Are you planning to make your investment on your first home and you’re clueless about things?
It happens with everyone. Buying a house in Singapore can be an irksome task altogether. For most of us, this would be the time when we push ourselves for a loan that can last for some 25 years or more.
Whether you are looking for a simple BTO or a studio pad, before you take the plunge you might have to sink yourself into the encyclopedia of rules, financial obligations and legislation in Singapore.
Getting a home loan is not as easy as it you might think, there are various things to consider such as your debt history, your eligibility based on your income slab, your credit score etc. We share with you 6 things to know before you apply for a home loan to make the investment on your first house. Given enough time to understand loans and investment would help you in the long run.
Before you make your final move on your first investment, consider the following things:
Research and know about different types of housing and lease
You would have created an imaginary figure of how your dream home should be but finding the same in Singapore is going to take quite a research before you actually go for it. To begin with, it’s necessary to research and understand the different types of housing and lease options available.
One of the trending things going on here for homeowners-to-be is whether to opt for a freehold property, a 99year lease or 999 year lease property. The basic difference is that freehold property is on a higher end (almost 10 to 15% higher than the rest in the same area) because they are better than the rest. The 999 year lease property offers better cost stability among the leasehold choices. Before you apply for a loan, decide on the type of flat to buy and know if you can afford to buy it.
Know your credit score
One of the essential factors that play a key role in getting your home loan approved is your credit score along with your TDSR (Total Debt Servicing Ratio).
When you apply for a home loan, the first thing that would be checked by both HDB and the bank would be your credit score. This TDSR would determine which property you can afford to buy and your home loan amount eligibility. Keeping a good credit score can make the home loan process hassle-free.
Know about the housing grants that you can avail
There are aplenty of housing grants and schemes available for various categories such as married or engaged couples, singles above 35 years old etc. You can contact a HDB representative to know more about the process and grants. This will help you to decide on home much you might require as home loan.
Have you cleared all your debts?
If you have a chain of debts while you apply for a home loan, it might impact the home loan process. The TDSR might restrict your loan quantum if you’re already under debts. This TDSR gives the ratio of income to repayment of all your loans. Clear off all possible major loans before you apply for a home loan. Plan well ahead so that you’ve enough time to clear your debts before you go for a home loan.
Compare the housing and renovation loans available
You would need to go for a home loan for sure but getting loan with better interest rates is your choice. A wise move would be to research all the housing and renovation loans available in the market and do a comparative study. You can even avail the services of a mortgage broker (for free) to get the market data. You don’t have to pick a bank just because it’s close by, instead look for the terms they offer and make the right choice.
Make the right financial move
Buying your first home can be an exciting experience but making it a right financial move is equally important. Ask yourself before you decide on a flat: “Can you afford it?”
Getting a home loan approved is still easy as compared to the repayment process which essentially takes quite a few decades. More often the banks would be willing to offer you highest loans, but think about the repayment as can turn into a financial burden.
It’s natural to be excited about your investment on your first home but on the other hand, it’s equally necessary to take every step carefully. Hope the above shared tips would give you an insight before you take the final step towards your first home.