Getting a Mortgage Redemption in Singapore

What is Mortgage Redemption?

When you mortgage your asset to a mortgagee (typically a bank), the ownership of the asset is transferred over to the mortgagee as a form of security for a loan. However, you have a right to redeem this mortgage, which entitles you to call for the re-transfer of your asset when the secured debt is satisfied. The process is known as mortgage redemption.

Getting a Mortgage Redemption

For housing loans from HDB, the process is simpler as HDB will handle some of the communication with the CPF Board for you (assuming you are planning to use CPF funds for the redemption). Otherwise, a law firm is usually appointed to carry out the mortgage redemption. The appointed law firm will liaise with the mortgagee (bank or finance companies) on the redemption or discharge of the mortgage and prepare the relevant documentation and the transfer of title deed.

In Singapore, the government allows us to use Central Providence Fund (“CPF”) savings for partial/full repayment of housing loan.

When you register for a CPF Charge, CPF Board will approve your use of CPF funds for redemption and discharge of the existing mortgage. CPF Charge is the amount withdrawn from CPF savings used to pay for property. Most Singaporeans have CPF Charges as they use CPF funds to pay for their homes. They are required to return the CPF Charge amount upon a property sale.

Alternatively, you can discharge the mortgage without using CPF moneys for redemption. If you have the funds to do so, you can choose to redeem your mortgage in cash with the help of a financier.

Process for Mortgage Redemption

If you are using CPF, the following are three steps to help you.

1. Seek approval from your financier and ensure you have sufficient CPF Ordinary Account savings for the repayment, subject to the housing limits. There are housing limits on the amount of CPF savings you can use. It depends on whether the property is a new or resale flat and whether you are financing your property via a HDB concessionary loan or bank loan. Based on these factors, either a valuation limit or a withdrawal limit (the maximum amount of CPF you can use for the flat) will apply.
2. Engage a lawyer to discharge the mortgage on your private property.
3. Instruct your lawyer to liaise with the Board on the use of your CPF for the full redemption and cessation of the monthly deduction from your CPF account to service the housing loan. Alternatively, you may submit an application online on SingPass via My Request – Property. The application will be processed within 5 working days.

The lawyer handles the conveyancing process, in addition to any negotiations between you and the mortgagee. Conveyancing refers to the legal process of transferring title from the mortgagee to you and involves the transfer of title deed.

This could potentially become a complex process and the exact procedure also varies depending on whether the property in question is a landed property, HDB flat or condominium. It would thus be wise to pick a lawyer with experience in conveyancing and can help you speed up this process.

Each bank also has different procedures to follow for mortgage redemption and these can be found on their websites.

For example, POSB Singapore requires you complete and submit a form on their website 3 months before the intended redemption. The bank will then release its charges over your property and return the title deed and other security documents back to you.