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Mortgages and Other Financial Issues

Singapore - Mortgages and Other Financial Issues


Financing your new property is a critical step in the property buying experience. Although some people do come in with cash, most end up having to at least partly finance their home. Before you make an offer on a home, you should ensure that you have the proper funds to cover the cost of it.

A mortgage broker can help you approach several different lenders at once, or you can approach the various banks yourself. Usually, using a mortgage broker will save you time. For first time homebuyers, local banks will usually cover up to about 80% of the property’s value. If you already have an outstanding loan the Loan To Valuation (LTV) is lowered to 70% so this means you will need access to more cash.

It is important to keep in mind that banks will base what they lend you on the lowest part of the purchase price of valuation limit. That means if you are purchasing a property that is above the cost of the bank’s valuation you will have to pay the difference.

Although the banks will usually loan up to 80% of the loan, they will also look at your debt servicing ratio of 35-50% as a ceiling. Your current debts and your potential mortgage payment will be added up and divided by your income to get this amount.

Fixed rates are often attractive to people because they offer security and stability since the rates don’t change over a certain period of time. This offers protection to the borrowers in case interest rates rise in the future. However, fixed rate mortgages are usually higher. Floating rate packages are available, too. In these, if interest rates fall then mortgage payments can fall as well.

The majority of the loans have subsidies such as the legal, valuation and fire insurance fees. The legal fees should be capped at $2,000-2,500 so it pays to research the different subsidies and make sure you know what you’re expected to pay upfront.

For foreigners, the UOB Home Loan is available if you want to purchase or acquire a permitted residential property in Singapore for investment or to live in. It offers good interest rates as well as flexible repayment options. It also offers up to 80% financing of the purchase price or valuation of your new property. For freehold properties, the repayment period is up to 35 years or 75 years of age at end of loan period, whichever is earlier. For leasehold properties, the loan term is up to 35 years or 75 years of age at end of loan period, whichever is sooner, and remaining lease of at least 35 years at the end of loan period.

To apply for a home loan, you will need a completed loan application, pay slip or employment letter, copy of a bank statement for the previous three months, and a copy of the property’s option to purchase or copy of the Sales & Purchase Agreement.

Provisions will also be made for the Property Tax, Income Tax, Legal Fee, and Stamp Duty. The Stamp Duty is a tax that is an executed document relating to properties. The Property Tax is a tax on the property and is the responsibility of the owner. It is based on the tax rate of the Annual Value of the property. More information can be found at http://www.iras.gov.sg/irashome

After you purchase your home, you’ll want to invest in some homeowner’s insurance. Fire insurance is inexpensive and covers the building’s basic structure. If you stay in an HDB flat, fire insurance is mandatory. If you have a mortgage loan, most banks will require that you have this as well. In addition, you’ll want to insure the contents of your home. Some of the policies will also cover personal liability.


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Expat Health Insurance Partners


Bupa Global

At Bupa we have been helping individuals and families live longer, healthier, happier lives for over 60 years. We are trusted by expats in 190 different countries and have links with healthcare organisations throughout the world. So whether you're moving abroad for a change of career or a change of scene, with our international private health insurance you will always be in safe hands.

Cigna

Cigna has worked in international health insurance for more than 30 years. Today, Cigna has over 71 million customer relationships around the world. Looking after them is an international workforce of 31,000 people, plus a network of over 1 million hospitals, physicians, clinics and health and wellness specialists worldwide, meaning you have easy access to treatment.