would be hit with margin call since there is a 20% buffer and prices should not have fallen > 20%.

    in any case, keeping savings for margin call is wise and a good buffer to have in current times.

  7. #7
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    Quote Originally Posted by rsrunner123 View Post
    I took a maximum LTV (loan to Valuation ratio) 80% like many others who believed interest rate is low. Make good use of low rate.

    Did a quick check and learnt that this knew as On-Margin Call. Some sources said during a sustained property down-cycle, look similar to now, and drops (20% or more) in property market values, this On-Margin Calls are be expected. Usually owners of luxury properties that suffer the most price volatility has higher chance receiving On-margin call, given the recent news of losses sustained by home sellers in Sentosa Cove of as high as 50. Properties most at risk are those in the high-end luxury segment where prices were inflated during the up-cycle.

    I don't have good confident that banks are so generous loaning out money easily, without calculating the risk exposed, all banks are going after money, the banks can force to impose penalties on the homeowners, this could include repossessing and offloading the properties.

    To be at the safe side, keeping a saving for margin call is good, just in case I am the unlucky one of few property owners faced with a margin call.
    What you are doing is correct.

    If I were you, I will only take up 80% LTV if my entry price is low. However, If my entry price is high, I will take up at most 70% LTV.

    There are already many bank's sales in RCR and OCR and we should be seeing more of such sales as the job market is weakening going forward.

    If you are stuck with a property with high LTV, the right thing to do now is to save and keep more cash.

  8. #8
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    Quote Originally Posted by bargain hunter View Post
    indeed. ccr price correction has been because of TDSR refinancing restrictions and fear/actual margin call threats. it has been ongoing for years and still ongoing but too a lesser degree now than the initial shock in 2014. i would be surprised that any units in OCR would be hit with margin call since there is a 20% buffer and prices should not have fallen > 20%.

    in any case, keeping savings for margin call is wise and a good buffer to have in current times.
    Well, I think I am quite safe. I wasn't heavily invested in properties, also didn't buy many prime areas properties during the up-cycle.

  9. #9
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