Getting a house for yourself is a dream come true for many, but in our day and age, it is almost impossible without a proper mortgage plan. Most young, as well as older, people of Singapore are now looking for mortgage opportunities to be able to build a property for themselves. Still, not everyone is well aware of the basics of a mortgage in Singapore.
Mortgage can be an overwhelming process for people who don’t know its basics in the country. With so much money involved, it is scary and confusing for many people who are not sure where to begin. However, we have made it simple for you.
If you are also someone who is excited to get a new home for themselves but don’t know how to avail mortgage in Singapore – don’t worry; you are at the right place. Here is all you need to know about mortgages in Singapore.
What is a Mortgage?
A mortgage is an agreement between two parties: a lender and a borrower, through which the lender can become entitled to your property. This is done as a security measure to make sure you pay the borrowed amount along with interest on time – in case you fail to do so, the lender has full rights to take your property and sell it to pay off the loan.
This means you can lose your property if you are not punctual with repayments. Therefore, it is advised to be aware of your financial status before applying for a mortgage in Singapore.
Fundamentals of a Mortgage in Singapore
You must have come across certain terms when you first look up mortgages. They are the basic components of a mortgage that one must know before applying for a mortgage in Singapore. Let us help you understand them.
1. Upfront Cost
Upfront cost, also known as the down payment, is the amount you will be paying “up front”. Before finding the property you want to purchase, you need to come up with an estimate of how much you can afford. You have to come up with an amount that includes the amount you have saved up and are willing to pay as a down payment.
2. Loan Amount
This is the total amount that you will get in terms of the loan. This is usually the same as the amount you wish to borrow, but sometimes banks do not approve the exact amount; they typically give up to 75% percent of your property’s purchase value as the loan amount.
3. Loan Term
This is the time duration granted to pay back the loan. When you sign for a mortgage, your contract will provide you with a certain timeline – by which you will have to pay the loan back to the lender. The loan term can be as long as 30 35 years and as short as 5 years.
4. Interest Rate
With every loan, you have to play alongside a certain amount of interest. The cost of borrowing is calculated according to the interest rate on an annualized basis. Moreover, there are also 2 types of interest rates: fixed and variable and this is decided at the time of your contract signing.
5. On-going Payments
A mortgage loan in Singapore is never paid at one time, as a single payment. You have to pay off the loan in multiple monthly mortgage payments – this also includes maintenance and insurance payments. Hence, before signing, you need to know the amount you’ll be paying each month for your mortgage loan.
What to Look for When Getting a Mortgage in Singapore
Most people in Singapore are usually confused about what features to look for in a mortgage agreement. This also leaves people in a dilemma whether they should approach a bank, broker, or private financing institution for a mortgage. We can help you save this confusion. Here are features you must take into account when signing a mortgage.
1. The Basis for Loan Approval
When you go for a mortgage, banks require you to show a certain amount of income and credit score to prove whether you can afford to pay back the loan amount. Banks base their mortgage approval on this information under the Total Debt Servicing Ratio (“TDSR”) guidelines, a credit assessment framework as approved by Monetary Authority of Singapore (“MAS”).
Find out about TDSR rules and calculation.
Apart from your credit score and monthly income, banks require borrowers to submit a long list of important documents to prove their eligibility for the loan. Complex documentation is one reason why most people in Singapore find it difficult to get a mortgage loan.
2. Approval Process
An approval process is a huge factor that helps you decide where you need to get a mortgage in Singapore. Typically banks take about a few weeks before they approve your request for a loan.
3. Loan Disbursement Time
After your loan has been approved, the banks take a certain amount before they disburse you the loan amount. Most banks in Singapore take about 2 to 3 months after approval for disbursement of the money.
4. Hidden Fee
This is an issue that most people are unaware of until they have signed up for a mortgage with a bank. These are extra charges that you have to pay to the bank after signing for a loan and increase your overall expense.
Why Choose ValueMax?
As we said earlier, a mortgage can be an overwhelming process, and without proper knowledge of the basics of a mortgage in Singapore, you can find it fairly difficult to find a good deal. However, we at ValueMax (VM Credit Pte Ltd) are here to help you.
We offer clients easy mortgage loan agreements that only require minimal documentation and real estate for the approval of loan. Our loan terms are highly flexible, and we guarantee to approve loans within a week.
We also make sure that loan disbursement is done within the 3 weeks from acceptance of our loan contract, and guess what? There is no hidden fee! We provide a high level of transparency with our lawyers, who handle all the necessary documentation. Since our loans are privately funded, we are devoted to providing quick and efficient service.
So what are you waiting for? Avoid foreclosure and restructure your debt now!
