Ravi Chandran
If you don’t go for a customised home loan, but would settle for one meant for the mass market, you may not get a good deal
Not all home loans in Singapore are created equal – as some will try to charge more than others. This is why it is very important to find the right lender who meets your needs for more funds. Many factors come into play when you are searching for home loans in Singapore – factors like, if have you defaulted on home loans in Singapore or other loans in the past and how you service your existing loans.
All mortgages in Singapore are not equal, which is why you need a customised home loan
All these factors affect your credit score. A credit Score is a number used by lenders as an indicator of how likely an individual is to repay his debts and the probability of going into default. It is an independent assessment of the individual’s risk as a credit applicant.
Information on all home loans is available on the internet, but finding one with a reasonable interest rate can be a challenge if you have defaulted on any loan repayments before. If you have defaulted on home loans in Singapore in the past (why Home Loans in Singapore? This is because the credit bureau will not be able to check your credit status or record in another country), this can make it extremely hard for you to find a lender with a reasonable interest rate.
The lenders’ intentions to better protect their monies and ensure repayments is also understandable. But regardless of if you have got a good credit score or not, every one needs some good tips on how to secure the right loan from the right lender.
Finding all home loans from across 16 lenders
For example, if you are looking for a customised home loan, there are 16 banks which offer retail mortgages. The Fed interest rates may go up once again in a few months, which means that the interest rates for bank loans here will follow suit soon.
But the truth is, not all 16 lenders revise their mortgage packages as soon as the the SIBOR rises. There is often a laggard response from the lenders and this would be your opportunity to grab the right loan for you, and that too with the lowest interest rates.
To Get a Good Customised Home Loan, Get Your Credit Together
As said earlier, a credit score is a number that the lenders consider before they determine if they should approve your application for loans in Singapore. It is a joint effort between all the major lenders here, where data about consumers’ credit history is pooled together and aggregated. Within the aggregated data, lenders would have access to records that show the number of accounts that you have across different banks, and your payment history.
After crunching the available data, each account holder is then assigned a credit score. This indicates how good or bad of a risk you might be to the lender as a customer. The higher the number (up to 2,000 and AA rating), the better your credit score.
Although the the exact weightage of how your credit score is calculated isn’t public knowledge, the factors that the Credit Bureau of Singapore (CBS) uses in determining your credit score is.
Factors like usage patterns of loan facility (e.g. if you have been making large purchases or transactions lately); your recent credit account activity (The number of credit facilities an account holder has is considered by banks as liabilities as they may perceive that you are over-extending yourself); and your account delinquency data, or how you have fared as a customer (this means where possible, always avoid making late or partial payments for your facilities).
Other factors considered by CBS include your credit account history, or how long you have been a customer (factors like if you have you been a loyal customer of your bank since you received your first credit card from them); how much available credit do you have (your credit score is affected by the number of accounts you have with various banks in Singapore); and enquiry activity of how many organisations have asked about you (having too many enquiries might indicate to banks that you could be taking on more debt than you should).
So if you looking for loans in Singapore, be disciplined in your spending habits to avoid going into debt, limit the number of credit facilities that you have across the different lenders, avoid defaulting on your repayments, and always paying your bills in full, on time. Also, avoid applying for accounts that you may not need.
Your Work Stability Matters
But loans in Singapore are not disbursed just based on your credit worthiness. Your work history is a very important consideration as well. If you are often are out of work or switch jobs frequently, you might not be the best candidate for a large loan. If you are a professional like a psychologist, it may be easier to get a loan than if you are a freelancer. A freelancer will have to prove nearly all his income, which means that loan process becomes that much more difficult.
Knowledge of All Home Loans Offers you Qualify for
With a good number of local and foreign financial institutions here, the choice of a lender and its packages can be mind boggling. Imagine having to compare over hundreds of different loan packages and wondering which is best for you. Even if you are a specialist in finance, differences between the loans in Singapore are not so straight forward, because there are quite a few variables.
This is where an independent loan specialist maybe useful for you in your search for a loan which is the right fit for your needs. Without any partiality, the independent loan specialist can compare a range of products and lenders. This will help you save time and money, avoid confusion, and improve your chances of getting approved, as well.
So if you are applying for home loans in Singapore, the lesson really is – never settle for the first loan you are offered as it might not be the right fit for you.
If your credit worthiness is suspect, getting the right loan may be more difficult but certainly not impossible, especially if you have the right independent loan specialist to help you in your search. Ad the best news is, the services of an independent loan specialist is often free.
For starters, you should read up more so that you have some basic understanding of how an independent loan specialist can help you in your search for the right loan.
