What is home financing?
Buying houses comes with a high price tag. That is why not everyone can afford to own a place of their own. However, that does not mean that buying a house is next to impossible for an average worker. Singapore house prices can be paid through home financing.
Financing for homes is when people are given money to buy houses of property prices Singapore budgets. There are two types of house finance: mortgage and grants. In this article, we will talk about the different kinds of mortgage loans and grants.
As the name states, this type of mortgage has a fixed-rate. Usually, the fixed-rate only lasts for a certain period. It can be 1 to 5 years depending on the mortgage agreement. This means that even if market rates fluctuate, the mortgage rate will stay the same. This type of mortgage provides stability. It gives predictability in paying the Singapore condo price instalments.
KEY LEARNINGS & TAKEAWAYS
- Home financing are financing options given to people to help in their property purchase.
- There are two key home financing options – mortgage and grants.
- Mortgages are fixed-rate. This means that mortgages rates do not fluctuate with the market.
- Home grants are financial schemes offered to first-time Singaporean HDB buyers.
- Singapore grants are typically based on the total household income.
SIBOR pegged mortgages
SIBOR stands for Singapore Interbank Borrowing Offer Rate. In this mortgage, the interest is flexible. The consumers can know online the rates of Singapore interbank. In addition, they can view the borrow costs through other mediums like the Business Times and Teletext. This is best suited to those who want to get the lowest rate for a Singapore condo price.
Board rate mortgage
Another mortgage type that you can get is the board rate mortgage. Nowadays, many banks have been abolishing this because it doesn’t give much transparency to their customers. However, some banks adopted a different style of the board rate mortgage.
A standard board rate is a new system used recently. This provides better transparency when loaning to pay for Singapore house prices.
Combination of fixed and variable mortgages
Clients prefer to have two types of mortgage rates to pay for their Singapore house prices. That is why there is an option to have two types of mortgage loans combined. This is called a combination of fixed and variable mortgages. In this setup, 60% of the amount of the loan will be charged with a fixed interest. While the remaining 40% will be charged with a variable interest percentage. The variable rate can be a SIBOR, SOR, or “board rate”.
Combination SIBOR and SOR pegged mortgages
Another combined mortgage type is the SIBOR and SOR combined mortgage. As the name suggests, this type of mortgage is using both the SIBOR and SOR. The combination percentage will be based on the mortgage agreement and the Singapore house prices. However, usually, the split is somewhere in the middle like 60% to 40% or 55% to 45%.
This type of mortgage is very preferable for customers that have more liquidity room. This involves taking up a mortgage using a deposit. This means that the interest of the deposit will be comparable to the home loan cost. This housing cost should be similar to the Singapore condo price.
HDB housing loans mortgageAs the name suggests, this mortgage type is offered to those who will buy HDBs. This is usually provided by the Housing & Development Board, the board that builds and manages HDBs. An HDB loan can get you around 2.6% interest rates for Singapore house prices. The interest rate will also be based on the buyer’s ability to pay. Thus, they give more competitive rates compared to banks.
Fixed deposit pegged home loan mortgages
Similar to an interest-offset mortgage, this type of home mortgage also uses a deposit. However, unlike the interest-offset mortgage, this has a fixed rate. It usually references the interest rates to the savings deposit fixed rate of the bank.
Partial-principal repayment mortgages
In this mortgage, the principal amount of the home loan is partially paid monthly. This also means that only a portion of the principal will be charged with interest. This will reduce customers’ monthly repayment.
Similar to SOR, the interest rate of the Singapore condo price will be based on the market rates of the currency. There is a currency swap that is used for you to get the lowest interest rate. If SOR allows you to swap Singaporean dollars to United States dollars, a multi-currency mortgage allows you to swap with your preferred based asset currency. This is also applicable if you will use a foreign bank to pay for the property prices Singapore loans.
Special CPF housing grant (SHG)
This type of home grant is for those who are first-time Singapore condo price HBD buyers. The amount of the grant will be based on total household income. Usually, it is combined with an AHG. The grant is only eligible for those who will buy a four-bedroom home or a small non-mature estate BTO home. Thus, this grant is only given to families with at least one 35-year-old parent.
Additional CPF housing grant (AHG)
This is an added grant that is added to the SHG. It can be added to other regular market subsidies. This is applicable to use if the buyers plan to pay for property prices Singapore new or resale HDBs. This is also applicable if you plan to buy BTO flats. Similar to the SHG, the amount of grant will be based on the total income of the household.
Proximity housing grant (PHG)
This housing grant type is given to those who wish to live with or in proximity to other family members. The Singapore government promotes family communities to continue to exist. That is why they give a CPF housing grant of up to S$30,000 to those who will live near their family. However, this grant is only applicable for buying resale property prices Singapore flats.
The family grant is given to first-time property prices Singapore buyers who plan to buy resale HDB flats. This grant is applicable for couples and families. The HDB management provides housing grant amounts of up to S$50,000 for a resale HDB flat with four bedrooms.
Search for your new home
As you can see, there are plenty of home finance options. Explore more of each option to find out which property prices Singapore grant or mortgage is best suited for you and your family’s needs. Once you weighed down and picked your options, you can now look for your next home. Are you looking for a house in Singapore? Here at SRX, we have reliable property prices Singapore listings that offer the best Singapore house prices. Explore our website to see our property listings.