Mortgage
6 Steps To Choosing The Best Housing Loan Singapore That Is Right For You
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The home loan you choose to take up is almost as crucial as the home you choose to buy.
After all, buying a house is the biggest financial commitment in the lifetime of most people.
Small differences in interest rates can appear to be insignificant to some but can mean thousands of dollars in savings in the long term. These savings can go towards a bigger TV set, the latest iPhone, or even a well-deserved holiday for the family.
There is a number of mortgage lenders in the market. And unless you know of mortgage bankers personally, they might not necessarily always have you best interest in mind.
Even worst is if they have little experience and have a hard time convincing the lender’s underwriters to approve a very attractive deal for you.
That’s like standing in the queue of a popular restaurant and watching people dig into the delicious food, but you know that you are not going to get into the place as the queue is simply not moving and closing time is approaching.
Here are 8 simple steps to take note when you are looking for a home loan in Singapore.
1) Go shopping
What do you do when you want to buy a television set? You shop around!
You look for the best deal even when you have decided on a particular brand and model in mind.
If you are going to spend time to shop around for the best deal when it comes to your thousand dollar television set, you should definitely shop around for a housing loan that comes up to hundreds of thousands of dollars.
Each home loan package serves a specific customer profile that the mortgage lender has identified.
You need to find the package that suits your profile and won’t put undue stress on your personal finances.
The more lenders you talk to, the more loan packages that you will learn about. And the better chance that you will find a home loan that is a perfect fit for you and your family.
2) Decide on the terms you want
Most people look out for interest rates before looking at the terms of the mortgage. That’s just human instincts and behaviour.
But one of the most common reasons for people to decline loan offers is when they learn about unfavourable contract terms only after everything else has been agreed upon.
These situations only serve to waste your precious time.
Decide early on things like loan tenure, redemption penalty fees, fixed or floating rates, monthly payments that you are comfortable with, lock-in period, etc.
3) Continue shopping for favorable interest rates and closing costs
An important thing to note at this stage is to remember to compare apples to apples.
You may have come to a stage when you have a choice of lower home loan interest rates with higher closing costs or higher interest rates with lower closing costs.
Choose wisely and use a housing loan calculator to help make you a fair loan comparison.
Only then will you have a good idea of what is the best deal around.
Floating interest rates for Singapore home loans are commonly pegged to the SIBOR or SWAP rates depending on the lender that you have approached.
Just remember to calculate the fully indexed rate by summing up the index rate with the spread.
4) Break down the fees that you have to pay
Make a list of the costs that you can control and those that you cannot.
There are some portions of the closing costs that a lender may subsidize for you. Make sure you ask about subsidies.
These can include:
- Legal fees
- Valuation fees
- Mortgage insurance
- etc
There are also other associated costs that you may be able to safe a hefty sum by looking for a provider yourself.
These include:
- Law firm service fees
- Home inspection
- Cash rebate promotions
- etc
Check out what are the costs that you have flexibility to take control and decide for yourself what you have to do.
While the interest rate plays a prominent role in determining whether a loan is attractive or not, the upfront fees that you have to pay would play a significant role as well.
5) Take a good look at the lender
If you have any suspicion that your banker is incompetent, you should consider switching.
Go to another bank or look for another banker from the same bank.
You are making a big financial commitment and you want someone who can give you good advice with work competence.
If for some reason, you know that you are not getting a good and fair deal, you can always walk away.
It’s not unheard of that two different bankers from the same bank can offer you drastically different mortgage rates.
It’s all a matter of how much they are willing to acquire your business.
6) Lock in your home loan interest rate
Interest rates fluctuate. You cannot expect a lender to give you the same home loan interest rates stated 6 months ago especially when market conditions have changed dramatically.
So you have to lock in you home loan interest rates when you have decided that you have found the best deal for you.
These are 6 easy steps to find the best housing loan in Singapore for you. If you find that it can be a huge hassle or feel lost because this is something totally new to you, you can engage our FREE service to do it for you. Our assistance is FREE to you because we are compensated by the banks separately. Contact us via the home page at www.housingloansingapore.com
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