An equity loan in Singapore refers to a financial product that allows owners to tap into the equity they’ve built up in their commercial or residential property. Equity is the difference between the market value of a property and the outstanding mortgage balance.

Equity loans are used by homeowners to access a portion of the equity of their property to fund various financial needs. Leveraging on property as collateral provides borrowers with a one-time disbursement of funds based on the equity in their property.

The loan amount is determined by the available equity in the property, which is calculated by subtracting the outstanding mortgage balance from the property’s current market value. Banks typically limit the amount that can be borrowed to a certain percentage of the property’s value.

Interest rates can be either fixed or variable and may be based on benchmarks such as the Singapore Overnight Rate Average (SORA).

Loan tenors for equity loans can vary but are often structured as shorter-term loans compared to the original mortgage. Typical tenors range from a few years to 15 years, depending on the borrower’s requirements.