Taking on a Home Loan in Singapore is a big financial decision and for good reason. You’re agreeing to substantial monthly payments and are also bound by a contract with its own conditions during the lock-in period.
If you’re shopping for a home loan, it helps to know the common pitfalls and how to avoid them. In this guide, we’ll walk you through mistakes to sidestep and the key things to check before you commit.
When to Start Looking for a Home Loan
Common mistake: Waiting until the week before your renewal.
Mortgages aren’t something you can sort out at the last minute. With all the jargon, package types, and lender options in the market, you’ll want enough time to compare and decide.
Some homeowners delay reviewing their mortgage because:
- They think their current loan can’t be changed.
- They’re too busy with other priorities.
- They don’t fully understand how their mortgage works.
- They’re unsure how to use the features available to them.
Instead of putting it off, start at least four months before your mortgage is due for renewal. Lenders often take three to four weeks to process your application. This time allows you to compare different options without feeling rushed.
Choosing the Right Home Loan
Common mistake: Picking the cheapest and lowest home loan rate package without looking at the details.
Low interest rates can be tempting, but a good mortgage is more than just the headline number. Here are key factors to consider:
- Downpayment – A bigger deposit means a smaller loan amount, which lowers your monthly repayments and total interest cost.
- Standard rate – If you’re on a fixed rate, this is what you’ll pay after your fixed term ends.
- When interest is charged – Daily interest may cost less than monthly or yearly interest.
- Flexibility – If you want the option to make partial prepayments, confirm this with your lender. It can shorten your loan term and reduce interest.
- Lock-in period – Shorter lock-ins give you more flexibility, but may come with higher rates. Also, check for penalties if you change terms early.
Repricing vs. Refinancing
Common mistake: Thinking they’re the same thing.
- Repricing means switching to a new loan package with your current bank.
- Refinancing means moving your mortgage to another bank entirely.
You might consider either option if it gives you:
- Lower interest rates.
- Features that better match your needs.
Processing times and costs:
- Repricing is faster and cheaper — often around $500 or sometimes free.
- Refinancing takes longer (up to three months) and costs more ($2,000–$3,000 for legal and valuation fees), though banks may offer subsidies.
- Some banks only allow refinancing if your outstanding loan is above $200,000.
Using Comparison Websites
Common mistake: Relying on them without knowing what to look for.
Comparison sites are useful for checking what’s available, but not every deal is listed. Also, different sites can show different results. Use them as a starting point, but always dig deeper to see if a package actually suits your needs.
Working with a Mortgage Broker in Singapore
Common mistake: Choosing a loan just because a friend recommended it.
Your friend’s mortgage might work for them, but not for you. A mortgage broker can help you:
- Review your current loan to see if it’s still competitive.
- Explain features and costs beyond just the interest rate.
- Access deals are not shown on public sites.
- Shortlist the most relevant options for your situation.
- Handle the paperwork so you don’t have to go back and forth with the bank.
This way, you are not only receiving the lowest home loan rate, but you are also securing a loan that truly fits your current and future needs.