Home shopping in Singapore appears simple while you tour display units and chat with realtors. Until you come to the money portion, that is. Cramming for an Economics test in the midst of all the financial jargon, a million pros and cons to balance, and the dreaded paperwork is like being back in high school. There is a plethora of uncertainty. Check out OCBC corporate account opening to get loans.
Where May a Person In Singapore Apply For a Mortgage Loan?
You may get a mortgage to pay for an HDB flat either through HDB (which we’ll refer to as an “HDB loan”) or from any of the banks in Singapore (which we’ll refer to as a “bank loan”). Here are three things to think about while you make your choice:
What’s The Lowest Interest Rate On a House Loan You Could Get?
Your mortgage interest rate for an HDB loan has been fixed at 2.6% p.a. (determined by adding the current CPF interest rate of 2.5% to the prime lending rate of 2.60%) for many years.
However, bank loans come in a variety of forms, each with its own set of terms and interest rates. However, a bank loan is your best bet if you want to borrow money at a rate lower than 2.6%. If you’re dealing with a substantial quantity of money, the savings might add up to a lot. It might also make you eligible for a greater interest rate on your savings accounts.
There are just a few different home loan options available from any given bank at any time. There are primarily three distinct categories:
Low Variability Mortgage
The rate that changes periodically (either about the bank’s fixed deposit interest rate or an external rate such as SORA)
Pricing for a Floating Board (the bank comes up with an interest rate that may change at any time)
Homeowners may prefer a floating rate loan over a fixed rate loan because of the lower interest rates often offered by the former.
DBS also provides a Two-in-One Home Loan in which the borrower can have some of the loan amount covered by a fixed rate package for security and some of the loan amount covered by a floating rate package to take advantage of interest rate fluctuations.
In a Nutshell, Interest Rates For Bank Loans Are Often Lower Than Those for HDB loans.
The primary disadvantage is that you’ll need to keep an eye on your interest rate, as these contracts often last only two or three years. That’s why it’s a good idea to renegotiate (with the same bank) or refinance your mortgage every so often (pick another bank for your mortgage). Always remember to check refinancing home loan Singapore before finalizing the loan.
Keep in mind that you are free to switch from an HDB loan to a bank loan at any time to take advantage of the cheaper interest rates offered by the latter at any time.