Unlocking your property’s hidden value: A simple guide to home equity loans in Singapore

In Singapore, private property isn’t just a place to live. It’s one of the most powerful wealth-building tools you can own. And if you’ve held your property for a few years, chances are you’ve built up a good amount of equity without even realising it.

A home equity loan—sometimes called a cash-out refinancing—is one of the smartest ways to unlock that value. But many homeowners still get confused about how it works, who qualifies, and how much they can actually borrow. So let’s break this down simply and practically.

What exactly is a home equity loan?

A home equity loan allows you to borrow against the portion of your property that you already own. Think of it as taking the value that’s sitting inside your home and turning it into usable capital.

Because it’s a secured loan—your property is the collateral—the interest rate is generally much more favourable than other financing options. People use it for renovations, business expansion, investments, funding their kids’ education, or simply to restructure their finances more efficiently.

But as I always remind readers: just because you can borrow doesn’t mean you should. It still requires discipline and a clear purpose.

Who is eligible for a home equity loan?

Eligibility in Singapore is pretty straightforward. You must own a private residential property, or an Executive Condominium that has already passed its five-year MOP. HDB flats don’t qualify for cash-out loans.

On top of that, the banks will check your income, credit profile, the amount of CPF you’ve used, and—very importantly—your TDSR.

Even though it’s a home-backed loan, the repayment must still fit within the 55% Total Debt Servicing Ratio. So your existing liabilities and income play a major role in determining how much you’ll ultimately receive.

Source: Reuters

How much can you borrow?

This is where regulations have tightened. Under the latest rules, you can borrow up to 75% of your property’s current market value. But that number isn’t the final figure.

The bank will take 75% of your home’s valuation, then subtract your outstanding loan, and then subtract the CPF you’ve used on the property. Whatever’s left becomes your maximum cash-out amount.

And even then, TDSR caps may reduce the final approved amount. I’ve seen many homeowners assume they can cash out a few hundred thousand, only to realise their TDSR limits them to a smaller figure.

So the rule of thumb is: valuation minus loan minus CPF gives you your ceiling, but TDSR determines the actual room you have to move.

A simple example of a home equity loan

Let’s say your private condo is valued at $2 million today. You still owe $500,000 on the mortgage, and you’ve previously used $300,000 of CPF.

Here’s how the numbers play out:

Seventy-five percent of $2 million gives you $1.5 million. From there, you subtract the $500,000 you still owe, leaving you with $1 million. Then the bank deducts the $300,000 of CPF you used. That leaves you with a maximum of $700,000 you could potentially unlock.

Of course, whether you get the full amount depends on your TDSR, income stability, and bank assessment. But this example gives you a clear sense of how the calculation works.

What about loan tenure?

Home equity loan tenures usually range from 10 to 30 years. The exact number depends on your age, how long you’ve already been servicing your current mortgage, and your bank’s internal guidelines. Most banks follow the MAS rule that a loan must not extend beyond the borrower's 75th birthday.

A longer tenure means a smaller monthly repayment but more interest over time. A shorter one means the opposite. The right choice depends on what you intend to use the funds for and how you want to shape your overall financial plan.

Before we wrap up, if you’re someone who wants to use tools like home equity loans to build real, lasting wealth through property, here’s something that will help you go even further.

I’ve put together a Resale Condo Playbook that breaks down the exact factors smart buyers use to choose the right condo—one that not only fits your lifestyle but also holds its value and appreciates over time.

Frequently Asked Questions

Can I use a home equity loan on my HDB flat?

No. HDBs do not qualify. Only private properties and ECs past their MOP are eligible.

Can I use the CPF portion of my property value when calculating how much I can borrow?

No. Any CPF savings used in purchasing the property must be subtracted when calculating the loanable amount. Banks won’t allow you to borrow against that portion.

Can I use CPF to pay off my home equity loan?

Unfortunately, CPF savings can't be used to pay off an equity loan, unlike home loans. It's important to plan accordingly for this!

Does taking a home equity loan affect my ability to buy another property?

It does. Your overall property debt rises, which increases your TDSR load. This directly affects how much you can borrow for your next purchase.

What fees should I expect?

You’ll need to factor in valuation fees, legal costs and the bank’s processing charges. Most homeowners spend between $3,000 and $4,000, depending on the complexity.

Can I take a home equity loan if I’ve already refinanced before?

Yes, though some banks prefer that your existing mortgage and your equity loan be held with the same institution. Your past refinancing history may limit your options.

Are interest rates lower than those on personal loans?

Generally yes. Because the loan is secured against your home, interest rates tend to be much more competitive.