Home Loan Guide 101 – New Purchase

home loanBuying a home is probably one of the biggest purchases and decision of your life. There are a thousand and one things that you would need to consider.

We hope to make your life a little bit simpler by providing you with a step-by-step guide for your new home purchase and securing your mortgage loan.

Step 1: Work out how much you can borrow.

Get a rough indication of how much you can borrow. Each bank may have different credit approving guidelines but a good indication would be that your total debt ratio should not exceed more than 50% of your monthly income.

A bank will also often use a much higher interest rate tier to compute your loan instalment to project for future interest rate movement, hence it’s always good to maintain some buffer.

Hence if you are earning $6000 a month, your total debt liability including your car loan, personal loan, current housing loan + the new home should ideally not exceed more than $3000/month.

Other costs for consideration include your stamp duty taxes and legal costs. Some other on-going cost after your property purchase include property tax, fire insurance, mortgage insurance, HDB conservancy charges and condo maintenance fees.

For an assurance on the amount of loan financing that the banks may grant you, you may put in your application to us for an in principal approval assessment by the banks.

Step 2: Finding the right property.

Now that you know how much you can borrow, you can continue your search for your dream home. Think carefully about the property’s location, type, size, price and affordability. You may check with us for an indication on the valuation of the property.

Some of the basic information required for an indicative valuation check are:
-Address of property
-Property type
-Land and build in area
-Types of estate (Freehold / Leasehold 99 years / Leasehold 999 years)
-Age of property
-Temporary Occupation Permit (TOP) date if unit is still under construction
-Renovation if any, what was done and how much was spent.

Step 3: You’ve bought your house. So what’s next?

Decide which mortgage is best for you. There are over 50 - 60 mortgage plans offered by the various lenders, banks and financial institutions in Singapore. Fixed rate, Variable rate, tracker interest rate plans, interest offset etc. Find one that is best able to meet your needs and priorities with the lowest financing cost.

At Mortgage Supermart Singapore, the take your headache out of the equation, understand your needs, requirements, priorities and sort out the best financing deals for you.

Step 4: Finalise your mortgage application.

With your home purchase confirmed and the right mortgage plan sorted out, we would put in your application for a formal approval with the bank. A copy of the option to purchase is needed for submission to the bank.

Once your loan application has been approved, the bank will generate a formal letter of offer for your acceptance.

When the letter of offer is ready, the banker will call you to fix an appointment to go through and accept the letter of offer.

Step 5: Appoint a lawyer.

You would need to engage a lawyer to act for you and the bank on your conveyancing matter for your home purchase and home mortgage loan.

Your lawyer will exercise the option to purchase/ sale & purchase agreement, advise the necessary legal matters, conduct title search, bankruptcy search, legal requisition checks, pay stamp duties to IRAS, prepare mortgage documents, act and liaise with bank, CPF Board and seller’s lawyer with regards to your home purchase.

Step 6: Formal Valuation of the property

The bank will appoint a valuer for a formal inspection of the property. You may need to inform the seller or the housing agent to allow the valuers access to the property for inspection.

A formal copy of the valuation report will be submitted to the bank.

Step 7: Completion of your property purchase.

Upon the date of completion of your property purchase, your lawyer will call for the release of bank financing monies payable to the seller’s lawyer.
Collection of keys to your new home.

Congratulations to your new house. Home sweet Home!