| For Existing OCBC Home Loan Customers |
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| For Home Buyers - Answers |
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| 1: | What is a "freehold" property and "leasehold" property? |
| | | Ans: A freehold title means you own the property for an indefinite period. On the other hand, a leasehold title specifies the number of years which you can hold the property, for example, 99 years or 999 years with effect from a certain date. Hence, if you are buying a leasehold property, you should also check the remaining unexpired term. In general, the shorter the unexpired term, the lower the value of the property. The Central Provident Fund (CPF) rulings allow financing only for properties with an unexpired lease terms of at least 60 years. Banks and financial institutions generally follow the same critierion in granting mortgage loans. |
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| 2: | What happens when a leasehold property reaches the end of the lease? |
| | | Ans: From legal point of view, the leasehold property would revert back to the State or reversionary interest owner upon the expiry of the lease term of 99 yrs, 999 yrs, etc. However, the government is currently looking into ways to allow old leasehold apartment/condominium developments to upgrade the existing unexpired lease term which they hope will provide an incentive for old apartment/condominium to be upgraded from their existing old and poorly maintained condition. Such details have not been finalised by the relevant authorities. |
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| 3: | I am buying a property together with my spouse/parent/friend. What are the different ways in which we can co-own the property? |
| | | Ans: i) Joint Tenants
If you and your co-owner hold the property as joint tenants, you must deal with the property jointly. Upon the death of one owner, the deceased owner's interest in the property will automatically vest in the surviving owner, notwithstanding anything contrary stated in the deceased's owner's will.
ii) Tenants-in-Common
If you and your co-owner hold the property as tenants-in-common each of you have a distinct share in the property and you can deal with your share independently of your co-owner. Upon the death of one owner, the deceased owner's share in the property will be distributed in accordance with his will or, if he died without leaving a will, his interest will be distributed in accordance with the prevailing law.
Please note that the above does not apply if you (or both of you, as the case may be) are Muslim. In such a case, the distribution will take place in accordance with the Administration of Muslim Law Act (Cap 3)("AMLA"). The Syariah Court is empowered under AMLA to issue a Certificate of Inheritance setting out who the beneficiaries are and the respective shares they are entitled to under the estate of the deceased Muslim.
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| 4: | When should I appoint a lawyer? |
| | | Ans: If you are purchasing a property under construction directly from a licensed housing developer, you should appoint a lawyer immediately after you have paid the booking fee to the licensed housing developer.
For other cases it is advisable to consult a lawyer before you pay any money at all or sign any contract for the purchase.
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| 5: | What sort of searches will my lawyer conduct? |
| | | Ans: In relation to the pruchase of property, your lawyer will usually conduct a bankruptcy search on the vender(s) and a title search on the subject property. A lawyer acting for a Bank in the mortgage of the property will generally be required to conduct bankruptcy and cause book searches on the mortgagor and the borrower (if different from the mortgagor) in addition to the abovementioned title search.
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| 6: | How are legal fees calculated? When do I have to pay my lawyer? |
| | | Ans: Legal fees for conveyancing transactions are calculated according to the scale prescribed by the First Schedule of the Legal Profession (Solicitors' Remuneration) Order. Statutory rebates are permitted where the different parties appoint the same solicitor to act for them.
Legal fees are payable upon legal completion of sale and purchase of the property.
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| 7: | What sort of documents would I and the Vendor (seller) have to sign in order to effect a sale and purchase of the property? |
| | | Ans: For purchase of completed properties, the parties can either sign a Sale and Purchase Agreement or an Option to Purchase. A deposit of 10% of the purchase price is usually paid upon the signing of the sale and purchase, while you pay 1% of the purchase price in exchange for an Option granted to you and upon the exercise of the Option, you pay 9% of the purchase price.
For uncompleted properties, you will pay a booking fee of 5% of purchase price for an Option to Purchase duly signed by the developers. You will then receive a Sale and Purchase Agreement which has to be returned duly signed within 3 weeks from the date of receipt of the Agreement from the Developers.
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| 8: | Is a verbal offer from the Vendor (seller) binding if there is nothing in writing? |
| | | Ans: Under the Civil Law Act, no action can be brought upon any contract for the sale or of property unless the contract or promise is evidenced in writing and signed by the person to be charged.
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| 9: | Can the Option to Purchase period be valid for more than 2 weeks? |
| | | Ans: Yes, if both the vendor and purchaser agree to the extension.
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| 10: | Can a Vendor (seller) ask for an option fee which is more than 1% of the purchase price? |
| | | Ans: The amount of Option Fee is a matter to be agreed upon among the parties. However the current market practice is for the sellers to ask for 1% of the purchase price as option fee.
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| 11: | I have paid the option fee and received an Option to Purchase. Can I choose not to proceed with the purchase? |
| | | Ans: If you do not exercise the Option within the stipulated time, the Option will lapse and the seller can sell the property to someone else. However in most cases, the Option fee (or part of it, depending on the terms of the Option) will be forfeited by the seller.
In the case of purchase from licensed Housing Developers, 25% of the booking fee paid by you will be forfeited by the developers.
