Home Equity Loan & Cash Out Refinancing in Singapore (2025)
Need to borrow a large sum of money without resorting to a personal loan? Well, you might want to consider a home equity loan, which lets you borrow against the value of your private property. It's even possible do this while still paying the mortgage. But is it worth it to "cash out" your home like that? Here's a guide to home equity loans in Singapore.
What is a Home Equity Loan?
Home equity loans come in many guises. Sometimes they are called "cash-out refinancing", "property equity financing", "mortgage equity withdrawal loan" and so on. Whatever they are called, home equity loans are united by one feature: You will be offering your home as collateral. As you pay off your mortgage, you increase equity (ownership) of your home, so a home equity loan simply means that borrowing against your equity in the property. Generally, they also have relatively lower interest rates than other forms of unsecured loans like personal loans or credit cards.
But how does one calculate their available home equity per se? In Singapore, banks typically permit you to borrow up to 75% of your property’s current market value—assuming you meet credit requirements and loan tenure doesn’t exceed MAS limits. For example, if your home is valued at $1 million and your outstanding mortgage is $400,000, your available equity could be up to 75% of your home value minus your outstanding loan—giving you approximately $350,000 in potential cash-out amount.
Thereafter, the funds obtained from the home equity loan can be used for a variety of purposes like home renovations, investments, starting a business, education, or other major expenses according to your needs.
What to Look Out for Home Equity Loans?
While the above sounds great in theory, bear in mind that the following restrictions also apply:
Private property only
Sorry, HDB flat owners. You are not allowed to transform your flat into a sum of cash. Home equity loans are available only for private property and executive condo (must pass 5-year minimum occupancy period), and even so, it's still subject to careful consideration by the bank. Your best bet is a fully paid-up private property, preferably one that has appreciated in value over the years.
Minimum loan amounts
Major local banks like DBS, UOB, and OCBC, along with foreign banks, typically don’t offer home equity loans in small amounts. While most of them impose a minimum loan threshold of $100,000, some exceptions may allow as low as $80,000—but that’s rare given the less favourable terms or higher interest rates. This is largely due to home equity loans involving property valuation and processing, legal fees, and risk involved, making them less practical for smaller sums.
Hence, if the available equity is too small or only a modest amount of cash is needed, a personal loan or business loan might serve as a more cost-effective and practical option, in spite of higher mortgage loan interest rates.
Hence, if the available equity is too small or only a modest amount of cash is needed, a personal loan or business loan might serve as a more cost-effective and practical option, in spite of higher mortgage loan interest rates.
Home equity loan limits
Unfortunately, you can't borrow the entire value of your $2 million condo. First you will have to subtract any outstanding home loan and any CPF* that was used to pay for it. The final Loan-To-Value (LTV) limit amount you can borrow is subject to bank approval, but it won't be 100% of what's left—more like (up to) 75%. Finally, you will still be subject to general regulatory limits like 55% total debt servicing ratio (TDSR). This means that no more than 55% of your gross monthly income can be used to service your debt obligations like property loans.
*Note: CPF cannot be used to finance home equity loans.
*Note: CPF cannot be used to finance home equity loans.
Loan application costs
At this point, we should note that getting a home equity loan is a rather cumbersome and expensive affair. You will need to pay a few thousand dollars for the (compulsory) property valuation upfront. It also takes at least about 2 months to secure a home equity loan, so it doesn’t have the best liquidity and is definitely not for emergency needs.
Should You Get a Home Equity Loan? 3 Key Considerations
Risk Level
Home equity loans have very low interest rates because the bank holds your property as collateral - and very few people are willing to default on their loan when their home is at stake! However, offering your home as collateral is not for everyone. Should you be unable to repay, you could literally lose the roof over your head.
Purpose of Loan
Depending on why you need that sum of money, a home equity loan may or may not make sense. Many borrowers use it to fund new business ventures or investments, while others use the money to pay off existing debt. For other purposes like a renovations or a wedding, you may want to consider a wedding loan or renovation loan instead.
Property Value
A home equity loan may be particularly suitable if your home has appreciated in value. For example, if you bought a $1 million condo unit and it's now S$2 million, you can now unlock some of the capital appreciation without having to sell off the apartment.
Turn Your Bricks Into Bucks!
Want to unlock the hidden value of your home? Explore these home equity loan options to turn your property’s worth into financial flexibility.
Understanding Home Equity Loan Rates
Home equity loan interest rates vary based on a few factors like lender, loan tenure, and borrower profile. They may also fluctuate according to economic conditions and bank policies. Currently, average first-year interest rates for home equity loans on private property are around 3.40% p.a. for floating-rate loans and 2.64% p.a. for fixed-rate loans.
Disclaimer: Interest rates are accurate as of 26 March 2025 and are subject to change without prior notice.
Disclaimer: Interest rates are accurate as of 26 March 2025 and are subject to change without prior notice.
