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SINGAPORE: People will soon be able to apply for deferment of loan payments for industrial and commercial properties, students, renovation and motor vehicles.
This comes after the Singapore Monetary Authority (MAS) and the local financial sector launched a second aid package on Thursday (April 30) to support those facing financial stress during the COVID-19 pandemic.
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The first was announced about a month ago, allowing people with liquidity problems defer payments of home loans and insurance premiums until the end of the year, among others. It also included support for small and medium-sized enterprises (SMEs).
The recently announced package will extend the scope of aid to people to other types of loan commitments and allow them continuous access to affordable basic banking services, MAS said in its press release.
“As the economic outlook remains challenging and there remains significant uncertainty about the depth and duration of this recession, the latest package of measures will provide more support to those affected,” he said.
READ: People can request to defer payments on real estate loans and insurance premiums in the middle of COVID-19: MORE
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Similar to the first package, these deferrals will not be automatic and people will have to choose their respective banks.
Applicants will not have to show how they have been impacted by COVID-19 to obtain these relief, MAS said. Your credit scores will also not be affected when deferrals are withdrawn.
Applications for most new aid measures will start on May 6.
The central bank said financial institutions will try to process all requests “promptly,” but a high volume of requests “could cause some delays.”
But since defaults and loan tenancy extensions will result in higher general interest costs, MAS has warned people to consider these accrued interest costs carefully and balance this with their need for temporary cash flow relief. .
Delays in loan payments to help facilitate cash flow
Under the second package, people with renewal loans or student loans that are not covered by the Ministry of Education can request that their principal and interest payments be deferred until December 31 of this year.
Interest will accrue only on the principal amount. No interest will be charged on deferred interest payments, MAS said.
Those with motor vehicle loans and rental-purchase agreements can also approach their respective banks or finance companies to discuss appropriate payment plans “on a case-by-case basis.”
Factors to be considered include the individual’s financial situation, the need for the use of a motor vehicle, the current market value of the motor vehicle, and its estimated market value after the deferment period, where applicable.
READ: Insurers begin receiving inquiries about deferred premium payments amid COVID-19 outbreak
Individuals may also choose to extend the tenure of the loan until the appropriate deferment period to facilitate monthly installments when regular payments resume, the press release added.
Additionally, those with commercial and industrial property loans can request to defer their principal payments until December 31.
MAS said lenders will approve the deferment request as long as the individuals’ loan repayments are effective as of February 1, 2020.
Borrowers with home equity retirement loans made after April 6, 2020 may also request to defer payment of principal or payments of principal and interest until the end of this year.
For the last option, interest will accrue only on the amount of deferred capital. No interest will be charged on deferred interest payments, MAS said.
Applications for the above loan types will begin on May 6, with the exception of loan tenure extensions for existing debt consolidation plans (DCPs). These will be open for application starting May 18.
Eligibles can apply to their banks for an extension of up to five years, MAS said, noting that this will help reduce monthly installment payments.
REDUCTION OF DEBT OBLIGATIONS, ACCESS TO BANKING SERVICES
Other recently announced measures include allowing people with investment property loans to apply to refinance or change the price of their loans without being subject to the Total Debt Service Index (TDSR) and the Mortgage Service Index (MSR).
“People can rely on this exemption to refinance or change the price of their loans to reduce their interest costs and debt obligations during this period,” MAS said, while warning people to consider contractual penalties where they could incur if they refinance or change the price of their loans within the lock-in period.
“Any subsequent request to defer mortgage payments for refinanced or repaid loans will be evaluated by your bank or financial company on a case-by-case basis.”
Meanwhile, people whose income is affected by the virus outbreak may request that service fees be charged, which are generally charged when one fails to meet the average daily or monthly minimum balance in their retail bank accounts, exempt until December 31.
Those who have established GIRO arrangements for automated payment deductions, such as insurance premiums and electricity and telephone bills, from their retail bank accounts may also request that bank fees be waived for any failed deductions up to the same period.
“This does not affect any action that beneficiary companies may take for failed payments, including late payment fees, if applicable,” MAS said, noting that these moves are made to ensure access to basic banking services.
BANKS WELCOME NEW SUPPORT MEASURES
OCBC said in a separate press release that it began receiving applications for an auto moratorium, renovation, education and commercial and industrial property loans in March. But since there were no standardized relief measures for these types of loans, each application was processed on a case-by-case basis.
Since then, the local bank has seen an increase in the number of clients seeking a moratorium on their monthly payments, and requests have increased 20 to 70 times in the past month for each of the four types of loans.
All eligible applications have been approved, he said.
OCBC Director of Consumer Financial Services Sunny Quek said: “While the largest number of people seeking help are our home loan borrowers, we expect the number of moratorium requests for other types of loans to continue to increase by the next few weeks, as demand increases. The circuit breaker measures continue to financially impact more people. “
So far, the bank has approved a S $ 4 billion moratorium on loans to individuals, primarily for home loans in Singapore, according to its statement.
At UOB, he has received more than 6,000 mortgage deferment requests and another 1,000 requests to convert outstanding balances of unsecured loans to a new loan at a reduced rate, since the first support package was announced.
About five percent of individuals’ requests have been to defer commercial and industrial loan payments, said Jacquelyn Tan, head of personal financial services in Singapore.
“The second round of measures will provide more options for those facing financial difficulties to work with their bank on a plan to address their individual circumstances,” said Tan.
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