How To Manage Your Property & Home Loans In A Divorce?

Ever since Singapore’s Minister of National Development lifted the 3-year time-bar policy for divorced parents to buy subsidised flats in 2018, divorcees have been able to purchase a property each, as long as they meet the eligibility requirements by HDB or Urban Redevelopment Authority (URA).

If you’re one of them and going through a divorce, making plans on managing your property and home loans can seem quite a daunting task, here are some important factors to consider before jumping into it.

5 Key Factors To Consider

These five key factors are essential for achieving a fair and legal settlement, ensuring financial security for both you and your spouse, and navigating the specific legal and regulatory aspects of property ownership in Singapore.

1. Type of divorce

Uncontested Divorce

In this scenario, both individuals consent to the divorce terms, leading to a process that's typically quicker, more private, and less expensive. They reach a mutual agreement on dividing assets, including arrangements for selling property. Nevertheless, the ultimate decision and fairness of asset division are still subject to the court's final ruling.

Contested Divorce

When disagreements occur, this type of divorce tends to be lengthier and more exposed to public scrutiny. Each party proposes their own plans for dealing with marital assets and child custody. If they fail to find a common resolution outside of court, the decision about asset division and other matters is left to the court's final judgement.

2. Determining ownership and value of property

Settlement agreements

If the spouses reach a divorce settlement out of court, accurately determining the ownership and value of property is essential for drafting a legally binding agreement. This protects both parties from future disputes about asset division.

Court orders

If the court decides on the division of assets, accurate property valuations are used to calculate fair shares and issue binding orders. This can help prevent future legal challenges based on claims of unfair distribution.

Outstanding home loans

Netting out the mortgage: The true value of the property for division isn't its market price, but its net equity. This means subtracting the remaining mortgage balance from the market value.
Spousal agreement: If both spouses agree, they can choose how to handle the mortgage. One spouse could take full responsibility (and get a larger equity share), or they could split it proportionally.
Court-ordered division: If they can't agree, the court steps in and factors that the court considers include financial stability which encompass determining which spouse can realistically afford the loan payments better, which spouse contributed more to buying or maintaining the property, and the children's needs, if there children are involved, their housing stability is a top priority.

3. Division of the shared property (which was a matrimonial asset)

In Singapore, whether the property is considered a matrimonial asset or not will significantly impact the division process. Generally, assets acquired during the marriage are considered matrimonial assets and are subject to division upon divorce.

However, there are specific exceptions, such as property acquired before the marriage. This property remains the separate property of the spouse who acquired it, unless there is evidence to suggest that it has become matrimonial property through commingling or other means.

Another exception would be gifts or inheritances received by one spouse during the marriage are generally considered their separate property, unless they are intended to be shared with the other spouse.

Non-Muslims

According to Section 112(2) of The Women’s Charter, this legislation provides a framework for the division of matrimonial assets upon divorce, regardless of religion.

It applies a principle of "just and equitable sharing" based on factors such as:

Contributions of each spouse to the acquisition, improvement, and maintenance of the property
Financial needs and responsibilities of each spouse
Age, health, and earning capacity of each spouse
Length of the marriage
Standard of living enjoyed by the family

Common law: In the absence of an agreement between the spouses, the court may also apply common law principles such as "resulting trusts" and "constructive trusts" to determine the equitable ownership of the property.

Muslims

According to the application of Islamic law (Sharia), the division of matrimonial assets for Muslims is governed by the Islamic Religious Council of Singapore (MUIS) based on Sharia principles.:

These principles generally provide for a specific formula for the division of assets, with the husband typically receiving two-thirds and the wife receiving one-third.
However, MUIS may deviate from this formula in certain circumstances, such as if the wife contributed significantly to the acquisition of the property.

5. Purchase of new property as a divorcee

	BTO	Resale	Executive Condominium (EC)	Landed/Private property
Restrictions on flat type/condo/property type	BTOOnly 2-room flexi BTO flats and not 3-, 4-, or 5-room flats under a new framework by HDB, and in locations such as those classified as Standard, Plus and Prime	ResaleNone	Executive Condominium (EC)Only singles who have already bought 2 subsidised housing before (HDB/Resale flat/DBSS/EC) are not allowed to buy an EC	Landed/Private propertyHouseholds with at least one Singapore Citizen flat owner can retain existing HDB after acquiring a new private property
Maximum income ceiling	BTO$7,000 (up to 99-year lease) $14,000 (up to 45-year lease)	ResaleNone	Executive Condominium (EC)$16,000	Landed/Private propertyNone
Property ownership/disposal	BTOTo be disposed at least 30 months before date of application	ResaleTo be disposed within 6 months of purchase	Executive Condominium (EC)To be disposed within 6 months of completion of the EC unit purchase	Landed/Private propertyTo fulfil the MOP of the existing flat owned before buying a private property
Schemes available	BTO Enhanced CPF Housing Grant (EHG) Singles Grant Proximity Housing Grant	Resale Enhanced CPF Housing Grant (EHG) Singles Grant Proximity Housing Grant	Executive Condominium (EC)Joint Singles Scheme (to be at least 35 years old)	Landed/Private propertyJoint-tenancy or Tenancy-in-common

Step 1

Eligibility check

Verify your eligibility under various HDB schemes like the Single Singapore Citizen Scheme (if you are above 35 years old) or the Joint Singles Scheme (if you are applying with another single person). For divorcees within three years of the final judgement, consider the Assistance Scheme for Second-Timers (ASSIST), Parenthood Provisional Housing Scheme (PPHS) or the Public Rental Scheme, if applicable.

Step 2

Completion of divorce

Ensure that your divorce is finalised. You need official documents as proof.

Step 3

Fulfil any Minimum Occupation Period (MOP)

If you previously owned an HDB flat, check if you have met the MOP before applying for a new flat.

Step 4

Take note of required waiting period

Be aware of any waiting period that may apply to you as a divorcee before you can apply for a new HDB flat.

Step 5

Do some finance planning

Assess your financial capability to purchase a new flat. Consider your CPF savings, cash on hand, and eligibility for HDB loans or bank loans. Obtain a bank loan approval-in-principle to know your budget.

Step 6

Application process

Apply for a flat through HDB sales launches, consider resale flats and ECs or even private properties if you can afford it. If eligible, apply for grants like the Singles Grant or Enhanced CPF Housing Grant.

Step 7

Property selection and booking

Select a flat and pay the booking fee if you are successful in your application and remember to research what government grants and schemes you may be eligible for. You can refer to our Guide On Government Housing Schemes For Single Parents to find out more details.

Step 8

Loan and legal procedures

Secure a mortgage loan if necessary and engage a lawyer for legal proceedings.

Step 9

Finalisation

Complete the purchase and sign the lease agreement.

Frequently Asked Questions

Does the type of divorce affect property settlement?

Yes. Depending on whether it is an uncontested divorce or contested divorce, it will affect the length of legal procedures required to finalise the division of property and assets. In an uncontested divorce, both individuals consent to the divorce terms, leading to a process that's typically quicker, more private, and less expensive.

However, when disagreements occur, this type of divorce often ends up as contested divorce and tends to be lengthier and more exposed to public scrutiny.

What happens to any outstanding home loans during a divorce?

There are a few ways to determine a fair or agreeable division of payment of any outstanding home loans in a divorce. It includes netting out the mortgage which means subtracting the remaining mortgage balance from the market value, spousal agreement that involves the remaining home loan to be split proportionally, or court-ordered division whereby the court steps in to come to a final decision for all parties.