A mortgage loan is a loan to purchase or refinance a property. In some ways, it’s an extension of credit from a bank. And since the loan is a line of credit, the borrower may withdraw cash as well. It’s also known as a home equity loan or home-improving loan. A Bank Home Loan is one of the most common forms of financing for property purchases.
Who qualifies for a home loan?
Home loan qualification is based on various factors, including credit history, employment situation, current and previous housing loans, family income, and property value. For some housing loans, you may need to show that you’re a first-time buyer. Banks want to lend money only to customers they are sure will be able to pay back their loans.
How much can I borrow?
In general, borrowing limits are determined by the property value and the term of the loan. A bank may approve a loan even if the property value is lower than the maximum amount allowed by the bank because of your credit history or your ability to make payments. Terms also determine how much you can borrow, since longer terms usually mean smaller monthly payments but more interest over time.
Benefits of Bank Home Loans
1. Security
Security comes in different forms. For example, a home equity loan offers the security of having the loan secured by your house. It can be secured by the property’s title or its mortgage. In such a case, you are committed to paying back the full amount if you default on your loan. On the other hand, with a bank home loan, you have no way to be sure that the money will be returned to you as long as you pay back your installments on time.
2. Flexibility
Bank home loans offer flexibility. The borrower can take out a part of the loan to use as a down payment and pay the rest over a long period. On the other hand, home-equity loans allow you to take out as much cash as you need with no repayment deadline.
This is also called a line of credit, and you can borrow as much money as you want. You owe the money to your bank and use it when needed. It’s important to pay attention to the interest rates on interest-only loans because they can be more expensive than conventional home-equity loans.
3. Down payment
With a bank home loan, you needn’t pay the entire down payment before borrowing money. A bank home loan in Singapore will usually require a deposit, usually 10 percent of the home’s purchase price. If you provide the bank with a valid and reliable cash deposit, you will get a lower interest rate.
4. Rates
Home-equity loans have lower interest rates than other types of loans. This is especially true when compared to credit card debt or payday loans. However, rates depend on the borrower’s credit history and the amount of money requested. One bank may give you a lower interest rate than another.
5. Repayment period
The repayment period is the time it takes you to pay back your loan. It’s often longer than the term of the loan. This can be a reason for higher monthly payments upfront. But in some cases, you may be able to get a lower rate on your bank home loan than on other types of loans because of the longer repayment period.
6. Protection from foreclosure
If you have late payments, your lender may foreclose on your home and sell off the property to recover the money you owe. This is called a deficiency judgment. A bank home loan offers the same protection in this regard as a home equity loan.
Our bank home loan in Singapore is one of our most popular mortgage products. If you’re looking to refinance your current property or buy a new home, we can help you find the right solution. Our advisors are ready to guide you through the process and help you find a solution that suits your needs. Contact us today and start the home loan process by filling in our inquiry form.
