• Mortgage Loan Singapore

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    Mortgage Loan Singapore

    Most people around the world have at least one dream in common, the dream of owning their own house. In Singapore, buying a home is one of the biggest investment for a person which has to be planned carefully. Thanks to home loans provided by financial institutions, it is easy for people to fulfil their dream of living in their own house.

    A mortgage loan or a home loan is a secured loan and is used by people to buy a property (real estate or house). The person taking the loan has to give the property they are buying as collateral security. In this case, if he fails to repay his loans, the lender can take over his security and sell it to get back the money.

    Why Choose Mortgage Loans?

    Mortgage loans provide low rates of interest and help you in increasing your credit score. When you take this loan, you do not have to repay the entire amount at once and have the option of paying it off in monthly installments, also known as EMIs. But the most important reason for choosing this loan is that mortgage loans can help you get your dream house.

    A house is one of the most expensive assets in Singapore and to buy it, you need a lot of money. Most people do not have the required money with them and they choose to take a home loan or a mortgage loan from banks or financial institution. Both individuals and businesses can take mortgage loans to purchase real estate.

    Types of Mortgage Loans in Singapore

    The different types of mortgage loans are as follows -

    • Fixed Rate Mortgage - Here, your rate of interest on the loan is fixed during the initial years of your tenure.
    • SIBOR pegged Mortgage - Here, your rate of interest is based on the SIBOR rate. SIBOR stands for Singapore Interbank Offered Rate. It is the rate of interest used by the banks in Singapore to give loans to one another. These rates comes in terms of 1 month, 3 months, 6 months and 12 months.
    • SOR pegged Mortgage - Here, your rate of interest is based on the SOR rate. SOR stands for Swap Offer Rate and is the foreign exchange rate between Singapore Dollar and US Dollar.
    • Board Rate Mortgage - Board rate is the bank’s internal rate of interest system. In this type, your rate of interest on the mortgage loan is based on the board rate.
    • Combination of Fixed and Variable rate mortgage - Here, your interest rate is a combination of fixed and variable rates.
    • Combination of SOR and SIBOR rate mortgage - Here, your rate of interest is a combination of both the SOR and SIBOR rates.
    • HDB Loan Mortgage - This loan is provided by the Housing Development Board for the financing of the HDB properties.
    • Interest Only Mortgage - In this type, the loan is available only for international and commercial properties.
    • Partial Mortgage with Interest - Here, only a part of the principal amount is repayment with interest.
    • Multi- currency Mortgage - This loan is available only for overseas and international properties.
    • Fixed Deposit Home Loan Rate Mortgage (FHR) - Here, your rate of interest on the loan is dependent on the mean average of 12 and 24 months Fixed Deposit (FD) rate.
    • Deposit Matching Interest Offset Mortgage - Here, your rate of interest is dependent on the fixed and recurring deposit rates.
    Mortgage Loan

    Features and Benefits of a Mortgage Loan

    A mortgage loan has many features and benefits. Some of them are -

    • Rate of Interest - The rate of interest on a mortgage loan can be fixed or floating. A fixed rate of interest is one where the interest is fixed and will not change during the initial years of the loan. A floating rate of interest is one where the interest can be changed by the bank.
    • Loan-to-Value Ratio (LTV) - Loan-to-value ratio shows the amount of money you are borrowing against the value of the property you provide as security. Higher LTV means expensive mortgage.
    • Incentives - A lot of mortgage loans have their own incentives and special offers such as no fees.
    • Repayment - A mortgage loan allows a person to repay the money in monthly instalments.
    • Tenure - A person can take this loan for a long period of time.

    Apart from the one’s mentioned above, there are other features and benefits as well, such as prepayment, down payment, etc. The major benefit that a person gets from this loan is a chance to live in a house which belongs to him.

    The features and benefits differ from bank to bank and a person should contact the banks which provide this loan in Singapore for more details.

    Mortgage Loan Eligibility

    The eligibility criteria depend on the banks providing the mortgage loan. Banks decide who is eligible for the loan and who is not depending on many factors. Some of them are -

    • The minimum income of the person
    • The age of the person
    • Present residency status of the person

    The Total Debt Servicing Ratio (TDSR) and Loan-to-Value Ratio (LTV) play an important role in deciding if you should get the loan or not. To get more information on eligibility, contact the bank you are planning to take the loan from.

    Documents Required for Mortgage Loan in Singapore

    • Purchase agreement
    • Income proof (Recent payslip or Income tax related documents)
    • Recent CPF statement
    • Passport/ NRIC copy
    • Residence Proof

    Apart from these there are other documents which banks may ask you depending on their eligibility requirements. To find out more on the same, please contact the lender.

    Banks Providing Mortgage Loans in Singapore

    There are many banks that provide mortgage loans in Singapore. Some among these banks are as follows -

    • ANZ Bank
    • Bank of China
    • CIMB Bank
    • Citibank
    • DBS Bank
    • HSBC
    • Maybank
    • OCBC
    • RHB Bank
    • UOB
    • Standard Chartered Bank

    Mortgage Loan Calculator

    There are times when a person may end up borrowing more money on loan than he can afford. A mortgage loan calculator saves a person from borrowing this extra amount. Besides telling a person about the amount he should take as a loan, the calculator helps him in figuring out how much money he has to pay in monthly instalments. This information aids him in planning his finances and preparing for the future.

    How to use the Mortgage Loan Calculator?

    The mortgage loan calculator can be accessed online and is easy to use. A person has to enter in certain details such as the amount of loan, tenure, down payment and rate of interest. After filling in the information asked by the EMI calculator, he has to click on calculate and in no time he will get a detailed result. This result will include the EMI, amortisation table and balance loan and the amount of interest due each month.

    Difference between mortgage amortization and term

    The difference between mortgage amortization and term is that amortization is the time you will take to repay the full loan and term is the period of time for which your rate of interest and mortgage agreement will be effective. The term is a part of the amortization.

    Frequently Asked Questions (FAQ)

    1. What will happen if I fail to pay my mortgage loan on time?
    2. If you fail to pay your mortgage loan on time, the bank which provided you the loan will take over your collateral security.

    3. Can I repay my loan early?
    4. Yes, you can pre-pay your mortgage loan, but some banks may charge penalty for doing so. It depends on the bank if they will charge this penalty or not.

    5. Are there any extra fees and charges?
    6. Yes, there are extra charges such as late payment charges, application charges, and charge for changing loan period, etc. You should ask for details on the same from the bank which is providing you the loan.

    7. I am self - employed, am I eligible for this loan?
    8. The eligibility criteria is different for every bank. You should find out information on the same from the bank which is lending you the money.

    9. For how many years can I take the HSBC mortgage loan for?
    10. The HSBC mortgage loan is available for maximum 35 years in case of private properties and it is 30 years in case of HDB flats. The period of loan also depends on the age of the borrower.

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