Ravi Chandran
Finance home loan with proper guidance to get the best deals from lenders
A recent research suggested that there were education gaps in consumers searching to finance home loan.
The research identified the need for greater awareness and education around home loan financing knowledge gaps.
Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “I do not fault the consumers for their home loan financing knowledge gaps. The home loan financing scene is constantly changing with new Government regulations and with global trends on interest rates. This is one big reason why consumers need to work with trusted home loan specialists.”
Choosing home loan financing can be a difficult decision to make given the multitude of factors involved. This is why consumers should use readily accessible mortgage platforms with banking or independent home loan experts that can offer personalised advice and help homeowners navigate through the home loan marketplace every step of the way.
Mr Ho added, “Consumers need not feel overly anxious when they are buying a property if they do some homework and work with trusted hands who are not fly-by-night companies.”
With housing being one of the biggest expenditures many expect to invest in, it is crucial for both homeowners and tenants to determine how much of their income they should set aside for housing costs, such as mortgage payments or rent along with utilities, maintenance charges or homeowners insurance. But how does one ensure that the housing costs are affordable before finding best deals to finance home loan?
Some measures of housing affordability use the Home Price-Income ratio (HPI), where a figure of 6, for instance, would indicate that the property being purchased is priced at six times the buyer’s current annual income. There is however no international consensus on what figure signifies whether a property is affordable or not.
In some leading international cities, such as Hong Kong or London, the HPI could be quite high, with some sources putting the HPI for Hong Kong in the double digits. In other countries, in areas away from centres of population or economic activity, the HPI could be lower.
In Singapore, HDB uses the Debt Servicing Ratio (DSR), which it says is a more accurate indicator of actual housing affordability. The DSR refers to the proportion of the monthly household income set aside for housing installments.
The DSR measurement takes into account interest payments, which the HPI does not. It is calculated on an assumed 30 year loan, and the figure would rise if the loan tenure were shortened. Correspondingly, a working household may reasonably expect salary increases over time, and, assuming a fixed tenure period, the actual DSR in later years of repayment may fall.
But regardless of if you are renting your first apartment or whether have been a homeowner for years, it can be difficult to ascertain how much you can afford to spend on housing each month.
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 trying to finance home loan 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. And 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.
Loan specialists or mortgage brokers are well-informed of all the loan packages in the market and their accompanying features, compared to most borrowers, because it is their job.
Besides matching you with the right loan, they can warn you about caveats and conditions of the loan contract, which if you are a lay person you may not be aware of.
In addition, loan contracts have financial jargon that first-time borrower may be baffled with. A mortgage broker will be able to explain these to you in plain English.
Most will even assist you with the paperwork in the application process. In short they take most of the hassle out of the loan process – from search to application.