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| 12: | I have exercised the Option to Purchase/signed the Sale & Purchase Agreement for the property. What if I choose not to proceed with the sale? |
| | | Ans: Once you exercise the Option, you would be contractually bound to purchase the property. If you fail to complete the sale, you would have breached your contractual obligations under the contract and be liable to compensate the vendor for damages. If the vendor sells the property at the open market for a purchase price that is lower than what he would have sold to you, you will have to make good the loss he suffered. You will also have to compensate him for all other expenses reasonably incurred as a consequence of your breach.
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| 13: | When will the sale and purchase have to be completed? |
| | | Ans: The completion period is usually fixed between 8-12 weeks following the date on which the Option is exercised or the date of the Sale and Purchase Agreement ( as the case may be). If you require a bank loan or intend to use CPF savings for the purchase, it is not advisable to agree to a completion period of less than 8 weeks.
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| 14: | I expect to be out of the country. Can someone else sign the necessary documents and attend to the completion of the purchase on my behalf? |
| | | Ans: You should appoint an attorney to act for you in your absence. Your lawyer will prepare a Power of Attorney for your execution.
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| 15: | When do I have to pay my stamp duty? |
| | | Ans: Stamp duty on the Mortgage is payable within 14 days from the date of the Mortgage.
i) If you are buying the property directly from the developers and the Temporary Occupation Permit (TOP) to your property has not been issued, the stamp fees on your purchase of the property must be paid within 14 days from the issuance of the TOP or within 14 days from the date of your contract to sell the property, whichever is earlier.
ii) If you are buying a property after the TOP has been issued, then the stamp fees on your purchase must be paid within 14 days from the date of the Transfer (that is, legal completion).
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| For Existing OCBC Home Loan Customers - Answers |
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| 1: | I have taken a home loan with OCBC. Will I be receiving any statement to inform me of my loan balances and payments made? |
| | | Ans: Yes, OCBC provides annual consolidated loan statements to our home loan customers. This statement reflects the total repayments and charges for the full preceding year, as well as the loan balances. For example, in Jan 2009, you will receive an annual consolidated loan statements for the transactions in 2008. This statement is given free of charge for transactions done in the immediate preceding year. Should you require a consolidated statement for transactions done more than 1 year ago, retrieval charges will be involved. |
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| 2: | How can I make lump sum prepayments for my home loan with OCBC? |
| | | Ans: You can download the Partial Prepayment form and the Internet Guide on making prepayment, and complete the form by following the explanatory notes on page 2 of the form. Once completed, you may submit the form to any of our branches. If CPF funds are to be used for the prepayment, you can obtain the applicable CPF Board's forms from their website. You will have to submit the CPF forms directly to CPF Board after receipt of an acknowledgement letter from the Bank on the prepayment notice given. You may also submit an online request to CPF Board. If you would like our Customer Service Officer to advice you further, you can either contact us at 1800 438 6088, or visit any of our branches. Please also refer to your Letter of Offer and the accompanying Terms and Conditions for the detailed terms pertaining to Prepayments as there could be penalties applicable. |
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| 3: | How do I know what is the instalment amount after the prepayment and the effective date of the new instalment? |
| | | Ans: You will receive a system-generated advice informing you on the effective date and amount of the revised instalment after the prepayment has been made.
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| 4: | How do I redeem my OCBC Home Loan, in the event of a sale of my property, or if I decide to fully repay the loan? |
| | | Ans: For loan redemption, we would require a written notice from the law firm which will be acting for you in the redemption as there are legal documentations involved. If you are serving redemption notice on your own, you should also indicate your preferred law firm to act in the redemption, else OCBC will proceed to appoint one of our panel law firm on your behalf. Please also refer to your letter of offer on the terms pertaining to redemptions as there could be penalties or clawbacks applicable.
If you are redeeming the loan due to the sale of your property, you should also update the bank on your new address prior to the completion of loan redemption, so that a copy of the full settlement letter and consolidated loan statement can be sent to you.
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| 5: | Do I have to initiate the renewal of my Fire Insurance? |
| | | Ans: If your fire insurance policy remains with Overseas Assurance Corporation Limited (“OAC”), the policy will be automatically renewed. If the insurance policy is taken up with another insurance company, you will have to renew the policy on your own, and also send an original copy of the renewal notice to OCBC.
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| 6: | How can I reduce/increase the loan tenor of my OCBC Home Loan? |
| | | Ans: If you wish to change the loan tenor, please contact us at 1800 438 6088, or visit any of our branches to submit your request and latest income documents. Please be informed that the request is subject to the Bank’s review and a processing fee is applicable for such changes upon approval.
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| 7: | If my OCBC Home Loan is currently on Interest-Servicing or Progressive Repayment Scheme, how can I change to Full Instalment Scheme? |
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Ans: If you wish to change your repayment plans, please contact us at 1800 438 6088 or visit any of our branches to submit your request. Please be informed that the request is subject to the Bank’s review and a processing fee is applicable for such changes upon approval.
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The information provided herein is intended for general circulation and/or discussion purposes only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.
No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statements, figures, opinion, view or estimate) provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank will not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein.
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