Last year, recognising the severe effects of the COVID-19 pandemic on the economy and wages, the Monetary Authory of Singapore (MAS) came up with several support measures, including mortgage repayment relief measures. On 5 October 2020, MAS extended the support measures into 2021, since the long-term effects of the pandemic are still being felt and cashflow pressures may continue into the new year. Here’s what you need to know about the MAS support measures.

1. You can request to make reduced monthly repayments of 60%

Unlike last year where you could defer your mortgage repayment entirely, MAS is now saying that you should try to pay at least 60% of your monthly instalment. This is because further postponement increases your overall debt, which is what MAS wants to avoid.

2. You can request reduced monthly repayments for up to 9 months

No matter when your application for reduced monthly repayments is approved, it can only be up to 9 months. Furthermore, it cannot be extended beyond 31 December 2021. This means that if you want to get the full 9 months, you should apply as soon as possible.

3. The 60% repayment will cover your interest and partial principal payments

Again, this is slightly different from what was allowed last year, where you had the option of repaying only your interest and deferring the principal amount, or deferring both so you pay nothing. This time, you are repaying both interest AND a portion of the principal.

Let’s assume you have a $500,000 outstanding loan, with a 20-year tenure, at an interest rate of 2%.

Before this, you would be paying $2,530 a month – $834 as interest and $1,696 as principal repayment.

During the next 9 months, you would be paying 60% of your usual monthly repayment of $2,530 or $1,518.

Of that amount, you would be paying $834 as interest, with the remaining $684 paying of your principal and reducing your loan amount.

4. These new relief measures are available to all

Regardless of whether you applied for the repayment deferment last year, you can apply for these reduced repayment plans in 2021. You can also apply for them if you have taken a commercial or industrial property loan, or if you are paying off an mortgage equity withdrawal loan.

5. This is not a way to save money on your home loan

As with last year’s deferred mortgage repayment relief measures, these are not opportunities to save money on your home loan. They are meant to help those in need manage their cashflow in the short term. Taking up these measures will cost you more in the long-term,