Home Loans

Whether you’re a first-time homeowner or an expert in property loans, applying for home loans can be overwhelming. It’s essential you familiarize yourself with various terminologies as well as read terms and conditions of the mortgage. With so many regulations to observe, here are the things to consider when getting home loans in Singapore.

Types of Rates

When applying for a home loan, you need to decide whether you want it with a floating or fixed rate. A fixed loan rate is a home loan with constant interest rates throughout the repayment period.

Thus, you’ll know what interest you’re going to pay, allowing you to plan your finances. The downside of this loan type is its high fixed interest rate.

Floating rates are usually pegged and can change depending on benchmark rates. They have low initial rates than in fixed prices, but they’re volatile. If you’re anticipating for a low benchmark rate, this loan is your best options.

A New Loan or You’re Refinancing Home Loan

If you’re looking for a new loan, the process is straightforward. Determine the amount you want and whether you’re eligible for the home loan.

However, always remember that Singapore’s maximum Loan-To-Value (LTV) ratio is 80 percent of the price of your property. Also, you can only get up to 60 percent of your total monthly income.

If you’re refinancing, you’ll need to check if your existing loan is locked-in with the lender. Most borrowers seek to refinance home loans to get lower interest rates.

Loan Conditions

It would be best if you also considered the conditions governing home loans. These conditions can be helpful in the long run, especially if you’re planning to refinance your mortgage.

Choose an amount you’ll be able to make full repayment within the loan term. Late payments can attract repayment penalties, which can be up to 1.5 percent your redeemed amount. Additionally, compare the loan conditions and cost of borrowing in various lenders to ensure you contract the best deals.

With these points in mind, they’ll help you in making a sound decision about your home loan. Don’t apply for high loan amounts you’ll be unable to repay within the specified repayment period. It’s so because late payment can affect your credit history and thus make you unable to get approved of any loan in the future.