Aellan Choo Real Estate Services

Understanding Pledging and Unpledging: Financing Real Estate Purchases in Singapore

If you’re looking to purchase a property in Singapore, getting a loan from the bank may be a challenge. Property prices in Singapore are among the highest in the world, and many buyers need to rely on getting a bank loan to be able to afford a property. Fortunately, there are different financing options available, including pledging and unpledging. This is an example on how I helped several local and overseas clients leverage on such solutions to finance their property purchases. 

Pledging and unpledging works when buyers have no income or insufficient income to support their loan application. For example, retirees or self employed individuals who are cash rich can use such solutions to overcome the obstacle of getting banks to grant them a loan. 

In this article, I will explain what pledging and unpledging are, and how they can help buyers finance their real estate purchases in Singapore.

Various Financing Options for Property Purchase in Singapore

Before we dive into pledging and unpledging, let’s first take a look at the different financing options available in Singapore. The most common options are bank loans, HDB loans, and private loans.

Bank loans are the most popular financing option for real estate purchases in Singapore. They are provided by banks and other financial institutions, and typically offer competitive interest rates and repayment periods of up to 30 years.

HDB loans, on the other hand, are only available for HDB flats and are provided by the government. They offer lower interest rates but come with more restrictions. The maximum repayment period for HDB housing loan is up to 25 years.

Finally, private loans are provided by private lenders and typically have higher interest rates and shorter repayment periods. They can be useful for buyers who do not qualify for bank or HDB loans.

HLE loan
HDB Housing Loan (HLE)

What is Pledging?

Pledging is simply depositing an amount in the form of fixed deposit with the bank for 48 months. The amount required is based on how much financing is required. 

Other types of assets may be pledged such as cash deposits, bonds, unit trusts, listed company shares. Any liquid assets that can be drawn on at any time can be considered as well. 

Pledging requires lesser amount than unpledging. Pledging means locking up this amount of funds for at least 48 months.

What is Unpledging?

Unpledging is whereby the intended borrower is able to show the bank an amount during the loan application and when the first loan is being disbursed. 

Unpledging requires to show a much higher amount than pledging, but offers financial flexibility to your funds after the loan is approved.

In summary

In conclusion, pledging and unpledging can be useful financing options for real estate purchases in Singapore. They offer buyers more financial flexibility and higher loan amounts.

Do you really need to pledge or unpledge? Not really because in every consultation, i will assess the financial situation and try to identify what is affecting your TDSR or what is your obstacle to getting a bank loan. For example, one of the most common reasons is outstanding car loan affecting TDSR. I would consult the client and asked if he is able to clear the outstanding loan in order to get a higher loan amount from the bank. 

If you’re considering pledging or unpledging, it’s important to consult with a trusted banker or approach me to determine the best financing option for your specific situation. With careful planning and research, you can make a well-informed decision and secure the financing you need to purchase your dream property in Singapore.

pledging and unpledging


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