When we think of the planet’s most expensive city to live in, the likes of Tokyo, London or Paris may spring to mind first. However, it’s believed that this title goes to none other than Singapore. For most Singaporean residents, their home purchase will be the biggest expense in their lifetime. While it’s true that the curve has flattened significantly since the 90s and early 00s, property prices in the country have generally moved upward over the years.
If you are planning to purchase a home in Singapore, you will probably have to obtain a housing loan (otherwise known as a home loan or mortgage loan) to finance it. Rather than going for the first housing option you see, it always pays off to do your research and compare, compare, compare! Here we will explore the benefits of comparing housing loan options in Singapore.
Get the Best Rates
Understandably, the biggest advantage and most common reason people compare housing loan offers are to find a better rate. A high-interest rate can end up costing you tens of thousands of dollars in unnecessary interest payments over the lifespan of your loan.
To make sure you are paying the lowest interest rates on offer, you must compare housing loan rates before committing to a lender. Alternatively, do this whenever you feel the interest rates from your current lender are too high. Savvy homeowners understand that making short-term changes like swapping to a lower-rate lender can save them thousands of dollars in interest in the long run, and most importantly, save money that can be put back in their pocket and spent on other things.
Unusual Circumstances
You will find that not every lender or bank accommodates everyone’s personal circumstances when it comes to housing loans. Some individuals may be in a situation where they need a special kind of loan, like a low deposit loan which requires an insurance policy, or a zero-deposit application where a loved one is willing to guarantee the balance.
Depending on the circumstance, some buyers may not qualify for an HBD loan, even if they are buying a flat. Instead, such buyers will need to use a bank loan to foot the bill. Everyone has different needs, so it’s wise to check out Property Guru. They can help you find the best home loans in Singapore without having to do all the hard work yourself.
Different Income Requirements
For many loans in Singapore (not just housing loans) the minimum required income stands at $24,000 per annum for single borrowers and $36,000 per annum if there is a co-borrower. One of the major benefits of comparing housing loans is to establish what income requirements you need. This is because, for ex-pats like yourself, some lenders require as much as twice the amount listed.
HBD loans also have a maximum income ceiling that you need to know about. Other important considerations are the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR). The former applies to all bank home loans and restricts your monthly loan repayment to 60% of your monthly income. A mortgage servicing ratio on the other hand applies when you are buying a HBD property. This restricts your monthly home loan repayments to 30% of your gross monthly income.
Age Requirements
The minimum age to qualify for a housing loan in Singapore is 21. However, age requirements to purchase a HBD flat still apply. The maximum age to qualify for a housing loan is 65. The maximum loan tenure is 30 years for a HBD property, and 35 years for a private property.
Regarding the loan-to-value ratio, your loan tenure and age combine to affect your LTV. For instance, if you’re 50 years old and you take out a 20-year loan, you would exceed the retirement age of 63. This would result in a lower LTV of 55%.
Lower Monthly Repayments
It’s safe to say that the vast majority of housing loan comparers are looking to get lower set repayments on their loan. Let’s say you’ve had a housing loan for some time and have paid off a significant amount, but you have either had a change of situation or require more cash on hand in your weekly budget, now is the perfect time to refinance.
Refinancing your loan gives you the ability to extend your loan without changing the borrowed amount. When you compare housing loan options, there’s also the option to have more flexible payments which can provide peace of mind.
Obtaining a housing loan is something that should be done with precision and care. If you’re relocating to Singapore, you’ll need to take your time comparing your options. Those who don’t are at risk of getting a bad deal and could end up spending a fortune well out of their budget.
