Mortgage in Singapore: All You Need To Know About It
Owning a private property is a dream for many, but in today’s world, it often requires a proper mortgage plan. As of 2022, the total mortgage amount in Singapore was approximately SGD $300 billion, reflecting the importance of mortgage loans to finance property purchases. However, the mortgage process can be overwhelming for those unfamiliar with the process.
A mortgage involves significant financial commitment, making it daunting for many. But don’t worry; we’ve simplified the essentials for you. If you’re eager to buy a new private property but unsure about securing a mortgage in Singapore, you’re in the right place. Here’s a concise guide to understanding mortgages in Singapore.
What is a Mortgage?
A mortgage is an agreement between a lender and a borrower, where the lender uses the property as collateral. This arrangement ensures that the borrower repays the loan amount along with interest on time. If the borrower fails to make timely repayments, the lender has the right to take possession of the property and sell it to recover the debt.
Therefore, it is important to assess your financial status and ensure you can make timely repayments before applying for a mortgage in Singapore. Proper financial planning can help you protect your property and meet your repayment obligations.
Fundamentals of a Mortgage in Singapore
Before applying for a mortgage in Singapore, one should understand the key terms and components of a mortgage. Let us help you break it down:
Loan Amount
The total loan amount you receive is typically referred to as the loan quantum. Lenders usually approve up to 75% of the property’s purchase value for the first mortgage loan, which is part of the government’s effort to maintain financial stability and prevent excessive borrowing.
Loan Term
The loan term is the period allotted for repaying the mortgage. When you sign a mortgage contract, it specifies the timeline by which you must repay the loan, which can be as short as 5 years to as long as 30-35 years.
Interest Rate
Every loan includes interest, representing the cost of borrowing. There are two types: fixed and variable. A fixed rate remains constant, while a variable rate can fluctuate with market conditions. The interest rate type is determined when you sign the contract, significantly impacting your repayment strategy.
On-going Payments
A mortgage loan in Singapore is usually paid off through multiple equal monthly instalments, which also cover maintenance and insurance costs. Therefore, it is crucial to understand the total monthly payment amount before signing the loan agreement.
What to Look for When Getting a Mortgage in Singapore
Most people in Singapore are usually confused about what features to look for in a mortgage agreement. This also leaves people in a dilemma whether they should approach a bank, broker, or Finance Institution for a mortgage. We can help you navigate this confusion. Here are features you should account for before signing a mortgage.
Basis for Loan Approval
For a mortgage, you are required to show a certain amount of income and credit score to prove whether you can afford to pay back the loan amount. Banks base their mortgage approval on this information under the Total Debt Servicing Ratio (“TDSR”) guidelines, a credit assessment framework as approved by Monetary Authority of Singapore (“MAS”).
TDSR rules and calculations
Apart from your credit score and monthly income, you are also required to submit a long list of important documents to prove eligibility for the loan through TDSR. Complex documentation is one reason why most people in Singapore find it difficult to get a mortgage loan.
Approval Process
An approval process is a huge factor that helps you decide where you need to get a mortgage in Singapore.
Loan Disbursement Time
After your loan has been approved, it takes time before the loan amount is disbursed to you.
Why Choose ValueMax?
As mentioned earlier, a mortgage can be an overwhelming process, and without proper knowledge of the basics of a mortgage in Singapore, one might find it fairly difficult to find a good deal. However, we at ValueMax (VM Credit Pte Ltd) are here to help you.
We offer clients easy mortgage loan agreements that only require essential but minimal documentation and the private real estate for the approval of loan. Our loan terms are highly flexible, and we guarantee an approval of your loan within a week.
We also make sure that loan disbursement is done within 3 weeks of accepting the loan contract. And guess what? There are no hidden fees! We provide a high level of transparency with our lawyers, who handle all the necessary documentation. Since our loans are privately funded, we are devoted to providing quick and efficient service.
So, what are you waiting for? Go to ValueMax to find out about how to restructure your loans now!
