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After several tries, the MAS measures significantly changed, impacting home loans and their interest rates. A person willing to apply for a home loan needs to follow new restrictions.
These include:
- Additional 20% for Buyer Stamp Duties
- 30-35 years of loan tenures, including the refinancing
- Second and third-time buyers reduced their loan quantum to 40% and 35%.
With the latest MAS measures, the bank needs to compensate for a decline in home loan volume by increasing the interest rates.
Taking a home loan should take a lot of studies and researches. Make sure to stay up-to-date when it comes to the latest government updates regarding home loans.
Visit Singapore’s leading finance platform ROSHI to find out more.
Here are the things to keep in mind before jumping into a home loan application:
- Don’t just dive into the loan package features with promising returns.
There could be enticing loan packages offered to you by the bank. However, you need to make a keen observation and research before biting on their schemes. Although some of these could be helpful, it might just damage your financial reputation in the future if you don’t have a maintaining large sum in your bank account.
For example, banks might offer interest offset loans, which reduces your home loan interest rates from your account’s interest rate. It could sound practical, but make sure you always have the right amount on your bank account, or else your interest rate might increase.
On the other hand, the internal board rates are also offered by the bank. Banks determined the internal board rates and not the SIBOR. You probably would know how long spreads last or whether it will take several years. The loan interest might rise in 3-year time.
- Go with the fixed-rate home loan if you have a stable monthly income.
Buyers usually go with the floating rates than fixed-rate since they said it would cost more. However, when MAS measures changed, the current amount is almost equal.
When you go with the fixed-rate, you don’t have to worry about the fluctuating monthly charges. You can always budget ahead of time.
- See how much loan you can still take.
Before banks accept your home loan, the latest TDSR regulations calculate how much loan you can take. They consider your current credit status and the balances on your card. The debt obligations you have to pay attention to is credit card debts, business loans, personal loans, and car loans. Banks will put these credit records and your salary into a ratio.
That’s why it is essential to pay off any amount to make a home loan purchase.
Before you give an initial down payment, you have to make sure the bank will approve your home loan. Take time to research what the banks need to see by applying for In-Principle Approvals. It will also give ideas on how much of a loan you can take considering your current financial status.
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