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How Many Mortgage Lenders Should I Apply With – Once you’ve gotten over the hurdle of making a down payment on your new home, don’t forget that the monthly mortgage payments are still ongoing. Different mortgage packages have different benefits and features, so it’s important to research your options and find the plan that best suits your needs (and saves you the most money!). We’ve put together a comprehensive list of what to look out for and our recommendations for the best mortgages this year.
When you buy an HDB flat, you have the option of taking out an HDB loan. HDB loans have higher interest rates, but the rates are fixed and the loans only require a 10% down payment compared to the 25% required by banks.
How Many Mortgage Lenders Should I Apply With
Interest rates may vary by a small percentage from one plan to another. However, the difference can add up to a significant amount as each property is an expensive property. Choosing the lowest interest rate among several options can save you thousands of dollars.
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Jars usually offer lower spreads, meaning the rates are lower for the first few years and then increase. The spread is the number you see after the “+”.
Most bank loans are usually issued with a fixed period of five years, during which the interest rate is guaranteed at a fixed level. During this period, you will be charged a penalty if you decide to prepay or cancel your mortgage. The penalty is usually 2 to 5% of the loan amount.
This is because banks take on a risk when they give you a loan, and it becomes difficult for borrowers to plan their finances when they cancel their loans and abandon ship soon after getting a loan. The first few promotional years of low interest rates are intended to encourage buyers to stick with the loan.
If you’re buying a home that’s still under construction (yes, Building Under Construction (BUC) is a real acronym), we recommend that you look for a loan with no lock-in period so you can refinance at any time. time after construction. Refinancing is when you pay off your existing mortgage in full or transfer it to a competing lender (usually because of lower interest rates).
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If your mortgage loan has a fixed interest rate, the same interest rate will apply throughout the term of the mortgage agreement. Its advantage is consistency and stability, and it also makes planning your finances easier, so it’s a good choice if you have a low risk appetite. Interest rates are independent of market fluctuations. However, stability comes at a price (literally) as fixed interest rates are higher than floating interest rates.
During the lock-in period, fixed interest rates are not linked to market or board rates. However, after the lock-in period ends, they are pegged to market or board rates. This will give you an idea of whether you should refinance.
Meanwhile, floating interest rates (also known as variable interest rates) are subject to market fluctuations. They are pegged to the Singapore Interbank Offered Rate (SIBOR), the Singapore Overnight Average Rate (SORA), the Board Rate or the Fixed Deposit Domestic Rate (FHR), which varies by index. (Note that SIBOR-based loans will be phased out by the end of 2024.
Floating interest rates are best for those who are risk averse. You may save more in a month if the interest rate falls, but you may have to pay more if it jumps the next month.
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However, most banks usually give you 30 days’ notice when interest rates change. This gives you some time to consider refinancing.
Also, for SIBOR-based loans, banks usually offer 1M (1 month) or 3M (3 month) SIBOR, indicating how often the rates are updated. 3M SIBOR rates are less volatile and only adjust once every three months.
HDB flat buyers, take note! You can choose between an HDB loan or a bank loan. HDB loans have a fixed interest rate (the current rate is 2.6%, according to the HDB website) and the down payment is only 10% of the purchase price of your flat, making it more affordable in the short term. The downside is that that HDB interest rate is higher than the banks offer.
By the way, bank loans can have a fixed or floating rate. Bank loans can be taken regardless of whether you are buying an HDB flat or a private property. The following two tables summarize the best fixed and floating rates available on a $500,000 loan with a 25-year term.
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Maybank undoubtedly has the lowest interest rate at just 1.2%. This rate is guaranteed for a two-year lock-in period only. In addition, you can decide whether refinancing is the best option.
While many banks offer higher interest rates with longer lock-in periods, OCBC’s fixed interest rate stands out in that the rate of 1.38% is offered with a choice between a two-, three- or four-year lock-in period (HDB only). homeowners are entitled to a four-year lock-in period).
Based on interest rate alone, OCBC 3M SIBOR outperforms all of its competitors at an amazing 0.46% per annum.
However, if you want to refinance your bank loan soon, we recommend the Maybank SORA with a shorter lock-in period of one year, which still has a reasonably low interest rate of 1.04% per annum.
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When choosing floating interest rates, be sure to keep an eye on SORA and SIBOR rates, which are constantly changing.
Some may think that it is best to take a loan only after the house is built… but we disagree! Settling your home loan early can give you peace of mind and (for some, more importantly) even better interest rates.
As we mentioned earlier, BUC homeowners are looking for mortgages with no lock-in period, which frees them up to refinance and provides a lower interest rate once the home is complete.
According to this list, Standard Chartered SORA is the best mortgage loan, offering the lowest interest rate of 0.98%.
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However, these interest rates (as of December 2021) and spreads are constantly changing and may not be updated at the time you read this article. We suggest you check the banks’ websites to get the latest rates before signing up for a loan.
Knowing the future will come in handy for many things. Go to Toto, ask out the girl who will eventually become your wife, and of course, get a mortgage loan at the lowest possible rate. But we can’t always get what we want.
According to a Bloomberg article, Tharman Shanmugaratnam, senior minister and chairman of the Monetary Authority of Singapore, said: “The risk of a rise in interest rates is a reminder to everyone to exercise caution when making property purchase decisions as interest rates in Singapore are expected to rise. Rise with those in the US.
He said: “Buyers should expect interest rates to rise and ensure their ability to service their loans before making long-term financial commitments.”
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If these predictions are accurate, it may be time to secure your mortgage soon before interest rates rise even more.
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