Housing Loan Singapore

www.Housingloansingapore.com

Providing online home loan services since 2009

SIBOR or SOR?

SIBOR is generally more stable while SWAP tend to fluctuate more. However 3-month SWAP has recently stayed consistently lower than 3-month SIBOR for an extended period of time. SOR is also very reactive to currency exchange rates.

Definition

Automated Underwriting

Automated underwriting refers to computer-driven systems whereby loan applications can be processed very quickly to determine a decision of approval or rejection after inputting required information.

This is most often used in smaller loans such as personal loans which is why we can sometimes see lenders promising 1-hour approval service levels.

However, when automated underwriting systems are used for home loans, the computerized process serves more to filter out applicants that would most probably have their applications denied by the bank.

This is because credit assessment, analysis, approval, and underwriting can be a long process that takes a lot of work.

By stopping applications at the first phase of loan processing, lenders would save themselves from undertaking work that would be unfruitful yet take up a lot of resources to process.

Automated systems do not approve mortgages, but instead either stops an application from going any further in the loan processing stage or allow one to go on to the next phase of credit assessment.

This is partly also because it is simply not possible at this point in time to grant instant approvals for home loans and have the underwriting done in an hour.

There are many reasons for this.

Firstly, the value used in loan processing is an indicative value provided by an appraiser and not a real concrete valuation as a result of a physical inspection. A variance between an indicative value and assessed value can have big implications to a mortgage’s loan to value.

Secondly, housing loans are considerably large loans and it would be risky to approve such loans too quickly without going through a phase of scrutiny by people.

Thirdly, there’s no guarantee that a certain borrower would accept the loan quantum suggested by the computer. Borrowers could very well take on a lesser loan amount or even find it too low to be acceptable. Committing resources to underwrite credit facilities without certainty can be a waste of resources.

Legal work can be tedious and cannot be done so quickly as well.

There’s also the potential for alternative documentation and other requirements that deviate from the standard set of loan documents. Things that automated systems are not programmed to process.

The list of reasons why fully automated underwriting systems are not used for housing loan is extensive. They are most suitable for unsecured loans in a personal or business capacity.

It’s main role is to reject cases that have little chance of approval, and allow those that meet the minimum criteria to enter the next phase of the home loan approval process.

The automated underwriting system does play a role in home loan qualification. This enables applicants to have an additional financing option available should they need it as they know that their loan would most probably be approved, provided the information they provided are truthful.

Want to see housing loan interest rate trends
for the last 36 months?

Enter your email below so we can send it to you.


It makes absolutely no sense to pay more
than you have to on a home loan.

Find the best mortgage rates here
SEE RATES

Related Posts

What We Do For You

We Gather And Provide You Information On The Best Housing Loans In Singapore So That You Can Make A Better Decision Based On What Is Available In The Market

Which bank do you recommend for home loans in Singapore?

We don't recommend banks. We recommend you the best home loan that suits your profile and financial position.

How Does SOR Rates Hit Negative Value?

SOR rates are calculated with a complex financial formula, solved with simple algebra. The results of solving the equation therefore depends on the inputs used. Varying inputs that result from economic impacts and indicators can lead to negative value when the formula is solved. Key input indicators include USD/SGD spot rates and USD/SGD forward rates.

HDB loan or bank housing loan?

Our opinion is to always take a HDB concessionary loan if you are eligible for one. One of HDB's objectives is to to provide affordable housing for the people. While a bank is profit driven.

Which bank offers the best home loan deals?

Interest rates and spreads are not all that matter. Don't ignore the closing costs involved. Different banks can have different customized home loans for you. Don't be surprised if you will save more on a home loan that charges more interest because of the lesser closing costs involved. This is especially so if you know that you will refinance your home loan as soon as the lock in period has expired.
Want to see housing loan interest rate trends for the last 36 months?

Enter your email below so we can send it to you.

It makes absolutely no sense to pay more
than you have to on a home loan.

Find the best mortgage rates here
SEE RATES
close-link

It makes absolutely no sense to pay more than you have to on a home loan.

Find the best mortgage rates here
VIEW TODAY'S RATES
close-link