Loan tenures
In Singapore, most banks offer home equity loans with tenures ranging from 10 to 30 years, depending on the borrower’s age and property type. Basically, the longer your loan tenure, the higher the interest rate might be.
Why? A longer loan tenure suggests that the bank will be taking on longer-term risk such as inflation and changing credit conditions. As a result, banks will factor these risks into their loan interest rates. For example, a 20-year loan tenure might carry an interest rate that’s 0.1% to 0.3% higher than a 10-year loan tenure. While this difference might seem small at first, it adds up significantly over time, especially on larger loan amounts.
Why? A longer loan tenure suggests that the bank will be taking on longer-term risk such as inflation and changing credit conditions. As a result, banks will factor these risks into their loan interest rates. For example, a 20-year loan tenure might carry an interest rate that’s 0.1% to 0.3% higher than a 10-year loan tenure. While this difference might seem small at first, it adds up significantly over time, especially on larger loan amounts.
Lender policies
Individual lender policies also play a part influencing your home equity loan’s interest rate. Each bank—regardless of local or foreign—will offer slightly different rates depending on their internal credit risk models.
Aspects they’ll consider include credit score, income stability, loan amount, and private property type (e.g. condo vs landed). These factors help banks determine the risk profile of prospecting borrowers. For instance, a high-income homeowner with a fully paid-up freehold condo may get better home equity loan interest rates than another homeowner with a partially paid leasehold property and variable income.
Aspects they’ll consider include credit score, income stability, loan amount, and private property type (e.g. condo vs landed). These factors help banks determine the risk profile of prospecting borrowers. For instance, a high-income homeowner with a fully paid-up freehold condo may get better home equity loan interest rates than another homeowner with a partially paid leasehold property and variable income.
Loan-to-value (LTV) ratio
The loan-to-value (LTV) ratio for a home equity loan refers to the percentage calculated by dividing the loan amount by your property’s appraised value—in other words, it’s the portion of your home’s value that can be borrowed.
Essentially, the LTV limit is affected by the number of properties you own and/or if you have any existing property loans:
First property: Up to 75% LTV limit
Second property: Up to 45% LTV limit
Third property: Up to 35% LTV limit
As of 2025, the maximum LTV limit is 75% of your property’s current market value—but this only applies if you only own a single property and have no outstanding home loans. If you own a second property, the LTV limit drops to 45% and for your third or more, it drops further to 35%. Basically, the more properties under your name or if you have existing property loans, the lower your LTV cap.
Essentially, the LTV limit is affected by the number of properties you own and/or if you have any existing property loans:
As of 2025, the maximum LTV limit is 75% of your property’s current market value—but this only applies if you only own a single property and have no outstanding home loans. If you own a second property, the LTV limit drops to 45% and for your third or more, it drops further to 35%. Basically, the more properties under your name or if you have existing property loans, the lower your LTV cap.
Nature of home equity loan
Similar to SORA-pegged home loans, home equity loans can come in both floating-rate and fixed-rate forms.
Floating-rate home equity loans are usually the most common option in Singapore where rates are pegged to the bank’s internal board rate (not to be confused with SORA) and are subject to change at their discretion. Loan repayments will increase or decrease accordingly. Hence, the standard loan structure follows a “board rate + spread” (BR + 1.5%) formula*.
Conversely, fixed-rate home equity loans are less common, usually for the first 1 to 3 years. But more importantly, after this fixed period, the loan then reverts to a floating-rate loan. As a result, these types of fixed-rate loans are more useful for borrowers preferring predictability in the early years, especially during high-interest environments like 2025.
In any case, not all banks offer both options. Thus, you should always compare the effective interest rate (EIR) and lock-in clauses before committing to any interest packages—be it floating-rate or fixed-rate.
Floating-rate home equity loans are usually the most common option in Singapore where rates are pegged to the bank’s internal board rate (not to be confused with SORA) and are subject to change at their discretion. Loan repayments will increase or decrease accordingly. Hence, the standard loan structure follows a “board rate + spread” (BR + 1.5%) formula*.
Conversely, fixed-rate home equity loans are less common, usually for the first 1 to 3 years. But more importantly, after this fixed period, the loan then reverts to a floating-rate loan. As a result, these types of fixed-rate loans are more useful for borrowers preferring predictability in the early years, especially during high-interest environments like 2025.
In any case, not all banks offer both options. Thus, you should always compare the effective interest rate (EIR) and lock-in clauses before committing to any interest packages—be it floating-rate or fixed-rate.
*”Board rate” refers to the internal interest rate set by the bank and is not tied to any external benchmarks like SORA. “Spread” refers to the fixed percentage that banks include in addition to the board rate to account for extra costs like risk profile, loan tenure, and lender policies.
