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How to Choose Best Home Loan Policy

In theory, a home loan can be taken for anything. The main condition is that you leave your real estate as security for the bank.

In practice, the choice is, of course, limited. Not all banks issue loans to the latter and here comes the role of good money lender in Singapore. It should be remembered that usually apartments are purchased as second homes in property, because they cannot be registered – according to the law it is considered non-residential. But the apartments are distinguished by a lower price and the possibility of free redevelopment.

Home loans can be taken both for housing in a newly built house and a new building, and on a “secondary” market, that is, in a long-built house. In the first case, the apartment is sold by a construction company, in the second the private owner is the owner of the apartment.

What should you look for when choosing a home loan?

The key factors in choosing a home loan are the amount of the down payment, the rate and the term.

Interest rate

Best interest new home loan in Singapore depends on a number of factors, in different banks they can differ by several percentage points. It should be understood that a low rate on a home loan may imply a significant subsequent expenditure on additional commission on the loan, which are provided in the bank.

An initial fee

As a rule, a home loan assumes an initial contribution at the expense of the borrower’s own funds. Such a contribution can be from 10% to 30% of the value of the loan itself. If possible, you should make the largest possible contribution, as it will directly affect the annual interest rate offered to you by the bank and the amount of the monthly payment for the loan. Nevertheless, the initial payment should not “eat” all available funds at your disposal. It is necessary to take into account not only additional expenses, besides the initial payment and monthly payment, but also the fact that one should always have a “financial security pillow” in reserve – an amount equal to at least three home payments.

Ideally, it is worth taking such a home amount and for such a period that the monthly payment on the loan does not exceed 40% of the principal borrower’s income.

Term

Terms for home loans also vary, as a rule, from 5 to 30 years. However, the last estimated year of home repayment should end before the borrower’s (retirement) age. Some money lenders are ready to lend to citizens up to 75 years, but the rate on the loan in this case will be much higher, as well as the cost of life insurance.

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