How to shop for a housing loan in Singapore
A lot of banks (if not all) in Singapore provide housing loans. It is normal if you find it confusing. You can actually find it really easy to compare mortgages if you understand the basic facts about them. Ask yourself the following questions before seeking out one.
How much can I borrow?
It really depends on your monthly income. It also depends on your purchase price and valuation of the property you are buying. Banks and financial institutions in Singapore use their own internal credit assessment criteria to determine the housing loan quantum that you can qualify for. They are currently also subject to guidelines enforced by MAS. Because of this, there cannot be a specific guide on how housing loan quantums in Singapore are determined. Generally, a higher income and lower monthly expenses will help your home loan application.
What types of housing loans are available in Singapore?
You may find many fancy names used to describe Singapore housing loans. These are just marketing activities. Most of the them belong to 2 types of home loans. One that has a fixed interest rate. And another that is subject to interest rate changes during the period of the mortgage tenure. It depends on your personal preference on which is a better suit for you.
Fixed rate housing loans
The advantage of taking up fixed rate housing loans is that you know exactly what you will be paying throughout the life of the mortgage. This give you certainty and you can plan your personal finances accordingly. But most fixed rate mortgages in Singapore are only up to 5 years. Meaning the loan will float and become a variable rate once the period of fixed interest rates are over.
You can find all over the internet that variations of fixed rate housing loans can be in the form of 30-year fixed rate, 15-year fixed rate, etc. But there is no such thing in Singapore.
Do find out the details of the housing loan with your mortgage lender before taking up an offer, Different banks can have different terms on the types of products and services that they offer. You might be surprised how different they can be on penalties and the little details.
Adjustable Rate Mortgages
Adjustable Rate Mortgages (ARMs) is one of the most popular types of housing loans.
As the name suggest, interest rates for this type of home loans can fluctuate. Depending on your risk appetite, this type of mortgage may seem desirable or undesirable to you.
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