Choosing the best home loan to suit your needs can be quite a tricky scenario, especially considering the many options that are available to you. Almost every top bank and financial institution in Singapore offers home loans at varying interest rates.
Several banks in Singapore offer home loans at rates ranging between 2% and 3% in a majority of cases – the rates can vary due to several factors. Banks have two types of interest offerings – fixed rates and floating rates. While some banks prefer lending at floating rates, others prefer fixed interest rates in order to give customers the opportunity to make fixed payments over a fixed tenure. As such, both interest offerings come with their own set of advantages and disadvantages.
Moving to the question of what it takes to get the ideal home loan package, let us try and understand these two types of interest rate offerings as they have a significant bearing on your ideal home loan package.
A fixed interest rate provision would mean that you’d be paying fixed monthly payments over the length of your loan tenure. An advantage that is particularly associated with fixed interest rate offerings is that the interest rates, over the period of the loan tenure, remains unaffected by market fluctuations that can impact interest rates. Floating interest rates on the other hand would mean that your monthly repayments can vary over the length of your loan tenure. A perceptible advantage that floating interest rates hold over fixed rates is that they are usually lower than conventional fixed rate offerings.
Although floating interest rates are lower than fixed interest rates, they are susceptible to unpredictable market dynamics that can have a negative influence on the amount you’d be paying towards your home loan on a monthly basis. Opting for a fixed interest rate over your loan tenure will give you give you a better picture of how much you’d be paying every month towards your loan, allowing you to adjust other aspects of your finances effectively.
If you wish to apply for a home loan in Singapore, it is important that you compare offers from various banks to get the lowest interest rate. Negotiation on the interest rate for your home loan is definitely possible – a lower rate can be negotiated if you already have an existing relationship with the bank, your income is high, and you have a good credit score.
Besides home loans, banks in Singapore also offer home renovation loans to help you beautify the interior and exterior features of your home. Home renovation loans come with a reduced interest rate (than the original existing rate) if the bank in already holds your home loan.
Various parameters influence the approval/rejection of your home loan application. Some aspects that banks consider include the following:
Amongst these, your credit score and annual monthly income are primary aspects that banks take into account while reviewing your loan application. While these parameters often take precedence, if you’ve already availed a huge car loan or personal loan and your income standards don’t meet the bank’s expectation, your application might not see light at the end of the tunnel. Even in the case of home renovation loans, aspects like your annual income and existing debt are important factors that influence your home application.
Once you’ve selected the ideal home loan for your needs, you can visit the official website of the bank (the one offering the best interest rate) and fill out the online application form. Upon filling the form, you are required to submit relevant documents to the bank, following which the bank will process your application form. You can avail a higher amount if both you and your spouse are employed. Documents that need to be submitted include your Identity proof, Proof of income, latest payslips, banks statements and those relating to confirmation of purchase of the property. Banks usually take about 10 days to review your home loan application.