A Comprehensive List of Common Singapore Housing Loan Mistakes
Owning a house is the dream of every Singaporean but this is easier said than achieved. However, the financial markets seem to have realized the problem you might be experiencing which is why housing loan products are now common. Whether you are looking for a HDB or private property, there are myriad lenders who are willing to listen and offer you a customized deal.
Basics of Housing Loans
In the simplest terms, a housing loan is financing for your dream property where the title deed is held as collateral by the lending institution until total repayment is done. Such financing is about 80% of the total purchase value of your property.
There are many other pertinent issues around these loans such as interest rates, Additional Buyer Stamp Duty (ABSD), lock-in packages, loan-to value (LTV) and all of them can affect your rate of repayment. Nevertheless, you need to be cautious when buying a housing loan. Here are some common mistakes to avoid so that you can get the best loan deal;
- Overuse of credit cards; modern lifestyles have made credit cards almost inevitable. You might find yourself falling for their convenience and in the process increasing your debt. When your bank is assessing your credit, this will be one of the drawbacks in clinching a good deal.
- Lack of pre-approval; when you get pre-approval from your bank or any other institution, you increase your negotiation power in the home market. You can thus talk to realtors on your terms because they understand you are not wasting their money. When you get a good bargain on a home, it translates to even a better loan package.
- Late payments; if you live in Singapore, you understand that almost every utility will be reflected in official records. As such, avoid late payments if at all you want the loan provider to give you a reasonable deal. Late payment is a sign of unreliability and there is nothing banks fear as much as an unreliable client.
- Reckless selection of a lender; when you spot your dream home, adrenaline kicks in and you start searching for any lender who promises low rates. What you do not consider is the the reputation of the housing loan provider. Always be very keen and take your time to evaluate as many lenders as practically possible.
- Closing costs; you need to consider all the pertinent fees of your home purchase. Most lenders will provide 80-90% financing and hence, be ready to write a check for attorney fees, title insurance, taxes and any other lender’s fees. In essence, you must plan for all these costs while applying for a housing loan.
If you want to own your dream home today, go on and take a housing loan but ensure you avoid these common errors above.