Which Bank Housing Loan Is Best For You?
With so many banks offering home loans, it’s not always easy to find one that is right for you.
However, a little bit of research and planning can go a long way in helping you make a more informed decision about which bank housing loan will suit your needs best.
So to answer the question: Which bank housing loan is best?, we will take a look at the different types of bank housing loans and discuss which one is your preferred option.
How To Get A Bank Home Loan
It goes without saying that getting the best home loan in Singapore can seem like a daunting task.
When you’re looking at the different options and trying to figure out which one is best for you, it can be hard to know where to start.
We want to make it easy for you by providing helpful tips on how to get the best home loan comparison in Singapore.
Here are some of the things that you should consider when getting a bank housing loan:
1. Interest Rate
The interest rate refers to how much money banks charge for borrowing money from them.
You can get a lower interest rate by choosing a fixed rate loan over an adjustable rate one.
A fixed rate loan means that your monthly payments will remain the same over time (as long as there are no changes to your contract).
In contrast, an adjustable-rate loan will change as interest rates go up or down.
2. Repayment Period
The repayment period is how long it will take you to pay back your loan in full, plus any extra fees.
If you can afford monthly payments but not one big lump sum at the end, then a shorter repayment period might be best for you.
3. Home Type
Banks have different types of home loans available, so you need to figure out which one suits your needs.
For example, if you want to buy a HDB flat or executive condominium, you can apply for a HDB loan.
Consider how much money you need for your downpayment and the loan amount you should take out.
This will help determine the best home loan in Singapore that you should apply for. It should also factor how much interest rate or annual percentage rate (APR) you’ll pay every month on that loan.
You can also do some calculations by using an online total debt servicing ratio (TDSR) calculator.
5. How Much You Can Afford To Pay Back
There are some rules when it comes to getting an HDB home loan. You need to be between 21 and 65 years old and earn at least $2,000 per month.
Besides, you should have lived in Singapore for at least 10 years, and not have any outstanding debt from another HDB concessionary loan.
Types Of Home Loans
First, you need to understand the different kinds of bank housing loans available in Singapore.
1. HDB Housing Loan
The HDB housing loan Singapore is a government-subsidised loan that helps eligible Singaporeans buy their first home.
To qualify, you must be a first-time buyer, and your income must not exceed $7,000 per month.
The interest rate on this loan is set by the government (currently at 2.6%), which means that it’s extremely competitive compared with other banks’ rates.
However, it does come with certain restrictions: for example, there is a limit on how much you can borrow.
2. Bank Loans
If you don’t qualify for a HDB housing loan, or if you’re looking to buy a resale property, then a bank loan might be your best option.
Banks offer loans with different terms and rates, so shop around for one that suits your needs.
3. Fixed Rate Mortgages Loan
A fixed rate mortgage means that your interest rate won’t change over time. It will stay constant throughout the term of your loan.
Fixed rate mortgages tend to have lower initial costs than other types of loans. But they also come with higher monthly payments because you are paying back more money in interest over time.
Fixed rate mortgages are ideal for those who want to know exactly how much they’ll be paying each month. This is because there won’t be any surprises down the line when rates change.
4. SORA Pegged Mortgages
Singapore Overnight Rate Average (SORA) pegged mortgages are a great place to start.
Your interest rate will be based on the prevailing interest rate set by the central bank of Singapore, which is currently 2.6%. This rate won’t change during your loan tenure.
Home Loans For HDB And Private Properties
If you’re looking for a home loan in Singapore, you’ll find that there are a lot of options out there.
There are two main types of housing loans: HDB (or public) housing loans and private housing loans.
HDB Housing Loans
HDB loans are government-backed loan programmes designed for low-income families or couples who have been in Singapore for less than five years.
This can be an attractive option since your monthly costs may be lower compared to other housing loans.
Besides, the loans have flexible mortgage repayments with lower downpayment requirements.
Private Housing Loans
If you have enough money saved up or have other means of financing your purchase, private property loans might be more suitable for your needs.
These loans are often offered by banks and other financial institutions that specialise in property financing.
HDB Loan Vs Bank Loan
If you’re looking to buy a property, you’ll probably be faced with two options: a HDB loan and bank loan.
Both of these loans have their own pros and cons, but which one is best for you? Let’s take a closer look at each of them.
HDB loans are government-sponsored housing loans offered by the Housing & Development Board (HDB).
They are usually smaller than bank loans but they offer lower interest rates, which translate to lower monthly payments.
To apply for a HDB loan, you’ll need to meet certain eligibility requirements.
For example, your income must be below $7,000 per month if you’re single, under $14,000 per month if you’re married, or $21,000 if you are living with your extended family.
Bank loans are offered by banks and financial institutions such as OCBC Bank and DBS Bank.
The loans can be taken out by anyone regardless of their income level or employment status, although some banks require a minimum amount of savings before they’ll consider offering a loan.
These loans have higher interest rates than HDB loans but they don’t have residency requirements.
So if you are not a Singaporean, this might be a better option for you.
