BUYING TIPS (Tips for Singaporean)

Location
You have to first determine where's the most likely location for you and your family to live at, by taking into consideration several important factors such as distance from working place, schools, kindergartens and places your family visits frequently, accessibility, lifestyle, etc.

Type & Size
What is the type and size of house do you need? You have to plan for the next few years, say at least 3~5 years. Ask yourself whether there will be any addition (due to new born or moving-in) or any reduction (due to moving-out) of your household members in the near future. How many bedrooms do you need? Where is the area within the house that your family would likely to spend most the time?

Budget
After determining the location & size of your future house, you need to start financial planning by looking into your own financial status - monthly household saving, asset, CPF ordinary account balance, other financial commitments, etc. You can source around just by talking to the banks for the best mortgage packages in terms of interest rate, loan tenure, early redemption penalty, bank charges, etc. Before you get on the frenzies of sourcing for your mortgage loan, it's best to check the local regulation on bank financing.

Amenities
Are there any amenities like shops, eating places, banks, market, school, transport, etc. within walking distances?

House Viewing
Don't lose track of the numerous properties you may view. During viewing, try to note down the address, asking price, floor area, orientation and add in your comments too. Here is what you should look out for when viewing a property:
(1) Water seepage. Signs of water seepage like peeling paint work, damp patches or discoloration;
(2) Wall cracks. Crack lines and spalling concrete on walls, pillars and ceiling;
(3) Layout. Odd shape rooms may mean that you will have problem to fit in your existing furniture.
(4) Condition of property. Renovated and well maintained property will save you from incurring extra renovation cost.
(5) Noise. If you need lots of peace and quiet, try to visit the property at different times of the day to identify and gauge the potential sources of noise nearby.

Making Decision
Always keep your cool and avoid rush decision upon finding the property that suits you best. However, you have to decide soon; otherwise somebody eyeing the same property may deprive you of your dream home!

Keep an Open Mind
Always bear in mind that, there is no such thing as 100% perfect house! Always keep an open mind and be prepared to have some flexibility with your expectation.

Credit to : http://www.geocities.com/singaporeagent/buyingtips.html

Useful Tips on Housing Loan (Tips for Singaporean)

Home Loans (or what is typically known as Mortgages in other countries)

What are Home Loans?
Mortgages are secured loans. Your property is the collateral in this loan transaction. These loans are normally used to finance purchase of HDB flat and private residential property. In Singapore, financial institutions can lend up to 90% of the value of the property, inclusive of CPF contributions, for owner occupied property. The balance of 10%, 5% must be paid in cash and 5% can be in CPF. Before the loan is approved, the bank will get an independent valuer to value your property. This property value is used to determine your loan amount.

For investment properties, the financing offered may vary from bank to bank.
Financial institutions normally approve loan amounts with instalment repayments that are not more than half of your monthly income. This amount will include any other outstanding instalment repayments such as car loans, and other financial commitments.

Currently, there are loan packages which provide fixed rates of up to a few years while others offer floating rates that are pegged against the bank's board rates.


How do they work?

Interest calculations: Currently, there are two methods of interest rate calculation:
Monthly Rest: The interest calculations are computed on a fixed date each month. If you repay your installment earlier than this date, you do not benefit from any interest savings.
Daily Rest: The interest calculations are computed daily. This provides an incentive for you to pay promptly as any reduction in the outstanding balance results in a reduction in interest charge almost instantly. The advantage of daily rest over monthly rest is therefore a slightly more rapidly declining interest expense.

Bridging loans: Most banks will provide a bridging loan for any mismatch in timing during the process of selling an existing property and buying a new property. This is to tie you over the gap period. However, to qualify for a bridging loan the bank will want assurances that you have sold your existing property. The interest rate for bridging loans is calculated on a daily basis and payable every month. Upon completion of the sale of the property, the bridging loan has to be repaid in full subject to a maximum period of six months.

Default: Mortgage payments that have been delayed for more than three months will be considered a default and usually the bank will step in and try to resolve the problem for instance, by restructuring your loan repayments for you. The bank would only see forced sale of property as the last resort. In any case if you plan your finances properly, forced sale of property is unlikely to happen.

How do I find the best deal?
When shopping for the right mortgage loan, keep these tips in mind:

Match duration: Check the maximum loan term that you can get. The normal loan term is 30 to 35 years, or up to when you are 65 years old, whichever is lower.

Monthly payment projections: Compare the monthly repayment (based on different interest rate scenarios) from various providers to see if you are comfortable with the amount.

Interest rate Comparison: Check to see if the bank offers fixed rate loans and how long the fixed rate period will be, especially if you anticipate interest rates going up.

Fees: Check to see if the bank charges a processing fee, pre-payment fee, or third-party fee (such as a legal fee, valuation fee or insurance premium)

Extras: Check to see if the bank gives free fire insurance and free valuation on your property. Banks may also give legal subsidies.

Credit to : http://www.housingloansg.com/housing.htm#1

Home Loan Frequently Asked Questions (Tips by Bank Negara Malaysia)

How much can I afford?

This depends on your income and other financial obligations. As a rule of thumb, most house buyers buy houses that cost 1.5 and 2.5 times their annual income. For example a house buyer earning RM40,000 a year would buy a house between RM60,000 and RM100,000. Furthermore, the monthly loan repayment should not exceed about 1/3 of your gross monthly income. In assessing your repayment capability, the financial institution would also take into account your other debt repayments such as car loan, personal loan and credit cards.

How much can I borrow?
This will depend on the value of your property, your income and your repayment capability. Margin of financing can go as high as 95% (inclusive of MRTA). The higher the margin, the higher you will have to pay per instalment. Also, at a given rate, a shorter tenure will require you to pay higher instalment.

