1. Always Review Your Home Loan From Time To Time
Homeowners should check the interest rates on their current home loans. They should also look for loan options that could save them money on interest.
At IQrate, we have a refinancing calculator. It helps you find potential savings. You can compare market options to your current home loan package.
2. Reduce Your Housing Loan Amount
You can use your extra cash or your annual bonus to make partial payments on your home loan. This can help you save on interest payments. Certain banks might impose a fee for making partial payments, so consider the advantages and disadvantages before choosing.
You could look for investment opportunities that might give you a higher return than your bank charges on your home loan. Using other’s people money to help offset your home loan interest is particularly popular among the investment savvy homeowners.
3. Use Your CPF For Your Monthly Home Loan Repayments
You can use the funds in your CPF-OA to service your monthly mortgage repayments if you have not done so.
Using your CPF funds to pay your monthly loan means you will miss out on interest. Your CPF-OA account earns 2.5% interest per year.
4. Extend Your Home Loan Tenure
You may consider extending your home loan tenure to reduce your monthly repayment amount. This usually leads to higher total interest payments over time. However, this is true only if you take the full adjusted duration to repay the loan. Extending the tenure can serve as a temporary measure to ease cash flow constraints and provide financial flexibility.
The extension depends on the maximum loan period allowed. This is 30 years for HDB flats and 35 years for private properties with a bank loan.
Financially savvy homeowners often opt for the longest tenure to lower their cost of capital and improve cash flow. They strategically invest their surplus funds in financial instruments that yield returns higher than their home loan interest rate. Since Singapore has some of the lowest home loan rates in the world, this method can boost investment returns. It can also lower the actual cost of borrowing.
5. Set Aside Excess Funds As Buffer
Homeowners with a floating rate loan should consider saving extra money each month. Put this money into your home loan servicing account. For example, if your monthly mortgage payment is $2,500, you might consider allocating $3,000 now for your home loan repayments instead.
The benefit of this approach is that it gets homeowners ready for higher payments. This can happen if interest rates go up. It also encourages you to save more money as a financial cushion.
In the long run, you can use some of this extra money to pay down your home loan. This will help you save on interest costs.
6. Choosing An Affordable Home
For anyone buying a home, it is always important to right-size property purchase and exercise prudence. This is particularly true since economies can unexpectedly enter a recession. This may result to retrenchment or a period of low income.
The Total Debt Servicing Ratio (TDSR) was tightened in September 2022. Now, your total monthly debt repayments cannot exceed 55% of your gross monthly income. This implies that borrowers’ monthly loan payments should not surpass 55% of their monthly earnings. New borrowers will be assessed based on TDSR to determine how much money they can borrow.
It is important to consider other related costs. These include property tax, agent commissions, condo fees, insurance, home repairs, and loan interest. Factor in additional initial expenses, like the down payment, stamp duties, furnishing costs, and any renovation expenses.
7. Discuss With IQrate Mortgage Specialist
It is a good idea to talk to a Mortgage Specialist. They can help you compare your monthly payments. They can also answer all your questions about buying a property.
It can be hard for borrowers to calculate monthly payments. They may also struggle to choose the right loan package. This happens because most websites do not update their online rates quickly.
Our Mortgage Specialist can help you with loan approval and repayment. They will guide you on financing options and loan eligibility. They will also help you choose the best interest rate package.
Our goal is to help you save as much as possible. We will schedule a review of your home loan packages in the future.
After selecting your loan package, please keep these points in mind……
Just like investing in stocks or making financial choices, it is smart to think long-term. Be ready for unexpected surprises. Our Mortgage Specialist will ensure you do not pay extra interest on your home loan than you should be paying by tracking market offers. Keep up with current trends and changes.
Reserve funds for emergencies. The idea is to have enough cash or liquid assets for your monthly payments. This should cover at least the next 2 years, even if unexpected events happen.
Start Planning Now
Contact IQrate
Reach out to our Mortgage Specialist for a complimentary Home Loan Consultation to find out which type of package suits your needs for new property purchase or refinancing.
Would you like assistance in finding the best home loan rates? 😊