Firstly, the amount of money you can loan from banks or credit union is depending on several aspects. Generally depending on the Loan-to-Value (LTV) ratio, Mortgage Servicing Ratio (MSR) and salary.
To choose the best home loan can be a nightmare. One needs to consider factors like interest rate, monthly installments, loan size, and maturity period before taking up a new home loan.
There is a simple tool that can make your life easier. With iMoney Home Loan Calculator, your decision-making process is now simplified.
Home loan is also known as housing loan or mortgage loan, a financing from bank or credit union offers to individual for the purpose of purchasing a property. Mortgage interest rates are usually being quoted in a floating or fixed rate basis which an individual can opt for.
iMoney created a housing loan calculator that makes calculating monthly repayments easy for you. To use the mortgage loan calculator, key in the loan amount and loan tenure. You will able to see and compare the best home loan rates for the loan amount you want. It will do all the calculations and show you the packages that suit your requirements best.
Fixed interest rate housing loan in Singapore maintain the same interest rate over a set period of time. For instance, if you choose the period of time for 5 years, your mortgage repayments and interest rate will be fixed and remain the same for the specific period of time.Floating Interest Rate:
In Singapore, floating interest rate can also be called variable rate home loan. Floating-rate housing loans fluctuate depend on the SIBOR rates on a monthly basis. Thus, your interest rate and loan repayments may change every 1 to 3 months.
In the process to determine whether to approve or reject your loan application, the bank will perform assessments using the following two criteria:1. Financial Commitment to Income ratio
This ratio is used to evaluate your ability to repay debt obligations by dividing your total monthly debt obligation with your total monthly gross income. As a general rule, your total financial commitment per month must not exceed 60% of your total household income.2. Loan-to-Value (LTV) ratio
This ratio expresses the ratio of a loan to the value of the property purchased in the form of a percentage. It is affected by several factors such as the loan tenure, age of borrower, and the existence of other outstanding housing loans in the name of the borrower. Generally to the bank, the higher the LTV ratio the riskier it is to lend money to the borrower.
In Singapore, the maximum LTV ratio by default is 80%.
The most common reference rate for home loans which the information can be viewed publicly and regulated by the Singapore government. SIBOR is set by the Association of Banks in Singapore (ABS) as a daily rate based on the interest rate which banks offer to lend unsecured funds in between them.SOR (Swap Offer Rate):
Based on foreign exchange rates which refers to Singapore Dollar (SGD) and US Dollar (USD). Another reference rate set by the ABS by the rate at which the same loan amount is borrowed in US dollars and is heavily influenced by the US Fed rate.
Refinancing your home is a good option when interest rates favour the home buyer. By refinancing, you as a borrower can redeem your existing home loan by taking up a new home loan at a lower interest rate.
Before you decide to refinance, it is important to weigh the costs of exiting your existing home loan against the potential benefits of your new loan. Do expect to incur these following fees and penalties when you go for refinancing: