+ Obtaining An Equity Home Loan In Singapore
Jan 29, 2015
+
Obtaining An Equity Home Loan In Singapore
+By Sean Lim
Founder of FindaHomeLoan.coTrusted by clients, Quoted in media
+About Us
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+ Reasons To Obtain Equity Home Loan Iin Singapore
Many homeowner consider using an equity
home loan as a debt consolidation loan to
pay off their existing car, education and
personal loans, OR as a cheap form of
borrowing at current rates.
+
Some intend to get better returns than the loan's
interest rates. You can borrow at ~1% and deposit in a
high-yielding foreign currency savings account, REITS,
stocks or basically any product that’s higher.
Some consider it a great way to generate funds for
your business working capital over a long tenure,
especially when mortgage loan rates are lower than
other credit facilities.
Reasons To Obtain Equity Home Loan
+
It is however important that you do a complete analysis
to find out if it is feasible getting equity loan to
supplement your existing housing loan.
With the introduction of TDSR, financing is no longer
straightforward. Many are surprised at how limited their
borrowing capabilities are.
A Complete Analysis
+
The first rule to remember while getting a loan against
your property is to determine the property value as
your loan amount greatly depends on this. The
approach is to obtain the highest valuation from the
banks that may consider borrowing you the maximum
Loan-to-Value (LTV) ratio. The LTV ratio if you have one
property loan is 80%.
Determine Your Property Value
+
It is to be noted that not every bank offers you 80% LTV.
Contact us and we will put you in contact with the selecte
d banks
. We would advise you to shortlist multiple banks at this
stage, providing you choices.
If you are applying for a term loan on a second property,
then the maximum LTV is 50% across all banks, as
regulated by MAS. Unfortunately, there is no bank that
can loan you beyond 50% LTV.
Determine Your Property Value
+
Equity home loan interest rates are similar to regular
mortgage rates and can be fixed, variable based on board,
SIBOR or SOR rates. Different lenders generally have unique
assessment policies and criteria to meet such as Total Debt-
Servicing Ratio, which is why it's important you check with
each lender to find out in the following proposed approach.
Shortlisting The Rates
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After obtaining the LTV, valuation from the selected banks
and deducting the outstanding loan amount, CPF funds used
and accrued interests (if any), you would have an idea on how
much you can borrow.
Equity Loan Calculation
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1. Make sure you can afford the monthly
installments. No point in taking a loan that you
cannot repay or a more expensive loan than you
need.
2. If you are getting this loan to replace an existing
loan, find out if there is a lock-in period where you
can be charged a fee if you redeem the loan
before this period expires.
4 Things To Remember
+
3. Make sure you weigh your options and decide if
you really need the loan in the first place as
you have to be careful whenever you take up
new loans.
4. If you own your home, getting a equity loan
against property places your house at a risk if
for some reason you default at paying the loan
amounts.
4 Things To Remember
Start by Comparing Equity Rates Here!
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