How to get the best Home Loan

Ever wondered why your friend has got a better home loan rate even though both of you took it from the same bank? Well, this is simply because there are just too many home loan products in Singapore that are available with varying types of terms.

If you are a first-time home buyer, getting a mortgage loan can be a rather daunting process. Starting with all the jargon related to home loans, the numerous types of interest rates and simply deciding on the most suitable one for your needs can be a headache. Instead of going bank-to-bank and asking for their home loan rates or simply just choosing the lowest rate available, here are three ways to ensure that you can get competitive mortgage loan rates that are to your requirements.

Use a Comparison Site

When searching for a suitable home loan, many start by calling up their banks to ask for rates. Instead of wasting so much time going to different banks and comparing their rates individually, an easy way to do it is to use a comparison site that gives you options to filter according to your loan requirements.

You may also want to seek the help of a mortgage broker, since they have been in the industry for a long time and probably knows the best type of loans for your needs. Many have the misconception that these brokers charge a fee for their consultation, but that’s not true. They are paid by the banks when they get a successful referral. Because most of these comparison sites and mortgage brokers have tied up with different banks, they offer a wide variety of loans and you would more likely find a competitive rate than sticking to a single bank.

Be Open to Innovative Loan Products

In recent years, banks are coming up with more and more innovative loan products amidst the competitive environment. In a way, that’s good news for consumers since this means that you are likely to have better products. Instead of looking upon these products as marketing gimmicks, consumers should keep an open mind to what these can offer.

For instance, mortgage products such as Standard Chartered’s MortgageOne SIBOR and HSBC’s SmartMortgage let you tie your home loans to a deposit account with the bank where the interest earned on your savings account  can be used to offset the interest payments of your home loan.

Sometimes, you may also get preferential rates if you already have a banking relationship with a particular bank so do check that out!

Don’t Forget To Refinance

For most parts, banks do not make much money from your mortgage loans unless you do not refinance. Interest rates are never stagnant, especially since a mortgage loan here in Singapore typically takes at least 25 to 30 years to service. This is why even if you’ve done the first step to secure a home loan, you need to monitor every few years to look out for refinancing opportunities.

Refinancing will probably get you a more competitive rate that is in line with the economic conditions at the moment. However, it is advisable to only refinance after the initial lock-in period, otherwise you will be penalised.

Before you refinance, you might want to ask yourself these questions to see if refinancing is a smart move for you:

• Will refinancing lower my monthly mortgage payments?
• Will I get lower interest rates if I refinance/reprice my home loan?
• Can I shorten the housing loan tenure by at least 3 years?
• Will the overall cost outweigh the benefits of refinancing?

If the answer to all of these questions is a resounding ‘yes”, then it makes perfect sense to refinance your current home loan. Start looking for refinancing plans about 6 months before your lock-in period ends so that you have sufficient time to give your current bank notice that you are looking to refinance.

So why not check out the best Home Loan comparison tool in Singapore