Tips for Getting a Mortgage in Singapore

 Tips for Getting a Mortgage in Singapore

Even though the land area is limited and real estate prices are high, Singapore’s investor-friendly and stable economy attracts a huge volume of real estate deals each year. Here, property sellers and buyers can make deals for a huge selection of industrial, commercial, and residential properties.

With a track record of higher returns on property investments in the past few decades, some property buyers are looking for long-term capital gains while earning a side income by renting a room or a whole unit. Some homeowners may also purchase a location to stay, especially if they are based out of Singapore for the long-term. The monthly rent is comparable to the mortgage instalments on similar properties.

Types of Mortgages Available in Singapore

Most banks will offer mortgages that are classified as variable or fixed rates. In most situations, banks will loan between 60% and 80% of the total valuation or purchase price, whichever one is lower. The buyer has to top up the remaining amount with cash or a CPF – Central Provident Fund account. The LTV – Loan to Valuation Ratio – will vary based on the loan’s tenure, the borrower’s age, and the other loans they have. A person should keep this in mind when they apply for a Singapore home loan with Dollarback Mortgage.

It is also necessary to factor in the TDSR – Total Debt Servicing Ratio. This limits the monthly debt obligations to just 60% of the salaried individual’s income and 70% for commission-based or self-employed workers, which includes debts incurred from the property and car loans and credit cards.

If everything goes well, it is possible to begin looking for a mortgage package. The simplest option is a fixed-rate mortgage, which carries an interest rate of just one or two percent that remains constant for a set amount of time, usually between one and five years. There is not as much flexibility on when the loan can be fully or partially redeemed in exchange for this stability.

The interest rates can work in favour of the property buyer, or they may prefer to get a mortgage that has a variable rate, such as the SIBOR or the SOR. The SIBOR is based on the rate that the Singapore banks exchange money with one another. It is more resilient to the fluctuations related to foreign exchanges than the SOR, which is based on the US Dollar- Singapore Dollar exchange rate.

Bank or Broker

The banks in Singapore are extremely competitive. Thus, it is possible to find new products and promotions, which is why it is smart to find out what banks are offering at any given time. It is easiest to get the best deal if a person negotiates right with a banker and compares quotes against other offers.

When it comes to acquiring a mortgage in Singapore, there are several factors to consider. Keep the tips and information here in mind to ensure the right mortgage product is found. Being informed will ensure the right mortgage product is found and used.

Clare Louise