Understanding 120% Commercial Property Financing in Singapore

Wayfinder Capital Insights · 4 min read

If you've researched commercial property financing in Singapore, you've likely come across banks advertising "up to 120% financing." At first glance, it sounds unusual — how can a loan exceed the value of the property it's secured against? The mechanics are more straightforward than the headline number suggests, and understanding them properly can help you plan a property purchase or refinancing with realistic expectations.

It's two loans, not one

A standard commercial property loan in Singapore typically covers up to 80% of the property's purchase price or valuation, whichever is lower. The business (or its owners) is expected to fund the remaining 20%, plus costs like legal fees, stamp duty, and any renovation work.

"120% financing" refers to a structured package that pairs this standard property loan with a second, separate facility — usually an unsecured business term loan — that covers an additional 20% to 40% of the property's value. Combined, the two facilities can add up to as much as 120% of what the property is worth.

Why the extra financing exists

The additional amount isn't only for buying the property. It's commonly used to cover costs that come with the purchase but aren't part of the property's own price — legal and administrative fees, renovation or fit-out work, and general working capital, so the business isn't left cash-strapped immediately after a large purchase.

Who typically qualifies

Not every applicant is offered the full 120%. Lenders extend the additional unsecured facility to businesses that demonstrate:

• A healthy track record of profitability and consistent revenue
• Low existing gearing (not already heavily leveraged elsewhere)
• A strong credit history, both for the business and its directors
• The property being for owner-occupation (used for the business's own operations), rather than purely as an investment for rental income — investment properties generally attract lower LTV ceilings

A newer or financially weaker business may still be able to secure a commercial property loan, but is more likely to be offered the standard 80% rather than the extended package.

What this means for your planning

If you're considering a commercial property purchase, it's worth treating 120% as a ceiling you might reach with a strong financial profile, not a figure every applicant is automatically offered. A realistic starting point is to plan around the standard 80% financing, and treat any additional facility as a bonus that reduces how much cash you need to set aside — rather than building your budget around it from the outset.