HDB bank loan Interest rates should be one of your first considerations.
Remember to get quotations from at least 3 HDB bank loan lenders to conduct a proper HDB bank loan comparison. Ask detailed questions on the required closing costs of the deals. You may qualify for the best deals if you are taking up a HDB bank loan for a high valuation HDB unit. It all depends on the lender. Usually they can be very flexible if you appear to be a customer with a potential big HDB bank loan deal. However, you could be subjected to more stringent mortgage terms if you have an adverse credit record.
Also take note of prepayment penalties. Because you want to have the flexibility to refinance or fully repay your HDB bank loan when you have the cash on hand. Redemption penalties will great affect your decision on what you want to do with your HDB bank loan in the future. Request for lower redemption penalties or get them waived altogether.
Properly evaluate the HDB bank loan offers. There are can be instances when a higher HDB bank loan interest rate might actually save you money. For example, if you have a concrete plan to relocate again in a couple of years, you can obtain big savings by not paying way over your means at closing. Use your HDB bank loan calculator and ask the attending bankers for clarification on closing costs.
When you have done your HDB bank loan comparison and found a HDB bank loan package that you are delighted with, commit to it as soon as possible to lock in the desirable rates. Because rates can fluctuate and you may not be getting the same rates if you delay your commitment. HDB bank loans can be processed very fast. It is also dependant on how hard your banker is willing to work for you.
Good HDB bank loan comparison
There are many forms of HDB bank loan packages available in the market. So when you compare packages, it is important that you make a fair comparison. For example, it is not practical to compare a 15 year mortgage to a 30 year mortgage. Likewise with comparing fixed rates and floating rates. It is like comparing an apple to orange.
Compare different HDB bank loan lenders at the same interest rate and lock-in period. This can vary especially when the lender is flexible with their packages. You may be given to choice to a good interest rate but longer lock-in, and vice versa.
Add up the total fees and charges you will incur at closing. There can be a number of different fees that with varying names. Some lenders may fully wave a particular fee but charge you more on their processing fees. So it is best that you add up all the fees involved at closing for your HDB bank loan so that you can conduct a proper HDB bank loan comparison.
When you conduct HDB bank loan comparison, you may find that lower interest rates does not necessarily mean that you are getting a better deal. This is especially so when you don’t intend to stay with the lender after the lock-in period. So remember to ask for the details of closing costs before proceeding to take up a HDB bank loan offer from a lender.
If you are fully intent on refinancing your house or selling it off within couple of years, the redemption penalty will be of particular concern to you. If you are fine with paying high interest rates, the lender may be flexible to be more lenient in the HDB bank loan redemption penalty charge.
SIBOR and SWAP rates are determined by the Association of Banks in Singapore. In other words, a big part of how much interest you are paying for your HDB bank loan depends on them when your interest rates is pegged to SIBOR and SWAP.
Giving you the details of how these rates are worked out will only confuse you. Just note that it is generally accepted that SIBOR is more stable while SWAP can be more volatile. So if you are a risk taker, you may want to take up a HDB bank loan pegged to SWAP especially when the current SWAP rates are low. Do ask for more details when deciding between these 2 rates.
The most common factor that determines which HDB bank loan you take up is the loan-to-value (LTV). This is the loan amount that the lender is willing to offer you based on the valuation or purchase price of the property, whichever is lower. This means that if your property has a market value of $350,000 and you bought it for $400,000, the lender will only offer to finance a certain percentage of the valuation price at $350,000.
However, if you were to purchase that exact same property at $300,000, the lender will only offer to finance a certain percentage of the purchase price at $300,000. Hence the meaning of “whichever is lower”.
Different lenders can have different classifications and categories on what percentage they are willing to finance your HDB unit. When conducting HDB bank loan comparison, factors like location, potential redevelopments, plans for that location from the authorities, etc, can all play a part in determining the LTV.