Mortgage Home Loans

By: EconomyWatch Content   Date: 17 December 2009

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Various banks in Singapore offer a variety of home loan products to choose from. Borrowers should do some comparison shopping before striking a deal to save some money on the interest rates. 

 

Mortgage Home Loans: Factors to Consider Before Choosing  

 

 

Here are some factors to be considered before you choose a home loan package:

Floating or fixed: It is worthwhile to do some market research to analyze the interest rate trends in the money market. Choose a floating rate home loan product if your findings conclude that rates are at their highest and are likely to dip in the near future. If there seems to be any likelihood of interest rates to get revised upwards by banks, a smarter option is to consider a home loan product with a fixed rate of interest for at least three years. Remember, the lock in period for most home loan products is three years.

Loan duration: You can take a home loan with monthly installments spanning over minimum of five or maximum of 30 years. The age factor also plays an important role. One can choose loan duration by matching it with one’s intended retirement age. This implies that you should repay the loan before you turn 60 years old, provided you want to retire by that age.

 

Interest-offset: This option works well for those who have a pool of cash. In this, current account is linked to the home loan as the percentage of interest earned on the former is same as that charged on the latter. This enables you to save both time and money. The money you put into your current account has corresponding effect on the loan repayment. This way, you can repay the loan sooner while paying lesser interest. On the other hand, if one opts for lump sum payment s/he can lose liquidity and cash can get locked in the property.

Penalties: Most loan products come with a penalty if the repayment is made in full before the duration. So, it is important to know the amount of penalty and its duration in advance. Penalty period usually spans one to three years.

Remember, only a few lenders offer home loan products that feature zero penalty periods.


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