I Have A Mortgage And Want To Buy Another House

I Have A Mortgage And Want To Buy Another House – Buying a house in Singapore can be very easy by checking out showrooms and talking to real estate agents. But if you dig deeper into the nit, you will find that there are more complex aspects to it.

For example, financial services, documents and different decision-making processes can make the process complicated.

I Have A Mortgage And Want To Buy Another House

Here are some important considerations: Which will you choose: HDB or bank loan? How much is the down payment? What is LTV, MSR and TDSR?

Let’s Choose The Right Mortgage For You

If you are buying an HDB flat, you have two loan options: an HDB loan or a bank loan. To help you decide, consider the following:

To qualify for an HDB loan, your monthly household income must not exceed $14,000 ($7,000 for a single person and $21,000 for an extended family).

You must also not own personal property in the past 30 months. If you do not meet these requirements, you should consider a bank loan.

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

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If you decide to get a bank loan, you will need to provide at least 5% of the sale price of the property in cash, which is 25%.

For HDB loans, the mortgage interest rate is a standard 2.6% p.a. (based on a typical CPF interest rate of 2.5% + 0.1%) unchanged over the years.

Bank loans, on the other hand, offer different loan packages, each with its own interest rate. This variety gives you more flexibility in choosing the loan that suits your needs.

Typically, fixed rate mortgages offer predictability and stability in your monthly payments because the interest rate remains constant for a set period of time (usually two to five years). Fixed rate loans are useful in a rising interest rate environment because they protect against the possibility of interest rate increases for a fixed period of time.

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Adjustable rate loans often have lower initial interest rates than fixed rate mortgages. The interest rate is usually linked to the Singapore Overnight Rate (SORA) or the Fixed Deposit Resource Rate (FDR).

If interest rates remain stable or decrease over time, you may pay less interest compared to a fixed rate mortgage. Remember that if interest rates rise, your monthly payment may increase.

A two-in-one mortgage is a product that allows you to have peace of mind by borrowing a portion of the loan amount at a fixed rate, while earning interest on the remaining loan amount at a variable rate.

This means that bank loans can offer lower interest rates than HDB loans. The biggest disadvantage is that you have to monitor interest rates as they may change after 2-3 years. You may need to adjust the price of your home loan (from the same bank) or refinance (choose a different bank for your mortgage).

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You have the option to upgrade from your HDB loan to a bank loan at any time to enjoy lower interest rates. Refinancing comes with costs and legal fees, so it’s wise to look at the whole package, not just the rates. The same goes for refinancing.

The LTV ratio is the loan amount expressed as a percentage of the property’s value. or for a first home loan, it is 75% for a bank loan and 80% for an HDB loan. In some cases, financial institutions may not accept even 75% and 80% when you apply for a home loan. We also consider your TDSR.

TDSR is the part of your income that goes towards all debts, including car loans and education loans. With a home loan, your TDSR cannot exceed 55% of your gross monthly income.

MSR is only valid when buying an HDB flat or an Executive House (EC). Limit your monthly repayments to 30% of your gross monthly income.

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Here’s an example of how TDSR and MSR affect your monthly debt payment amount (assuming your monthly income is $5,500).

TDSR: TDSR is 55%, so you can spend up to $3,025 per month on loan repayments (all types).

MSR: The MSR is 30%, so you can spend up to $1,650 per month on an HDB/EC Home Loan. ($1,650 per month equals a total loan budget of $3,025.)

If you are taking out an HDB loan, most of the savings in your CPF Account (OA) will be used for the down payment. You may consider setting aside US$20,000 in the CPF-OA section. This is because these funds provide a safety net that allows you to pay your monthly installments in the event of unforeseen circumstances, such as a temporary loss of income.

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If you have savings in your CPF and want to have an estimated income, you can pay the entire cash advance through a bank loan.

To understand the loan limits mentioned above, you can use a home loan calculator to calculate your monthly repayment. A longer term loan means lower repayments and easier to manage.

You can also use your Ordinary CPF Account (OA) savings to pay your home loan payments.

If you need cash flow for everyday expenses and investments, paying into CPF is definitely attractive, but it means giving 2.5% risk-free interest on your CPF funds.

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In case of selling the property, the CPF-OA funds used must be returned together with the interest earned.

You can increase the 2.5% interest rate on your CPF-OA savings by repaying your loan in cash. You can keep the sales profits without having to top up your CPF.

If you have money to spare, you might consider paying off your home loan in installments to save on interest costs. Some banks charge for partial payments, so it’s important to weigh the pros and cons before proceeding.

If you decide to get a bank loan, consider getting an In-Process Approval (IPA) to better understand your borrowing capacity and speed up the buying process.

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This is a document that states how much the bank is willing to lend you, taking into account your TDSR, MSR, income and credit score.

You will need to secure an IPA before paying any home option fees. This is important because you won’t be able to get your option money back if you find you can’t rent out enough property. In some cases, the real estate agent may request an IPA before proceeding with the transaction.

Having an IPA can also help speed up the loan repayment process. Most importantly, knowing the maximum loan amount can help you avoid an emotional attachment to a home that is way over your budget. You can set realistic expectations and make informed decisions while looking for a home.

, so you can know for sure how much you can borrow for your home, and know exactly what your budget is. If you are buying or looking to buy a home in a competitive housing market, it may be a good idea to pay for your home in cash. Save money on your mortgage interest. This can help you close the deal and discourage other buyers. However, not using a mortgage has its drawbacks, such as the risks that come with investing your money in the wrong assets. Find out when you should and you shouldn’t pay for your home completely out of pocket.

Factors That Lenders Use To Determine Your Mortgage

The first step to buying a home with cash is, of course, withdrawing the money. Unless you have a lot of money in the bank, you may need to liquidate other investments and transfer the profits to your bank account. Note that you will be subject to capital gains tax if you sell securities at a profit.

Potential buyers may also ask for proof that you have money, such as a recent bank statement.

The process behind that is very similar to buying a home with a mortgage, except the mortgage lender is looking over your shoulder. Once you have chosen the house you want to buy,

A seller who knows you don’t plan to apply for a mortgage is more likely to take you seriously. The mortgage process can be time-consuming, and there’s always the possibility that applicants will be rejected, businesses will fail and sellers will have to start from scratch, said Marie Adam, a certified financial planner in Boca Raton. , Florida

What Do You Need To Buy A House?

Just as money makes you a better buyer, it also puts you in a better bargaining position. Even sellers who have never heard of “time value of money” will understand that once they receive the money, the sooner they can invest it or use it for other purposes.

After the housing bubble and subsequent financial crisis of 2007-2008, mortgage insurers narrowed the criteria they use to determine who is eligible for loans. It’s gotten a little easier since then, but it’s still possible that buyers with strong incomes and poor credit history will still ask for a special document.

This may be a smart move for the credit bureau, but it can have more ramifications.

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