How long does it take to process a loan?
It usually takes about one to two weeks for your loan application to be approved from the time you supply full documentation. You should ask the financial institution for the checklist of documents required for the application to avoid any delay.

What is the difference between conventional financing and Islamic financing?
Under conventional financing, your outstanding loan consists of principal plus the interest charged on you. The interest is actually the financial institution's cost in obtaining the funds. Islamic financing works on the concept of buying and selling where the financial institution purchases the property and subsequently sells it to you above the purchase price.

Why do I need a valuation?
A valuation is required if you are buying a completed property. The financial institution requires a valuation to ascertain whether the property provides sufficient security for the loan given. It also provides an indication that the property is worth what you are paying for.

Do I need to appoint a lawyer? Can I choose my own lawyer?
Yes. You need to appoint a lawyer to draw up your loan documentation. Normally, the financial institution will provide a panel of lawyers who are familiar with their documentation requirements for you to choose from. If you prefer to engage your own lawyer, you should discuss this with your financial institution.

Who pays for the legal fees?
Generally, legal fees are borne by the buyer. However, certain developers and financial institutions may offer to pay the legal fees on the legal documentation as part of their marketing package. In addition, some financial institutions also extend financing for the loan documentation fees.

What if I run into financial difficulties and cannot meet my loan repayments?
If this happens, you should contact your financial institution to discuss a reasonable repayment program, which could include extending the tenure of the loan.

Can I pay off my loan in full earlier than the agreed loan tenure?
Normally there will be penalty charges for early loan settlement. Depending on the financial institution, penalty charges will range between 2-5% of the outstanding amount. The charges that are made will depend on the type of product you have chosen and when you decide to redeem your loan. Note that in some loan packages, there are certain minimum periods you need to observe before full settlement is allowed.

Is there any waiver of penalty fees for early loan settlement?
Any waiver of penalty fee is strictly at the discretion of the financial institution.

Why does my outstanding loan remain high at the initial stage despite the repayments made?
During the early years of the loan, a significant amount of your repayments will go towards the payment of interest. So if you make partial repayments to repay the principal sum outstanding, you make substantial savings in your interest payments and thus shorten your loan tenure.

Can I make extra payments other than the monthly contractual repayments?
This depends on the terms and conditions stated in your loan agreement. By paying in extra money each month or making an extra payment at the end of the year, you can speed up the process of paying off the loan. When you pay extra money, be sure to indicate that the excess payment is to be applied to the principal. However, if you make a lump sum payment or partial repayments to your principal loan, you must give notice to your financial institution. The notice period ranges from 1 to 3 months.

Do I need a guarantor for a loan facility?
This is at the financial institution's discretion and depends on the credit standing of the borrower.

Does the financial institution have the right to charge my loan account for any miscellaneous charges incurred by them such as late payment charges, legal costs, insurance, etc?
The financial institution's power to impose charges on your account is normally indicated in the Terms and Conditions of the loan.

How long is the grace period for payment of my monthly instalment/interest?
Generally, the financial institution gives a grace period of 7-14 days for you to repay your instalment payment. Any payment received after the grace period will be subjected to late payment charges.

When does the financial institution release the loan to the seller/developer?
For houses under construction, the financial institution will release the progressive payment to the developer based on the claim made upon completion of each construction stage as certified by the Architect's Certificate. For completed properties, the loan will be released upon completion of legal documentation or when all relevant approvals, such as the approval of the state government have been obtained.

Can I purchase a house under joint names and apply for the housing loan only under my name?
The financial institution will consider such applications on the merits of each case, under the following circumstances:
The co-owners are related as husband and wife, and one party is not working and the other party is solely responsible for the loan
The co-owners are related as father/mother and children, the parents are old and not working and the children will be responsible for the loan
However, the above is at the financial institution's discretion and they may also consider other circumstances.

If the developer abandons the project, am I still required to service my interest/instalment payments?
Yes. You are still obliged to service your loan based on the loan agreement signed between you and the financial institution. However, since the financial institution has vested interest in the property, you could discuss a repayment plan with your financial institution. You should also report the matter to the Ministry of Housing & Local Government.

What happens when the loan is fully repaid?
When the loan is fully settled, the financial institution through its solicitors, will release its charge on the property. The financial institution (chargor) will uplift his claim on the property and the title to the property will be transferred to you.

What happens in the event of death of a borrower who has not bought insurance?
The deceased's survivor/next of kin can claim through the court the rights of the deceased's property. The person will have an option to either proceed to service the loan or redeem it. However, most financial institutions make it compulsory to insure (MRTA) against such an event.

What can the financial institution do if I do not make repayments?
If you fail to make three consecutive payments, the financial institution will take the necessary actions to recall the loan. In the worst case scenario, the financial institution will foreclose the property and sell it to settle the loan. The borrower would still be liable to pay the difference between the auction price and the loan amount outstanding.

What is the most convenient way to repay my loan?
Financial institutions offer a wide range of services to make banking easier for you. Some of the alternative ways of servicing a loan include:
- Open a savings/current account and arrange for standing instructions with minimal charges (if you maintain deposit and loan accounts with the same bank, the charges may be waived)
- Through an ATM transfer
- Internet Banking
- Telephone banking service
- Deposit your cheque at the deposit machine or send your cheques direct to your financial institution

Should I consider refinancing my loan if I am offered a lower interest rate?
The main consideration in refinancing would be the costs involved. As you are clearly aware, you have incurred a substantial amount to pay for the necessary fees to obtain your first loan. For example, processing fees, legal fees, stamping and transfer fees. Refinancing means you would have to incur the same charges again. Before you decide to refinance, you should ensure that the savings from the lower interest rate is enough to compensate all the costs incurred associated with refinancing, including penalty charges, if any.