When searching for the home of your dreams, the next thing on the mind of most people will probably be how to finance it. A home loan is an important part of completing your property purchase in Singapore.
With record-high HDB resale flat prices and continually climbing private property prices, finding the right home loan is more essential than ever. You want to ensure that you get the most savings and remain comfortably committed for the rest of your financial obligation, especially in the era of rising interest rates.
So, how do you choose the right one? Here’s the outline of our article, click to jump ahead:
- What Makes Advice “Right” in a Mortgage Context?
- Will I Benefit From Getting the “Right” Advice?
- What Are Useful Sources of “Right” Information?
What Makes Advice ‘Right’ in a Mortgage Context?
Reliability of Mortgage Advice
Providing honest and unbiased advice makes up the basics of what counts as being a mortgage advisor. Here, we refer to information tailored to benefit you and your unique financial situation and not for someone else’s profit.
When it comes to obtaining reliable advice in choosing home loans, your mortgage advisor’s experience and relevant industry knowledge matter. An expert who has been dealing with HDB and private property loans for over a decade would potentially be able to give you more credible and extensive advice compared to one who has just joined the field for two years.
Bankers may be better primed to offer you advice if you have decided on a specific bank to obtain the loan. However, if you have yet to narrow your options, mortgage advisors can likely give you more holistic advice on the range of loans offered by different banks.
To give you a better idea of what to look out for, here is a quick checklist when choosing a reliable mortgage advisor for your next home loan:
- Credentials
- Relationship/access to banks/financial institutions
- Years of relevant experience in the field
- Service(s) provided (e.g. if it is a one-stop streamlined service from start to finish for the application process)
- Fees and interests charged (if any)
Relevance of Advice to Your Financial Needs
With the fast-changing property market in Singapore, it is crucial to obtain updated advice in line with rules and regulations. This is because using outdated information may lead to wrong decisions and affect your financial health in the longer term.
For example, the Mortgage Servicing Ratio (MSR) of 30% now takes into consideration a 3% interest rate floor. This means the amount you can loan is affected, and by extension, the type of property you can afford to comfortably finance. A good advisor would be able to assess your situation accurately and provide you with relevant options.
Between a fixed vs floating rate home loan, which one makes sense for your financial needs? Should you use your CPF to pay off your home loan? What about whether you should take a SIBOR- or SORA-pegged loan?
Planning and research are crucial when selecting a home loan in Singapore. You’ll also want to have the right someone to help you exercise financial prudence and see that you do not overstretch yourself.
Why Does the ‘Right’ Advice Matter?
While there is no single right way to manage your finances, there are certainly some lessons that only experience can teach.
For instance, you may be thinking of taking on a larger loan to finance a property you like. But this would require you to pay a higher interest rate amount and remain in debt longer. So, should you go for your dream home or buy a more affordable property?
With reliable advice from an experienced professional, you will gain a broader perspective on the pros and cons and better decide if you should enter the market. Getting the ‘right’ advice straight off the bat will allow you to make sound and more informed financial choices effectively.
You can also speed up the loan application process with the help of an expert. Having your application vetted by a professional can prevent save on critical oversights as your advisor can take care of all the paperwork and nitty-gritty details!
Will I Benefit From Getting the ‘Right’ Advice?
Suppose you have read through our Home Financing articles and feel that you are already armed with sufficient knowledge of obtaining a home loan that best suits you.
Great, but if you are feeling unsure, it always makes sense to get a second opinion before securing a mortgage. After all, two heads are (usually) better than one and obtaining professional advice would be greatly helpful for many people.
Given the sea of home loan information on the internet, picking out sound advice can be confusing, especially when you come across contradicting information.
Who can benefit most from getting the ‘right’ advice? We recommend you save time, effort, and money by speaking to an expert if you are:
- A first-time home buyer
- A first-time investor
- An elderly unfamiliar with digital devices and online process
What Are Useful Sources of ‘Right’ Information?
With the rise of fake news and the spread of misinformation in recent years, it is vital that you obtain your information from credible and legitimate sources that are up-to-date. Fact-check the latest procedures and requirements when deciding on your next home loan against government websites (e.g. Monetary Authority of Singapore, HDB).
And while you can take mortgage advice from your relatives and friends, it may be good to take it with a pinch of salt unless they are professionals!
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