Once you have decided to go for a home loan Singapore it is advisable to consider specific factors so that you can benefit to the maximum with this loan. You have multiple banks and financial institutions offering these loans and making a choice in accordance to your requirement might get a little confusing. You also have the option of seeking professional help from financial advisors on the type of home loan which can work best for you. Listed below are few tips to consider before you go ahead and apply for the housing loan, Singapore.
Amount of the Loan:
Most of the banks offer 75% of the value of the property as a home loan for those buying a house for the first time. The actual amount is decided only after the banks have assessed your ability to repay the loan. The ability for repayment is determined by the ratios of debt servicing based on the regulations in Singapore like, MSR (Mortgage Servicing ratio) and TDSR (Total Debt Servicing ratio).
At present the TDSR is 60%. That means the sum you owe to others for different loans, be it the education loan credit card bill or renovation loan, cannot exceed 60% of your monthly income.
The MSR is calculated only on repayments of the housing loans and is applicable when you buy EC or HDB.
The banks are free to lend the funds based on the internal valuation or the purchase price, whichever is lower. In case of the purchase price being more than the valuation, the difference needs to be paid in cash.
Term of the Loan:
The duration of time taken to repay the loan completely is known as the loan term. This term normally ranges from 10 years to 35 years. The monthly repayment is smaller with a loan term which is long. This leads to a high rate of interest.
The age also plays a role in the loan term. For those who are 50 years of age are offered a loan for only 15 years as most banks cap the term to 65 years.
Floating or Fixed rate:
The borrower for home loan, Singapore is offered stability with the fixed rates as there is no change in the rate. This is stable throughout the loan term. Though this can work out beneficial, the rates of interest are higher as compared to the floating rates.
Those borrowers who are sure of the interest rates falling or remaining low for a long period of time can choose the floating rate for the housing loan, Singapore. This leads to a low rate of interest up front and in case the interest rates tend to fall the monthly repayments are low.
Discounts and Promotions:
There are some loans which have a feature of interest offset. The deposits at the specific bank can be used for offsetting the loan amount. This leads to paying the interest on the difference. This helps the borrower to have ready-cash for other requirements.
Some banks offer packages of interest-only. For these types of loans, you need to pay the amount of the interest for a specific period of time, after which the loan is reverted to the normal interest along with principal loan. This is perfect for the investors who need to minimize the outflow of cash during the period of interest.
Penalties Lock-in periods and Subsidies:
Most of the home loans, Singapore are available with some specific subsidies which include the fire insurance, legal and validation fees. Before deciding on a loan, it is important to check out what these subsidies are for. Besides this, it is important to go through the cancellation fees so that you are well aware of the terms and conditions of a specific housing loan, Singapore.
Loan Approval in Singapore:
Following some tips can ensure your home loan; Singapore is approved without any problems.
*. Market Conditions:
The market can give you a clear indication of whether you will face any delays in the approval of home loan, Singapore applied for. The availability of credit depends on the performance of the market. You find the market being stable when the economy is good. The credit available is at a cheaper rate. This can ensure favorable loan terms and rates of interest.
* Understand TDSR (Total Debt Servicing ratio):
The framework of the TDSR is legal ad is put into place by the MA (Monitory Authority) of Singapore. This helps in putting a stop to risky financial business and can also prevent the people from over-extension with finances. This is done by keeping a limit on the amount the people can borrow by determining the financial status of an individual. Most often, this works out to 60% of the income but can work out a little higher or lower.
It is important to ensure that the TDSR is in according to the set standards so that the approval is without any hitch.
* Documents in place:
Home loan, Singapore can get smooth sailing if the papers required by the specific bank are in place whenever the banks need these. Some of the documents which are required can be Digital Pay slips, Assessment Notices of the Income Tax, Copy of the Passport or the NRIC and contribution history of the CPF. There also might be a requirement of documentary proof of the received income from the work place. You might face automatic rejection if these documents are not ready when the bank requires them.
* Account History:
The relationship between the institution from which you have applied the loan and you can determine the ‘good’ account history. This means you need to avoid over-drawing from your account or even miss any payments. This account history can expedite the loan approval procedure and can also help you in getting good loan terms. This can also make a difference to the interest rates.
Taking the help of a professional who is qualified and experienced is definitely advisable as they can help you filter the different packages in accordance to your specific requirement for home loan, Singapore.
Should you be keen in refinancing your home loan for a lower interest rate, feel free to contact us by leaving your contact number below with us. We do have attractive fixed/floating rates which we can compare for you. Likewise, do not forget to also get your mortgage insurance to cover for your home loan in the event of unfortunate events such as Death or Total Permanent Disability/Terminal Illness.
We do cater for various insurers in Mortgage Insurance and hence we will be able to offer you the lowest and most affordable home loan or mortgage level or reducing term insurance! Do leave your contact details or message us and we will get back to you in 2 working days for the best rates!