DBS pilots financing solution for seniors with private properties

This will allow them to borrow against their property to raise their retirement income.

DBS Bank piloted its “market-first” financing solution that allows Singaporean senior citizens owning private property to borrow against their fully-paid residential property to increase their retirement sums.

The DBS Home Equity Income Loan (DBS EIL) is offered to individuals aged 65 to 79 to borrow against their private property to increase their central provident fund (CPF) to be used for their CPF Lifelong Income For The Elderly.

“DBS EIL was introduced as an option to help seniors unlock the value of their homes safely, and we adopted a collaborative approach to come up with this solution. Unlike other property decumulation loans, DBS EIL enables borrowers to receive guaranteed monthly payouts for the rest of their life, something that would not have been possible without the existence of the CPF LIFE scheme,” Shee Tse Koon, DBS Singapore Country head, said.

Key features of the solution include a loan period of up to 30 years until the customer or youngest borrower in the case of a joint loan reaches 95 years old and a fixed interest rate of 2.88% per annum throughout the loan period.

There are also no monthly loan repayments, with the loan amount and accrued interest payable only at loan maturity; and the long loan period allows the customer to retain the flexibility to sell their property anytime and repay the loan without a penalty fee.

DBS also said that the maximum amount that can be borrowed is the amount required to top up the current CPF Enhancement Retirement Sum, and the borrowers are required to have a Lasting Power of Attorney.

Borrowers will also not be required to make any payment to reduce their outstanding loan if there is no event that causes early termination of the loan if the value of the property declines during the loan period.

The bank will commit to not repossess the property until all other mutually acceptable options with the borrower or their estate are exhausted if there is an early termination of the loan or if borrowers outlive the loan.