Fixed Home Loan Rates Vs Floating Home Loan Rates
If you’re looking to buy a property, there are two main types of home loans you should be aware of: fixed and floating.
If you’re not sure what the difference is between these two types of home loans, we’ve got the answers for you.
Fixed Home Loan Rates
When you choose a fixed home loan rate, your monthly payments will remain steady for the duration of your loan term.
This means that if interest rates go up, so will your monthly payment but only by a certain amount predetermined by your lender.
You’ll also have an annual cap on how much your monthly payment can increase over time, usually 2%.
Floating Home Loan Rates
Floating rate home loans are a bit more complicated because they change with market conditions.
The best home loan rates in Singapore are tied to changes in market conditions such as inflation and interest rates.
As such, they can rise or fall depending on how those factors change over time. They can be tied to things such as SOR and SIBOR, or the current Singapore Overnight Rate Average (SORA).
This means they could move up or down depending on what’s happening in those markets at any given time.
If you’re looking for something simple and straightforward, then a fixed rate option might be right for you.
But if you want something that will adapt as needed such as during an economic downturn, then a floating rate loan might be better suited to your needs.
How To Choose The Best Home Mortgage Loan
When you’re looking for the perfect home mortgage loan in Singapore, it can be hard to know where to start.
There are so many options designed to help you achieve your financial goals. But before you choose a bank housing loan in Singapore, there are several factors to consider.
Here’s how to choose the best mortgage rates loan in Singapore:
1. Check Out Your Credit Score
Your credit score tells lenders how likely you are to make payments on time. The answer to this determines how much interest you’ll pay if you do get the loan.
The higher your credit score, the better. This means you’ll have more options for funding and lower interest rates when you apply for a loan.
2. Choose An Affordable Interest Rate
When you’re looking at different mortgages, ensure you compare home loans by their interest rates, fees, and charges.
You don’t want a mortgage that seems affordable on paper but then has lots of hidden fees that will add up over time.
3. Choose A Fixed Or Variable Interest Rate
Some people prefer to have their mortgage payments stay the same every year no matter what happens in the economy.
They’d rather not risk having their payments go up if there’s another recession or two coming down the line.
Others like the flexibility of being able to pay more or less depending on how well their investments are doing, so they’ll choose a variable rate.
They’d rather do so than lock themselves into one fixed amount forever (which might mean paying more over time if inflation goes up).
4. Compare Your Options With A Mortgage Broker
A mortgage broker can help guide you through the process of finding the right financing by showing you all of your options.
These options include anything from fixed rate loans to adjustable rate mortgages, which the mortgage broker will explain what makes each one unique.
This way, you can choose what suits your budget. Of course, this service comes at a price.
How To Check Your Eligibility For A HDB Loan
How To Adjust Your CPF Payment For Your Housing Loan
How Much Can You Borrow For Your Home Loan?
Which Bank Has The Best Floating Home Loan?
When it comes to choosing which bank has the best floating home loan, you’ll find that there are a lot of choices out there.
Many tend to consider big banks such as DBS or OCBC because they’re more familiar with them. But, sometimes it’s worth your while to look at other options.
For example, if you’ve been thinking about getting a loan from smaller banks but are worried about the quality of their service, we recommend checking out UOB or Citibank.
These banks have great loan products and they’re well-known for their excellent customer service.
If you’re into low interest rates, UOB 3M SORA would be the best choice offering a rate of 1.60% + 0.70% per annum.
On the other hand, if you plan to refinance your bank loan soon, DBS FHR6 is the better option as it has no lock-in period. However, it has high interest rates.
Citibank 1M SORA is also a good choice with its interest rates at 2.21% + 0.78% per annum for a two-year lock-in period.
Remember to also check SORA rates as they keep on changing.
You can refer to the table below to see the rates offered by various banks.
|Bank||Interest In The First Year||Lock-In Period|
|UOB 3M SORA||1.60% + 0.70% p.a.||2 years|
|DBS FHR6||1.40% + 1.75% p.a.||NA|
|DBS FHR6||1.40% + 1.30% p.a.||2 years|
|DBS 3M SORA||1.60% + 1.00% p.a.||2 years|
|Citibank 1M SORA||2.21% + 0.78% p.a||2 years|
|Citibank 3M SORA||1.60% + 0.78% p.a.||2 years|
|OCBC 1M SORA||2.21% + 0.98% p.a.||Not specified|
|OCBC 3M SORA||1.60% + 0.98% p.a.||Not specified|
|HSBC Advance||SIBOR + 0.85%||Not specified|
|HSBC Premier||SIBOR + 0.80%||Not specified|
Weigh Your Bank Loan Options Carefully
So which bank housing loan is best? It’s not an easy question to answer.
With the options you have, weigh your priorities, and compare the features, and benefits that each one has to offer.
We recommend that you choose the housing loan that best meets your needs and what you can repay.
If you need to get a housing loan urgently, try a reputable licensed money lender like Horison Credit.
Apply for a loan now in just five minutes or contact us for more information. We will be more than happy to hear from you.