• Home Equity Loan


    There are times when a person is in need of extra money for, say, buying a car, repairing his house or paying off his education fees. At such times, he can choose to opt for home equity loans. A home equity loan is a kind of loan wherein a person can borrow money from a bank or financial institution by pledging the value of his house as collateral security. He can then use this loan for any personal or business purposes. Home equity loans come under the category of secured loans.

    Why Do You Need Home Equity Loans?

    You can take a home equity loan for any personal or business purpose in Singapore, but there are other reasons as well, which make this loan very attractive compared to others. One of them is that it is very easy to get these loans. To take this loan, one has to keep their house as collateral security, which makes it comparatively simple to get it. Another reason is the low rates of interest. These loans are given to people with a very good credit history, thus the rate of interest on the loan is less. You can choose to opt for this loan as it will allow you to invest in other places. This investment will earn you returns and if done wisely, will get you more money than the interest you pay on the loan . It is also a very good idea to take a home equity loan for increasing funds for your own business.

    Features and Benefits of Home Equity Loans

    • Home equity loans have low rates of interest
    • This loan is easy and simple to get
    • People can borrow a higher amount through this type of loan
    • People can use this loan for any personal or business use
    • The repayment period is flexible and varies according to the bank or financial institution
    • Home equity loans are tax deductible
    • A home equity loan can be availed in the form of cash
    • If a person does not want to take the money at once, they can go for a HELOC (Home Equity Line of Credit). Here, he can choose the amount of money he wants to take and pay interest only on the borrowed amount

    Tips for Getting a Home Equity Loan

    • Find out the value of your property or house which you are giving as a collateral security
    • Ensure the loan is affordable
    • Compare quotes provided by different banks and financial institutions
    • Find out the loan-to-value (LTV) ratio and try and get the maximum LTV. If a person is taking the loan to get a second house, then the LTV provided by banks is maximum 60% in Singapore
    • Find out about the rate of interest being provided by the bank. He should find all information about the SIBOR (Singapore Interbank Offered Rate) or SOR (Swap Offer Rate) rates, fixed and variable rates before applying
    • If you are planning to choose HELOC, do in-depth research before applying
    • Once you are done with research and have chosen your bank, apply and get your home equity loan

    Banks which offer Home Equity Loans in Singapore

    There are many banks in Singapore which provide Home equity loans. Some of them are

    • HSBC
    • United Overseas Bank
    • ANZ Bank
    • Maybank
    • CIMB, etc.

    Home Equity Loan - Frequently Asked Questions (FAQs)

    1. I want money to travel, will this loan allow me to do that?
    2. Yes, you can use the money you get from the loan for any personal use as long as you repay it on time.

    3. How do I get the home equity loan from HSBC Bank?
    4. To get a home equity loan from HSBC Bank, please visit the nearest branch of the bank or contact them.

    5. Do I need to have a good credit history to get this loan?
    6. Yes, most banks require you to have a good credit history or they will not approve the home equity loan. There are some banks which give you this loan with a bad credit but with a high rate of interest.

    7. What happens if I am not able to pay back my loan?
    8. If you are unable to pay back your loan, the bank or the financial institution will take over your house.

    9. When I apply for a home equity loan, will the bank give me the full amount, i.e. the amount equal to the value of my property?
    10. Banks look at different parameters before approving the home equity loan amount. They do not give the full amount, but provide up to 70% or 80% of the value of the property given as a collateral. Not all banks give 70% to 80% and in case you are taking this loan to buy another property in Singapore, then the maximum amount given by the bank will be 60% of the value of the house.

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