When Creditis eased, Banksdecides to relax lending for housing loans.
MARY and JOHN, by maxing out their home loan max loan quantum limit can borrow $947k. And their other friend Mr. Tan pays for the downpayment.
The loan is assessedbased on 2 person’s cash flow and credit standing despiteMr. Tan’s involvementas the third person.
Mr. Tan is the mortgagor, but not the borrower.
So the loan is structured based on: -
MARY + JOHN = Based on borrowers
MARY + JOHN + Mr. TAN = Mortgagors
In case it happens if the the borrowers refuse to continue payingon home loan repayment?
Surely if the 2 Singapore property buyers investors (Mary + John) refuses to continue paying, then the bankswill still end up having to deal with three partners of the house. Under tenancy-in-common, the owners are then able to split up their share into the percentage of shares.
So in the case where the borrowers fail to pay, the bank will seize the said apartmentbelonging to all 3 persons.
So all three people becomes liablebecause of that property. In case of any shortfall of funds even after sellingof the property, then even the owner Mr. Tan will be impacted. Mr. Tan’s ownershipin the property is deemed a liability but may not be recorded as such in the credit bureau.
Where are the dangers for mortgages?
If and when the market turns downwards again, banks may yet tighten credit.
So Mr. Tan may be liable or at risks if he himself is exposed to certain other mortgages. And if 1 or more of Mr. Tan’s partners in property investors defaults leading to a CRUNCH time, if a bank force sell on one property, this could lead to the whole condoportfolio unraveling for Mr. Tan.
At www.propertyBuyer.com.sg Singapore mortgage loans and refinance consultants and brokers , we advocate a safety first approach. even though safety first approach has certain drawbacks such as missing out on fast profits in a rising market, we still think it is worth it.
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