Professional Home Loan Advice: Is It Necessary? (2023)

PropertyGuru Editorial Team
Professional Home Loan Advice: Is It Necessary? (2023)
In a country with steep property prices like Singapore, the world’s second most expensive city to live, a home loan is probably one of the most important decisions you will make since it is going to help you with a big-ticket purchase financially.
With the plethora of easily accessible and free information online, some people may feel that professional advice is unnecessary when choosing a home loan as they can obtain the instruction on their own. However, others may differ as they think that expert advice is needed to help them ease the entire process.
Furthermore, different types of home loans are available depending on the property you wish to acquire. For instance, if you’ve made up your mind to buy an HDB flat, you may be presented with the choices of applying for an HDB or bank loan.
In this article, we will discuss the pros and cons of obtaining professional advice when selecting the ideal home loan for you.

DIY Research or Professional Advice?

Both DIY research and seeking professional advice have their advantages and pitfalls when selecting a home loan. First, take DIY research – you might find it the more pocket-friendly option with free information readily available online. Also, it’s convenient and fast, permitting you access without having to leave the comfort of your home (or phone).
However, the pitfalls include the accuracy of information online, which may become outdated and thus unreliable, given the ever-changing rules and measures of the property market. Since regulations constantly evolve based on market conditions, it’s sometimes difficult to get the most up to date information about property and loans online compared to an advisor.
In addition, DIY research may often yield generalised results for the public and may not be most suitable for your own needs.

4 Reasons Homebuyers Seek Professional Advice When Choosing Home Loans

1. Better Clarity in Financial Situation

If you are inexperienced in property and mortgages, the sea of information out there may just overwhelm you. Therefore, getting professional advice would be helpful in giving you a better perspective on your current finances, helping you decide what you can purchase comfortably and identifying the ideal type of loan options available.
Expert advice: PropertyGuru Finance’s Mortgage Affordability Calculator provides you with a quick estimate on the property you can afford according to your loan eligibility!

2. Planning Your Property Purchases and Investments For The Future

With the right advice from experienced advisors, you’ll be armed with the knowledge to plan for future property purchases and investments. For instance, you’ll be able to make better financial judgements on when to refinance, sell, upgrade, or right-size your property.
Since a layperson may find home loans a little confusing as the amount of money he can borrow is determined by up to four factors: age, salary, property valuation and Loan-to-Value (LTV) limit (LTV) limit as determined by their Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR).
For instance, the new maximum LTV ratio for bank loans is capped at 75%, with 20% to be paid using a combination of cash or CPF Ordinary Account (OA) savings and the remaining 5% paid in cash only.
Moreover, with the MSR now capped at 30% (applicable only to HDB and EC purchases), and the TDSR for private properties reduced to 55% after cooling measures in December 2021.
This means that a higher 5% upfront downpayment and reported income has been required to qualify for the same amount of loan when buying a property since December 2021. Therefore, getting clear advice would be beneficial when selecting your next home loan as your advisor would ensure that you are kept updated with the latest information and avoid any miscalculation.

3. Ease Confusion with Paperwork and Documentation

An experienced mortgage advisor can offer you the right advice, help you mitigate confusion and fuss over the paperwork and assist you in collecting the documentation required for the home loan application.
For example, if you are unaware of whether you should apply for an In-Principle Approval (IPA) first or if your IPA is still valid following the recent property cooling measures announced in September 2022. While the new changes may cause some confusion, obtaining the right advice can help ease anxieties as banks would have to recalculate the debt obligations and repayments for all new applications due to the reduced limits. In this scenario, a mortgage advisor would be able to provide you sound advice and assist you with the necessary paperwork when reapplying for the IPA.
Hence, with the requirements for different types of properties changing every few years, having professional and up to date advice will help you realise your next dream home.

4. Getting Mortgage Advice Can Be Helpful When Refinancing

Compared to the more straightforward new purchase loan application, refinancing and repricing of home loans may be an unfamiliar concept to some home buyers. With so many options available from different banks and financial institutions (FI), figuring out which package works best for you can be a daunting task.
For a start, we recommend you try PropertyGuru’s mortgage comparison tool to review home loans across major banks with the latest interest rates to find suitable loans to refinance to.
Also, when looking to invest or generate passive income from a property, there may be requirements and regulations you are unsure. Getting appropriate advice would be immensely helpful in assisting with your decision-making and better decide your investment plans.
It is evident from the above that seeking professional advice is beneficial, or even necessary, for gaining greater clarity about your financial health. However, sometimes you may find that such advice is not necessary.

When is Advice Not (100%) Necessary for Choosing Home Loans?

With our experienced PropertyGuru Finance mortgage experts, who are kept well updated with industry knowledge and experience from working with various banks, you might find their advice beneficial in helping you choose your next home loan. However, you might also feel that the following situations would make obtaining advice less helpful.

Familiarity With Mortgages

Suppose you already have a solid finance background and a clear outlook of your current financial situation. In this case, professional advice may not be as helpful since you already know which home loan to opt for your property.
Also, if you monitor property trends and have a sense of the best time to invest, outside advice may also not fully capture and reflect your personal investment views and objectives.

Wider Selection of Products and Services

The fact that our mortgage experts are not limited to a single bank, nor do they charge you a fee, allows them to provide objective and unbiased advice on a variety of home loan packages available at different banks. This contrasts with a banker who works for a particular organisation and may not be able to provide you with a holistic advice on other packages available elsewhere which might be more suitable for you.

To Obtain Advice, or Not, When Choosing Home Loans?

We believe this is ultimately up to you since everyone comes from different financial backgrounds and has differing requirements. As both options have multiple benefits and drawbacks, it is ultimately your decision. However, be sure to understand all the terms and conditions, documentation, and paperwork needed before putting pen to paper.
Still unsure of what to do, you can always rely on PropertyGuru Finance as a useful and reliable source of objective and unbiased mortgage advice. The best part? Our services are complimentary and come at no cost! No matter what you decide, our friendly and approachable PropertyGuru Finance mortgage experts are always here to assist you!
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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.

More FAQs on Whether to Seek Home Loan Advice in Singapore

Most people would either apply directly to a bank or get mortgage advice from a mortgage advisor.

A mortgage advisor could help you save time and money by guiding you through the process and suggesting the best loan for your specific needs.

To ensure that you are getting sound advice from a professional, you should learn about your advisor's credentials, access to banks or financial institutions, and experience level.

Information may vary based on the individual, but most will receive advice on their eligibility for a loan, competitive rates, and assistance with their application process.

When negotiating with your bank fails, you can speak with a mortgage advisor who will try to match you with a bank that may be more comfortable accepting your loan.