The mortgage is one of the loan types available for the purchase of condominiums in Singapore. There are many options available for this type of loan like the re-finance, cash out, home improvement, equity loan, purchase loan and others. The first step is to choose the condominium and apply for the mortgage loan. When you contact the seller with the details you can hold the condo reserved in your name for the next 15 days. For this, you need to make an upfront payment to the seller as per standard norms. Then you have 30 days more for making the second payment. Within this time you can apply for the mortgage loan and get it approved.

We have talked about an executive condo in the previous post. Take a look at The Tapestry Condo, one of the latest launch in Singapore in 2018. Is definitely one of the dream house that a family would love to own. But to get it, you need to understand the loan. If you?are intending to profit from rental income, then you need to understand the costs associated on in renting a condo on top of the mortgage that we discuss here.

Mortgage Regulations

According to the regulations governing mortgage in Singapore, you could be eligible for 80% of property value as a loan if your credentials are evaluated and found to be valid. For the second purchase, you can get up to 50% of the property value as loan. The repayment period could extend up to 30 years depending on the terms and conditions of the lending company. The installments will be equally distributed for every month with the calculated interest at the rate as applicable.

Fixed Rate Mortgage

The fixed rate mortgage stays constant throughout the repayment period. The interest could be bit higher compared to the floating rate in some cases. But you get to plan for the repayment in an organized manner due to the consistency in the net repayable value (principal + interest). The other advantage is protection from fluctuating interest rates which could become unpredictable.

Variable Rate Mortgage

The interest rate might vary (up or down) depending on the market conditions. The mortgage company depends on the external sources for procuring the money to loan you. When the market rate decreases the benefit is passed on to you. On the other hand when the market rate increases you pay more interest. The choice between the two options will be entirely on you. Hence you can take the help of a mortgage consultant to get the accurate information about the pros and cons of each type before taking a decision.

Mortgage Loan Provider

Private Banks in Singapore can provide condo mortgage loans at affordable rates for the PR and foreign nationals. Many of the banks allow you the privilege of getting the repayment period up to 35 years. The condition is that the sum of your current age and the loan repayment period should not cross 75 years whichever is lower. Just like the private banks, you can also find many private financial institutions that can provide the mortgage loan. You need to approach the helpdesk to get the accurate and detailed information about the procedures.

Check out this video talking about the different mortgage loans available:

Initial Loan Documents

You need to submit certain important documents along with the completely filled application form. Some of the banks do accept e-formats of applications while the others may insist on officially printed forms to be filled and submitted in person. This could be one way of getting acquainted with you personally before processing your application.

  • Passport: – You need to submit copies of your passport (all the pages) and the original at the time of verification. You can get to know about the validity period as expected by the bank authorities. This is one of the most critical criteria to determine the loan repayment period which can be allocated to you. In some cases, you might have the option of renewing your passport just before its expiry and still continue to get the loan privilege.
  • Income: – You need to submit all your documents related to the sources of income. They could be your salary credits, employment document and the statements from your bank. Some of the lenders may ask for three previous months while the others may insist on six months or more. Your salary credit could also be in the form of pay slip you get from your employer/ company. If you are the freelance or self-employed person you need to submit the bank transactions and the details related to the evaluation of tax payments. This is a form of assessment done by the related tax departments of the Singapore government related to your self-employed job or business. Some of the banks might ask for previous two years of assessment while the others might opt for more or less.
  • Agreement: – The sale/buying agreement copy between you and the seller has to be submitted to the lending authorities at the time of submitting the mortgage loan application.
  • Insurance: – The basic insurance you need to provide your condominium is against fire accidents. This is the premium which you need to pay to the bank until the completion of the mortgage loan. Apart from this, you might need to take up insurance against natural calamities and other nature of damages. You can speak with the mortgage insurance specialist to know more details about the other types of mandatory and optional insurance schemes.

Interest Rates

The interest rates charged by the private banks and financial institutions could be based on parameters under two categories, namely the interbank transactions and the individual bank terms and conditions. The fixed rate and the board rates are based on the individual banks. They might vary between two banks. The other two parameters are the Swap Office Rate and the SIBOR. They may have the direct relation to the loan rate. In some other instances, the impact could be indirect.

Lock in Period

This is the time during which the loan repayment cannot be completely cleared before the scheduled date. In such cases, the bank can impose a penalty on you. The other clause in this period is the fixed interest rate charged by the bank. They cannot increase the rate within this period in spite of the variations in the market. Hence you have a benefit and a risk associated with the lock-in period. Some of the banks might have locked in the period of 2 years while the others may have none.

Oh, before we end our post for today, for those who want to check out The Tapestry Condo that we mentioned earlier, you should!