+

Obtaining An Equity Home Loan In Singapore

+By Sean Lim

Founder of FindaHomeLoan.coTrusted by clients, Quoted in media

+About Us

FindaHomeLoan.co is Top referrer of Standard Chartered (Singapore) Limited in 2013

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+ Reasons To Obtain Equity Home Loan Iin Singapore

Many homeowner consider using an equity

home loan as a debt consolidation loan to

pay off their existing car, education and

personal loans, OR as a cheap form of

borrowing at current rates.

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Some intend to get better returns than the loan's

interest rates. You can borrow at ~1% and deposit in a

high-yielding foreign currency savings account, REITS,

stocks or basically any product that’s higher.

Some consider it a great way to generate funds for

your business working capital over a long tenure,

especially when mortgage loan rates are lower than

other credit facilities.

Reasons To Obtain Equity Home Loan

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It is however important that you do a complete analysis

to find out if it is feasible getting equity loan to

supplement your existing housing loan.

With the introduction of TDSR, financing is no longer

straightforward. Many are surprised at how limited their

borrowing capabilities are.

A Complete Analysis

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The first rule to remember while getting a loan against

your property is to determine the property value as

your loan amount greatly depends on this. The

approach is to obtain the highest valuation from the

banks that may consider borrowing you the maximum

Loan-to-Value (LTV) ratio. The LTV ratio if you have one

property loan is 80%.

Determine Your Property Value

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It is to be noted that not every bank offers you 80% LTV.

Contact us and we will put you in contact with the selecte

d banks

. We would advise you to shortlist multiple banks at this

stage, providing you choices.

If you are applying for a term loan on a second property,

then the maximum LTV is 50% across all banks, as

regulated by MAS. Unfortunately, there is no bank that

can loan you beyond 50% LTV.

Determine Your Property Value

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Equity home loan interest rates are similar to regular

mortgage rates and can be fixed, variable based on board,

SIBOR or SOR rates. Different lenders generally have unique

assessment policies and criteria to meet such as Total Debt-

Servicing Ratio, which is why it's important you check with

each lender to find out in the following proposed approach.

Shortlisting The Rates

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After obtaining the LTV, valuation from the selected banks

and deducting the outstanding loan amount, CPF funds used

and accrued interests (if any), you would have an idea on how

much you can borrow.

Equity Loan Calculation

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1. Make sure you can afford the monthly

installments. No point in taking a loan that you

cannot repay or a more expensive loan than you

need.

2. If you are getting this loan to replace an existing

loan, find out if there is a lock-in period where you

can be charged a fee if you redeem the loan

before this period expires.

4 Things To Remember

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3. Make sure you weigh your options and decide if

you really need the loan in the first place as

you have to be careful whenever you take up

new loans.

4. If you own your home, getting a equity loan

against property places your house at a risk if

for some reason you default at paying the loan

amounts.

4 Things To Remember

Start by Comparing Equity Rates Here!

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