Nexus Mortgage SG  ·  28 May 2026  ·  8-minute read

Cash-Out Refinance Singapore 2026: Unlock Property Equity

What Cash-Out Refinance Is (and What It Is Not)

Cash-out refinancing — also called an equity term loan or home equity loan — lets you borrow against the appreciated market value of a property you already own. You take the difference between the current valuation and your outstanding loan as cash, structured as a term loan secured on the property.

It is one of the cheapest sources of capital available in Singapore, because the loan is secured against real estate and priced at ordinary mortgage rates (fixed from ~1.4% in 2026) rather than unsecured personal-loan rates (6–10%+). For business owners, investors and renovators, the rate gap is the entire point.

It is not:

• A way to pull HDB equity — HDB flats are excluded.
• A way to convert CPF back into cash — CPF used is deducted from the headroom.
• A route to fund a second residential property while dodging ABSD — that use is restricted.
• Free of TDSR — unless you stay at or below 50% of value.

Eligibility — Why HDB Is Excluded

Only private residential property (condominiums, landed) and Executive Condominiums that have completed their 5-year Minimum Occupation Period qualify for cash-out refinancing. HDB flats are not eligible — full stop.

The reason is policy design: HDB flats are subsidised public housing, and the rules do not permit owners to extract the subsidy-inflated equity as liquid cash. HDB owners seeking liquidity have to look elsewhere — the flat itself cannot be cash-out refinanced regardless of how much it has appreciated. If you own both an HDB and a private property, only the private one can be tapped.

The Maximum Withdrawable Loan (MWL) Formula

Three deductions stand between your property's valuation and the cash you can extract: the LTV cap, your outstanding loan, and CPF used.

The amount of cash you can extract is the Maximum Withdrawable Loan (MWL):

Two adjustments to the 75%:

• 75% LTV applies if you have no other outstanding housing loan on another residential property.
• 45% LTV applies if you have one or more other outstanding housing loans. This sharply reduces the cash you can pull on the second property.

The two deductions after the LTV cap — outstanding loan and CPF used — are where most borrowers' expectations diverge from reality. A property worth S$2M does not yield S$1.5M of cash; it yields S$1.5M minus your existing loan minus every CPF dollar you spent on it.

The CPF Deduction Trap

MAS rules require the CPF Ordinary Account amount used on the property — principal plus accrued interest — to be subtracted from the maximum loan available. CPF funds are designated retirement savings; the government restricts their conversion back into liquid cash through property financing.

This is the trap. A property heavily funded by CPF yields far less cash-out headroom than one funded by cash, even at the same valuation. And because CPF accrued interest compounds at 2.5% per annum monthly, the deduction grows over time — the longer you have held the property using CPF, the smaller your cash-out room becomes. Our CPF accrued interest guide covers the compounding math; the same accrued figure that hits you on sale also caps your cash-out today.

TDSR and the 50% Threshold Exemption

The cash-out increases your total borrowing on the property, so the 55% Total Debt Servicing Ratio is re-tested on the combined loan — at the MAS 4% medium-term stress floor, not today's rate. For asset-rich, income-light borrowers (retirees, business owners with lumpy income), this is often the binding constraint.

One important exemption: if your total borrowing is 50% or less of the property's value, TDSR does not apply. This makes the 50%-of-value line a deliberate planning target. A borrower who would fail TDSR on a 65% cash-out may still extract cash up to the 50% threshold without the income test. The trade-off is a smaller cash amount — but for those who cannot pass TDSR, it is the only route.

Worked Example — S$2M Condo

Inputs

A Singapore Citizen owns a private condo, current valuation S$2,000,000. Outstanding loan S$600,000. CPF Ordinary Account used to date (principal + accrued interest) S$400,000. No other outstanding housing loan.

Computation

The owner extracts S$500,000 in cash at ordinary home-loan pricing (fixed ~1.4% p.a. in 2026) — but must clear the 55% TDSR on the combined S$1.1M loan, requiring roughly S$10,560/month gross income (before existing debts). If income falls short, dropping the cash-out so the total loan is ≤ 50% of value (S$1M total, i.e. S$400K cash-out) removes the TDSR test entirely.

Smart Uses (and What's Off-Limits)

Cash-out proceeds can be used for almost any purpose. Common ones:

• Business capital — cheaper than SME unsecured loans; a frequent use for owner-operators.
• Renovation or A&A works on the same or another property.
• Investment — deploying equity into higher-yielding assets (with the obvious leverage risk).
• Debt consolidation — refinancing high-interest unsecured debt into a secured loan at ~1.4% home-loan pricing.
• Education, medical, or life events.

What is off-limits or restricted:

• Using the cash to fund the down payment on another residential property to sidestep ABSD — banks and IRAS scrutinise this. For the legitimate second-property route, see our decoupling guide.
• Cashing out CPF — structurally impossible, as CPF used is deducted from the MWL.

Commercial Property Cash-Out — A Different (and Often Cheaper) Regime

Everything above governs residential cash-out. Commercial and industrial property sits under a separate regime — and for business owners it is frequently the better deal. The MAS residential LTV caps (75% / 45%) do not apply; there is no CPF deduction (CPF cannot fund commercial property in the first place); and where the facility is taken by the operating company rather than an individual, the personal 55% TDSR gives way to an assessment of business financials. The result is a higher achievable LTV and, for strong borrowers, sharper pricing. For the full picture see our commercial property loan guide.

Live case — S$4M equipment, two routes

A business owner needed S$4 million to fund equipment for a new project. Two financing routes were on the table (client and figures anonymised; rates as quoted in 2026):

The client chose Option 2. The commercial equity term loan drew on a fully-paid asset the business already owned, priced roughly 30–50 bps cheaper in the early years, and — critically — left the owner's private property completely unencumbered as a separate reserve. Because the commercial property carried no CPF history, the full valuation-based headroom was available with nothing to deduct. On a S$5.5M valuation the ~90% ceiling gave close to S$4.95M of room, so the S$4M draw sat at a comfortable ~73% LTV rather than maxing the facility.

The caveats — read before assuming you get the same:

• The headline ~90% LTV and sub-1.3% pricing are not universal. They reflect a strong, fully-paid asset and a creditworthy business borrower. Many commercial cash-outs land closer to 70–80%.
• The promotional rate reprices after year 2 — model the post-promo rate, not just the teaser.
• Both routes here were quoted on promotional fixed packages, which in 2026 can sit below the SORA-floating cash-out range noted below.
• Commercial facilities are underwritten case-by-case on property type, tenure, business financials and banking relationship.

The structural lesson stands regardless of the exact numbers: do not assume the residential 75% cap and 2%+ rates apply to a commercial-secured facility — they often do not, and for an asset-holding business the commercial premises is frequently the cheapest balance sheet to borrow against.

2026 Cash-Out Rates

A residential cash-out refinance is priced exactly like an ordinary home loan — the cash-out portion rides the same fixed or SORA-pegged package the bank would offer on a plain refinance, with no “term-loan premium”. In 2026 that means roughly 1.4% p.a. on a fixed package, or a SORA-pegged rate (1M / 3M SORA + spread) working out to around 1.1%–1.6% in the first year — depending on bank, loan quantum and tenure. Rates move with the SORA cycle — live comparison on our current rates page. Compare the package options in our when-to-refinance guide.

Three Moves Before You Apply

1. Get a current valuation. The MWL keys off today's market value, not your purchase price. Order an indicative valuation before assuming a cash-out figure. A property that appreciated 40% gives meaningfully more headroom.
2. Pull your CPF Property Withdrawal Statement. The CPF principal + accrued interest used is a direct deduction from your cash-out. Most owners underestimate this number — check it before modelling.
3. Decide TDSR vs the 50% threshold. If your income clears the 55% TDSR on the combined loan, take the full MWL. If not, size the cash-out so the total loan is ≤ 50% of value and skip the income test. Run both via our affordability calculator.
4. Grab the playbook. The Singapore Mortgage Free Report bundles your funds-position card (including CPF used vs available), the TDSR/MSR check at the MAS 4% stress floor, a 16-bank rate comparison and the refinance-savings comparison — the numbers that decide your cash-out headroom.

About the author — Dan Ler is a Mortgage Advisor at Nexus Mortgage SG, an independent Singapore brokerage that works with 16+ MAS-regulated lenders. Nexus has facilitated 500+ home loans across HDB, EC, private condo and landed property segments. Banks pay Nexus on disbursement, so there is no cost to the borrower.

Nexus Mortgage SG is an independent Singapore mortgage advisory. This article is general information, not financial advice. Cash-out refinancing eligibility, LTV limits and the CPF deduction are governed by MAS regulations and individual bank policy; figures are illustrative and reflect MAS positions and indicative 2026 bank pricing as of 30 May 2026. The commercial case study is anonymised and its rates and 90% LTV are deal-specific, not a general offer. Rates and rules can change. Always confirm your specific cash-out headroom with an independent mortgage advisor and your bank. Sources: MAS Notice 645 (TDSR), CPF Using Your CPF to Buy a Home, MAS TDSR explainer.