The Singapore economy has been on an upward trend over the last few years, and many Singaporeans are now looking to purchase their first property. As a result, you may be considering getting a bank mortgage loan in Singapore for your new home. Before you sign up for and buy a new home, here are some of the questions you need to ask yourself before making one of the largest investments of your life:
1. Is the economy booming?
The Singapore economy is very strong and has been growing rapidly over the last few years. This means that house prices will probably be rising fast, which means the payments on your mortgage loan will be bigger.
2. How much do I want to spend on my house?
You need to make sure you have enough money for your mortgage loan first and foremost before you put down any deposit; being a little short of funds can lead to bigger problems down the road. As a good rule of thumb, less debt means better results in the long run as it reduces the amount of interest paid on loans.
3. What kind of property do I want?
The kind of property you want will affect the amount you borrow and your loan tenure. For example, if you are looking at a luxury property, you probably won’t be able to afford it for more than 10 years if you are taking an HDB loan. As a rule of thumb, a 10-year mortgage loan is ideal for an average home.
4. What kind of interest rate should I expect?
A bank mortgage loan in Singapore is interest-based, which means that the interest rate charged on your loan can have a big impact on the total payments made over the term of your mortgage contract. Make sure you know what your interest rate is going to be before you start looking at any properties or signing any contracts. Different banks will offer different rates, so shop around to make sure you’re getting the best deal for you.
5. Are the property taxes reasonable?
The amount you pay for your property tax will depend on the kind of property you have acquired, its size, and its location. Property taxes are paid by all owners in Singapore who hold properties within their names – these properties include private homes, shops, factories, and other commercial buildings.
6. Is the interest rate dependent on salary or takes into account the number of years’ worth of repayments?
The interest rate you are offered when taking out a bank mortgage loan in Singapore will be based on the amount of money you can pay each month for your mortgage payments. It is important to take note that the bank will not calculate your monthly payment amount based on your actual salary but rather on what they deem to be your capacity to pay, which means that higher-earners will pay a lower monthly interest charge if they took out a home loan with similar terms compared to those given to lower earners who borrowed money at favourable rates. So make sure you compare apples with apples when making your decision.
Conclusion
Bank mortgage loans are certainly a viable option for homebuyers in Singapore who have a steady income and good credit history. However, before taking out this kind of loan, you should always make sure you know what you will be getting into that way; your decision to take out a bank loan is an informed one.
