Best Banks For Mortgages First Time Buyers

Best Banks For Mortgages First Time Buyers – Buying a home in Singapore may seem easier than visiting showrooms and talking to real estate agents. However, if you dig deep and deep, you will discover that the game also has more complicated aspects.

For example, dealing with finances, paperwork and making various decisions can make the process more complicated.

Best Banks For Mortgages First Time Buyers

There are several important considerations such as: Should you choose HDB or a bank loan? How much is the deposit? What are LTV, MSR and TDSR?

Mortgage Comparison & Mortgage Rates

When buying an HDB flat, you have two loan options – an HDB loan or a bank loan. Consider the following factors to help you decide:

To qualify for an HDB loan, your monthly household income must not exceed $14,000 ($7,000 for singles and $21,000 for large families).

In addition, you must have no personal property in the last 30 months. If you do not meet these criteria, you should consider a bank loan.

If you choose an HDB loan, you can borrow up to 80% of the value of your home. On the other hand, with a bank loan, you can borrow only a maximum of 75%.

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If you decide to take out a bank loan, you must pay 25% of the sale price of the property, with at least 5% in cash.

For an HDB loan, your mortgage interest rate is a standard 2.6% p.a. (Based on the prevailing CPF rate of 2.5% + 0.1%), which has not changed over the years.

Bank loans, on the other hand, offer different loan packages, each of which has its own fixed interest rate. This variation allows greater flexibility in choosing the loan that best suits your needs.

In general, fixed rate mortgages provide predictability and stability in monthly payments because the interest rate stays the same for a fixed period of time (usually 2-5 years). Fixed rate loans are useful in a rising interest rate environment because they hedge against potential rate increases over a period of time

Mortgage Age Limit

Floating rate loans often have lower interest rates than fixed rate mortgages. Interest rates are usually linked to the Singapore Overnight Rate (SORA) or Fixed Deposit Rate (FDR).

If interest rates stay the same or decrease over time, you may pay less interest than a fixed-rate mortgage. Keep in mind that monthly payments can increase as interest rates rise.

A two-in-one home loan allows you to keep part of the loan amount on a fixed interest rate scheme for peace of mind, and to receive interest from the remaining loan amount on a floating interest rate scheme.

In short, bank loans can offer lower interest rates than HDB loans. The main disadvantage is that you need to monitor the interest rate as it can change after 2 or 3 years. You may need to revalue your home loan (from the same bank) or refinance (choose another bank for your mortgage).

Things You Need To Be Pre Approved For A Mortgage

There is always the option to refinance from an HDB loan to a bank loan at any time to enjoy lower interest rates. Keep in mind that refinancing requires an appraisal and legal fees, so it’s best to look at the package as a whole, not just the interest rate. The same applies to revaluation.

The LTV ratio refers to the loan amount as a percentage of the property’s value. Or first home loan, can be 75% with bank loan or 80% with HDB loan. In some cases, you may not be able to get the full 75% and 80% because the lender will also consider your TDSR when applying for a home loan.

TDSR is the portion of your income that goes toward all your loans, such as car and student loans. For a home loan, your TDSR should not exceed 55% of your gross monthly income.

The MSR is only valid if you are buying an HDB flat or an Executive Condominium (EC). This limits your monthly payments to 30% of your monthly income.

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Here’s an example of how the TDSR and MSR affect your monthly loan payment amount (assuming you have a monthly income of $5,500):

TDSR: Since the TDSR is 55%, you can spend up to $3,025 per month to repay the loan (all types).

MSR: Since the MSR is 30%, you can spend up to $1,650 per month on your HDB/EC home loan. (That’s $1,650 a month if your loan budget is $3,025.)

When you take out an HDB loan, most of your CPF Ordinary Account (OA) savings are used for the down payment. You may consider setting aside $20,000 in your CPF-OA as these funds provide you with a safety net to pay your monthly installments in case of unexpected circumstances such as temporary loss of income.

Mortgages For First Time Buyers

If you prefer to leave your savings in CPF and have cash to spare, bank loans allow you to pay the entire deposit in cash.

To understand the loan limit mentioned above, you can use the home loan calculator to find out your monthly payment. Longer loan terms mean smaller and more manageable payments.

You also have the option of using your CPF Ordinary Account (OA) savings to pay your home loan installments.

Paying with CPF is certainly attractive if you need cash flow for everyday expenses and investments, but it also means giving up the risk-free 2.5% interest on your CPF money.

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If you sell the property, you must return the CPF-OA funds used with accrued interest.

If you repay the loan in cash, you will get a maximum interest rate of 2.5% on your CPF-OA savings. You can keep the sale proceeds without having to top up your CPF.

If you have extra cash, you can consider paying off part of your home loan to save on interest payments. It’s important to note that some banks charge a fee for partial payments, so consider the pros and cons before proceeding.

If your choice is a bank loan, consider getting an approval in principle (IPA) to better understand your creditworthiness and simplify the buying process.

Should I Buy A Home With A 5% Deposit Mortgage?

This is a document from the bank that states how much they are willing to lend you based on your TDSR, MSR, income and credit score.

You must secure your IPA before you can pay the option fee on your home. This is important because if it turns out you can’t borrow enough for the property, you won’t get the option fee back. In some cases, the estate agent may ask for your IPA before proceeding with the transaction.

Having an IPA also helps speed up the loan disbursement process. More importantly, knowing your maximum loan amount will keep you from getting emotionally attached to a home that exceeds your budget. During your home search, you can set realistic expectations and make informed decisions.

, so you’re sure how much you can borrow for your home, so you know exactly what your budget is. Buying your first home is an exciting time. Whether you’re ready to put down a deposit, set up property listings or simply view a house, we’ll help you get on the first rung of the property ladder. Ready? Let’s go…

Can You Rent Out On A First Time Buyer Mortgage?

If you’ve already applied, check out our first-time buyer journey tracker to see where you are in the process and what happens next.

Think carefully before taking out a new loan on your home. If you don’t make your mortgage payments, your home could be repossessed.

With a pay-as-you-go mortgage, a longer term can reduce your monthly payments to help you get on the ladder – although remember, you’ll generally pay more in interest. You may be able to reduce your penalty in the future, just contact us.

The AIP is a document that shows what we can lend you before you apply for a mortgage, so you can make an offer as soon as you find the right place.

Biden Wants To Level The Playing Field In The Mortgage Market

Our friendly team can advise you on the best mortgage and help you feel more confident about buying your first home – just give us a call.

We don’t charge an early repayment fee like some other lenders – it’s not fair. It may not be a consideration now, but unlimited overpayments mean you can reduce the overall interest you pay in the future.

Big houses move fast. Be ready to make an offer as soon as your property alert is issued. There is an agreement in principle here. This is not a legal document and does not affect your credit score, but it shows that you are serious about the purchase. The real estate market moves so fast that if you haven’t installed AIP before viewing it, you could be missing out on real estate.

Get an AIP that lasts 6 months. Speak to our mortgage team today and get your deal in principle. You need details about your income and expenses

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