For a lot of people, a housing loan in Singapore is the biggest financial commitment they will make in their lifetime.
When looking for a housing loan in Singapore, it would help you to focus on what types of home bank loan is more suitable for you instead of only looking out for the best housing loan in Singapore or one that offers the best interest rates. Deciding on which offer to accept depends on your current and foreseeable future personal finances. However, if you are left with no other options, you are pretty at the mercy of the financial institutions.
Unless you have a lot of experience in working with mortgage bankers, the application process can be tedious and complicated to you. There is a stack of documents to sign and a whole booklet of terms and conditions of the housing loan. It is your responsibility to read up the terms and conditions to understand them.
Among those terms, 3 main terms should stand out for you. You have to be clear especially on them. Do not hesitate to ask questions when you do not understand them.
1) Housing loan tenure
The housing loan can run up to 30 years and more. A lot of people prefer to take as long a tenure as allowable so as to pay a lower monthly installment. However, do note that the longer the housing loan stretch, the more total interest you will pay. This can be illustrated with a proper housing loan calculator.
2) How are your home loan rates calculated.
Your housing loan in Singapore can be either a fixed rate mortgage or an adjustable rate mortgage. In layman terms, fixed rates mean that interest rates will stay the same throughout the tenure, and adjustable rates mean that the interest rates change at specified periods during the repayment schedule over time. Housing loans with adjustable interest rates can appear to be very attractive initially, but note that the interest rates can fluctuate with the movement of the market.
3) Housing loan closing costs.
Ask questions about the specifics of it because closing costs can often greatly affect your final decision. You can try to negotiate with the mortgage lender to subsidize some of these costs.
Closing costs consists of chargeable services for stuff like property appraisals, legal fees, stamp duties, etc. Any costs that you will incur when you finally take op the housing loan being offered can be part of the final closing costs. Ask about these costs if you do not fully understand them. You don’t want to be paying a premium price for a service when there are alternatives.
These are the 3 more basic and important terms that you have to know before taking up a housing loan in Singapore. Use a home loan calculator if necessary. Get quotes from at least 3 mortgage lenders to make proper housing loan comparison. Minor differences between different packages can result in major impact on you financially.