With the current mortgage market in Singapore not very favorable, it is important to have the right information and know where you stand before deciding on a property to buy. Many are struggling to get a home loan due to stricter lending standards. It is more important than ever to understand how much you can borrow, what types of properties you can buy, and how much deposit you need.
When getting a bank loan for your dream home, we recommend that you approach several banks as well as mortgage brokers if necessary. This way, you are likely to find the best deal and terms for your needs. These tips will help you get a bank home loan in Singapore.
1. Research the types of bank loans available
The banks in Singapore offer home loans for new or existing properties. They also offer different types of fixed-rate and variable-rate products. For example, a 3-year fixed-rate loan has a loan interest that is fixed for three years.
A variable rate loan will have the interest change every month based on banking index rates set by Singapore’s Central Bank, the Monetary Authority of Singapore (MAS). You should know what is best for your needs before you settle on any terms and rates.
2. Determine how much you can afford to borrow
When looking for a bank loan, you have to have a good idea of how much you can afford to borrow. For example, if the monthly installment is too high, it could mean that your salary will not be high enough at the end of each month. To determine the amount that you can borrow, take note of the following factors:
– First and foremost, look at your total monthly income before any deduction for expenses. This includes rental income if any.
– Work out all your expenses including food, transport, and other miscellaneous expenses. Do not forget to include interest on your existing loans such as car loans and credit card payments.
3. Decide on a property type and location
When deciding the type of property to buy, look at your personal needs and lifestyle. It might be best to live close to your office or have family living nearby. If you are looking for something near the beach or perhaps an apartment with windows that overlook trees, water or a favorite park, you should be able to find what you want by browsing through the available properties online.
4. Get your credit report and know your borrowing capacity
A credit report basically shows how well you have been managing your finances over time. A good credit report reflects that you can manage your bank loan repayments well and are unlikely to default on the loans. Banks usually look at your non-mortgage-related debt such as credit card and personal loan payments.
If you are having a difficult time getting approved, do not be disheartened. Your house is important and securing the right bank loan to buy it is vital. Just be sure that you approach the process in a structured way so that you can avoid pitfalls.