Market conditions and economic trends
Interest rates in Singapore are tied to global economic conditions, especially movements by the US Federal Reserve. If Fed rates remain elevated to fight inflation, Singapore banks may raise their interest rates in response. In turn, this affects floating-rate home equity loans the most as it raises the costs of borrowing—even for loans already disbursed. Hence, if you have a lower risk appetite and prefer stability, it’s recommended to lock in a favourable fixed rate instead.
Eligibility Criteria: How to Get a Home Equity Loan in Singapore?
In Singapore, qualifying for a home equity loan involves homeowners possessing substantial equity in their private property, ideally one that has increased in market value. Lenders will conduct a detailed assessment of your financial stability, reviewing factors such as your credit score and income level.
Adhering to Total Debt Servicing Ratio (TDSR) regulations is crucial, as lenders will ensure that your monthly payments do not surpass 55% of your gross income. Additionally, applicants must provide pertinent documents like proof of property ownership and current mortgage balance to facilitate the loan application process.
Adhering to Total Debt Servicing Ratio (TDSR) regulations is crucial, as lenders will ensure that your monthly payments do not surpass 55% of your gross income. Additionally, applicants must provide pertinent documents like proof of property ownership and current mortgage balance to facilitate the loan application process.
Step 1
Assess property’s value
You can obtain your property’s annual valuation (AV) from your bank, licensed independent valuer, or the IRAS website.
If via IRAS, follow these steps:
- Log into myTax Portal using SingPass
- Select “Check Annual Value of Property” ($2.50 fee per search)
- View your property’s AV for up to the past 5 years
Step 2
Review outstanding loans
To determine how much of mortgage remains unpaid:
For HDB Loans
- Log in with your SingPass via HDB website > Select “My Flat” > Select “Purchase Flat” > “Select Financial info”
- Make an appointment at the HDB Branch managing your flat via the e-Appointment system
For bank loans, check with your bank.
Step 3
Calculate available equity
Banks typically allow borrowing up to 75% of your property’s market value, minus outstanding loans (LTV limit).
Step 4
Compare loan interest rates
Different banks offer different interest rates for home equity loans.
Step 5
Submit application
Apply for a home equity loan through us on MoneySmart. Ensure relevant documents such as proof of income and property documents are provided too.
Exploring Alternatives to Home Equity Loans
While home equity loans are a favoured choice, they may not be the right fit for everyone. Depending on your financial objectives, credit criteria, and desired payment flexibility, here are some alternatives to consider:
Personal loans or business loans
Since home equity loan approval takes at least 2 weeks from application, personal loans or business loans are generally more recommended if:
You need urgent cash. Personal loans and business loans are more flexible and offer a higher degree of liquidity.
No risk of losing your home. Since they’re unsecured loans, you won’t run the risk of losing your property if you default the loan.
Smaller loan amounts. If you only require a smaller sum, a personal loan will be more suitable than a home equity loan.
For specific business needs. For more tailored benefits like flexible repayment terms or government grants, business loans will definitely cater better.
Selling property and right-sizing
It goes without saying that selling your property grants you 100% access to its available equity once the mortgage is fully paid off, providing more cash-in-hand without the burden of new debt or monthly repayments.
Meanwhile, if your current property is too large or costly to maintain, downsizing to a smaller or more affordable home can significantly reduce mortgage payments, property taxes, maintenance fees, and utility costs.
Additionally, selling eliminates the risk of foreclosure, as your home is not serving as collateral for a loan.
Meanwhile, if your current property is too large or costly to maintain, downsizing to a smaller or more affordable home can significantly reduce mortgage payments, property taxes, maintenance fees, and utility costs.
Additionally, selling eliminates the risk of foreclosure, as your home is not serving as collateral for a loan.
Your Dream Home is a Loan Away!
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Frequently Asked Questions
Which is better: home equity loan or line of credit?
- A home equity loan is sometimes thought of as an alternative to unsecured loans such as credit cards or personal lines of credit.
A home equity loan has very low interest rates, but you risk losing your home if unable to repay. Meanwhile, a personal line of credit is an unsecured loan, but you’ll face significantly higher interest. What are the drawbacks of a home equity loan?
- The main drawback of a home equity loan is the fact that your property ownership is now held as collateral.
You run the risk of foreclosure—losing your property—if you default on your loan repayments. Plus, with multiple properties, the maximum LTV ratio you qualify for decreases. Thus, using the roof over your head as collateral can be especially risky, as it puts your home on the line. Can I use a home equity loan to buy another house in Singapore?
- A home equity loan can be used to pay off another property’s outstanding loan, but it cannot be used as downpayment for a new property.
Where to get home equity loans?
- Compare the best home equity loans with our home loan comparison page.
Are home equity loans cheaper than mortgages?
- Home equity loans tend to be more expensive than mortgages in Singapore. This is due to their higher interest rates, shorter loan tenures, and higher risk premiums imposed by lenders.
Are home equity loans tax deductible?
- If you take a home equity loan on an investment property, you might be able to get tax deductions on your interest.