Comparing mortgage deals, staying updated with the latest interest rates, and performing regular financial health checks are all part of responsibly managing a home loan. With household liabilities (which include mortgage and personal loans) increasing by 1.7% in Q1 2024 year-on-year, homeowners may be wondering how to best manage their mortgage.
Should you refinance now or hope mortgage rates in Singapore drop in 2025? What are the current home loan refi rates? Does it make sense to pay off more of your home loan now? You may even be wondering if you should buy an investment property or right-size your current property.
To answer these questions, we consulted our in-house PropertyGuru Finance Mortgage Experts. Here’s what they have to say.
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Key Considerations for Property Buyers in Their Mid-30s
For the purpose of this article, we’ll assume you’re likely in your mid thirties, in a financially secure position, and wondering what should be the next step in your property ownership journey.
It’s likely your key considerations are:
- Upgrading your property and determining the loan tenure for your next home
- Paying off your mortgage early for your existing home
- Finding an ideal exit strategy for retirement
1. Loan Tenure for Your Next Home
When taking on a new home loan in your mid-thirties – whether you are upgrading or purchasing your first property – loan tenure is a critical factor. Loan tenure is the amount of time you have to repay your principal loan and interest.
A longer loan tenure is suitable for those who need to have more cash on hand and want more flexibility in managing their debt. However, the downside is you are likely to pay more interest over the duration of your loan term. Conversely, a shorter loan tenure reduces the overall interest amount but increases the monthly mortgage instalments.
For those upgrading from an HDB flat to a condo, your mortgage repayment amounts will likely increase along with the price of your new property (and the amount you’re likely to borrow). That’s why it’s prudent to opt for a mortgage with a loan tenure that balances monthly affordability and total interest paid.
Remember that as you get older, the maximum loan tenure yo Remember that as you get older, the maximum loan tenure you are eligible for will be lower, impacting your maximum Loan-To-Value ratio or the total amount you can borrow for your property.
Find the right loan tenure for you by:
- Comparing home loan interest rates based on different loan tenures.
- Using the PropertyGuru Finance Mortgage Calculator to see how loan tenure affects your monthly repayments.
- Contacting PropertyGuru Finance’s Mortgage Experts to find the right home loan based on your unique situation.
2. Paying off Your Mortgage Early or Refinancing Your Loan
As someone in their mid-thirties with a decent monthly income and cash savings, you might be wondering, "Should I pay off my mortgage early?"
Paying off your home loan early can help you save interest costs over time and achieve financial freedom sooner. To repay your home loan, you could use a combination of CPF savings and cash to finance your mortgage.
There are also multiple ways to pay down your mortgage, such as making extra monthly payments against the principal, thereby reducing the total interest, or making a lump sum payment. However, you may incur an early loan redemption penalty for making prepayments during the lock-in period.
By clearing your mortgage loan, you could even start looking for a new investment property (perhaps even a commercial property).
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But of course, there are cons to paying off your mortgage early. If you use more of your CPF OA monies to pay off your loan, you are foregoing the potential CPF earnings from the accrued interest.
And if the interest rate on your mortgage is low, it might be financially advantageous to invest your surplus funds in other assets that could provide you with potentially higher returns. Plus, appreciating property value could make prepayment unnecessary.
If you don’t want to pay off your home loan but wish to lower your monthly repayments, consider refinancing your mortgage. By securing optimal home loan refi rates, you could potentially save hundreds per month on your mortgage. Start by comparing refinancing mortgage deals, checking you’re refinancing eligibility, and assessing your potential savings.
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3. Ideal Exit Strategy for Retirement
| Downsize your property in your old age | Sell your current property to a smaller one to release equity; you could possibly use the proceeds to fund the entire property with cash |
| Rent out part of or your entire property | Rent out your property for monthly retirement income; the additional income can also help service your mortgage |
| Sell your property at the right time before buying another property | Timing the market right to sell your property at peak prices for maximum returns will reduce the amount you have to borrow. |
In your mid-thirties, you may think it’s too early to start thinking about retirement but planning your exit strategy helps you make informed decisions along the way about your finances and mortgage. In your golden years, the last thing you want to worry about is having to still service a mortgage.
With your existing property, you can consider three options: downsize your property in the future, rent out part or all of your property, or sell your property. Whatever you choose should ultimately align with your retirement goals. Speak to PropertyGuru Finance’s mortgage experts to ensure your property is integrated into your estate planning.
Need Home Financing Advice? Ask our Mortgage Experts
Comparing mortgage deals and home loan interest rates is just one part of what our PropertyGuru Finance Mortgage Experts can do. Aside from helping you explore your options, they can provide tailored home financing advice.
From helping you choose a home loan to securing an In-Principle Approval (IPA) for your desired home loan, our team of dedicated Mortgage Experts are here to guide you every step of the way. Best of all? It’s free!
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Disclaimer: The information is provided for general information only. PropertyGuru Pte Ltd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.