| Q1: |
What
are the ways available to me to finance a property purchase? |
There are several
ways for you to finance your property. You can either take out a housing
loan from commercial banks/finance companies or use part of your CPF
savings together with a housing loan. The important thing to know is that
banks and finance companies can only loan you up to 80% of the purchase
price or the valuation of the property, which ever is lower. Therefore,
you must come up with at least 20% of the purchase price of the property
on your own.
|
| Q2: |
How
do I know how much I should loan for purchasing a property? |
You can find out
by doing a simple calculation based on the purchase price of the property
and your income from our on-line calculator. (click here
to go to on-line calculator)
|
| Q3: |
What
are the charges involved in taking a loan from the bank? |
Each Bank has its
own set of charges, but generally the following applies:
| a) |
Processing fee: for
processing a loan application |
| b) |
Pre-payment fee: for
repaying part of or the full loan ahead of schedule |
| c) |
Third-part charges:
for the valuation fee, legal fee (including the fee for the lawyer
to act behalf of the bank), stamp duty, and insurance |
| d) |
Others: Some banks
also charge for making changes to the original loan application or
for canceling a loan offer after you have accepted it.
|
|
| Q4: |
What
are the documents I need to have to produce to the bank when applying for
a housing loan? |
Most financial
institutions require the following items:
| a)
|
Latest income tax
Notice of Assessment/ last 3 months payslips or the Notice of Tax
Assessment for those self-employed
|
| b)
|
Latest CPF statement
of account |
| c)
|
Option to purchase (if
any)
|
| d)
|
Tenancy agreement (if
any)
|
| e)
|
Latest CPF statement
for CPF withdrawn under the Residential Property Scheme (for
refinancing loans)
|
| f)
|
Latest 6 months to 2
years housing loan statements from current financier (for
refinancing loans)
|
|
| Q5: |
What
are the main factors for banks to consider when deciding whether to
approve my housing loan application? |
Since the main
concern for banks would be whether you would have money to repay a loan,
your bank will usually examine the current market value of the property
(if any); your income; your employment history; your assets and
liabilities; the total equity which you are committing to the property,
and your age.
|
| Q6: |
Besides
my housing loan, is there any other loan I can use to help me pay for the
down payment of a property? |
Yes, you may use a
bridging loan, which is a short-term loan designed to tide the borrower
over a period when he needs cash. However, because bridging loans are
usually available for those taking up a housing loan from the same bank.
You must also produce an option to purchase document for your property as
a prove to the to the bank that you would have money to repay the loan.
|
| Q7: |
How
is the bridging loan interest calculated? |
It is calculated
on a day to day basis and is payable every month.
|
| Q8: |
When
do I have to repay the entire bridging loan? |
You have to do so
upon completing the transaction of purchasing the property(usually 3
months), subject to a maximum of 6 months
|
| Q9: |
When
may I redeem a mortgage |
It may be redeemed
any time, however, but if you wish to redeem a mortgage earlier than the
redemption date, you may have pay a penalty. The penalty is based on the
mortgage loan amount or outstanding amount.
|
| Q10: |
How
may I redeem my mortgage? |
|
You may do so by giving asking your
lawyer to give the notice of redemption to your Bank. Once you pay off the
mortgage loan, you will receive the "total discharge of
mortgage" or "deed of reassignment".
|
| Q11: |
What
happens if I am unable to pay my mortgage installments? |
Your banker would
first speak to you to work out a possible solution. If this fails, the
bank would send you letters of demand. If you still do not pay up, the
bank will issue a lawyer’s letter to recall the property. The whole
‘chasing’ process can take up to six months, before the bank takes
over your property.
|
| Q12: |
What are
the possible solutions offered by banks to help me keep to my repayment
schedules? |
The following are
some of the packages offered:
| A) |
Lower repayments-you
may need to pay a lesser repayment each month for a few months |
| B) |
Restructuring the
loan- if you are having a reduction in income for a longer period,
the banks may arrange for a lesser repayment each month and extend
the loan period. |
| C) |
Capital reduction –
you may use more of your CPF savings to service the monthly
installments. |
| D) |
Interest servicing-
you may also be allowed to pay only the interest for a period of
time until you are able to resume the monthly payments. |
|
| Q13: |
I
had defaulted on the mortgage loan for my property, and the Banks has sold
my property for a very low price, can I sue the Bank? |
Unless you can
prove that the Bank has acted carelessly or recklessly in selling your
property at a much lower price that what the market is willing to pay, the
Court will not interfere.
|
| Q14: |
Am
I entitled to any money after the Bank sells my house? |
Yes, provided that
there is any left after the Bank deducts the money lent to you, and all
other expenses in selling your house.
|
| Q15: |
What
type of loan should I apply to rebuild my bungalow? |
You can apply for
a reconstruction loan.
|
| Q16: |
Why
can’t I use an overdraft to facilitate my loan to rebuild my bungalow? |
You can use an
overdraft to rebuild your property, but a reconstruction loan has a lower
interest rate, and you only need to pay for the interest rates on the
amount you have used.
|
| Q17: |
Should
I refinance my property with another bank with a much lower interest rates? |
It all depends.
This is because you must take into account the pre-payment penalties
involved in redeeming your mortgage earlier than the maturity date.
Therefore, you have to compare the monthly installments offered by each
bank and include the penalties for terminating the original loan. Also, it
would be not be sensible to refinance at the end of a loan period since
there is minimal interest gain in the new bank. To find out more about the
conditions and penalty fee for each bank,
click here
to our on-line
refinancing facility.
|
| Q18: |
What
are the types of home insurance policies available for private properties? |
There are two main
types of policies: a standard fire policy that covers losses caused by
fire, lightning and explosion; and a home insurance policy that covers
destruction to a building, home contents and any renovations carried out.
|
| Q19: |
Is
it compulsory for me to take out an insurance policy for my home? |
If you are taking
out a mortgage with a bank, then you must have the fire insurance policy
for your home. Some banks are offering this policy free for the first year
if you take out a mortgage with them.
|
| Q20: |
What
do the fire insurance policies cover? |
They cover damages
caused by fire, explosions and lightning.
|
| Q21: |
What
are the items covered by the home insurance policy? |
In addition to the
damages caused by fire, explosions and lightening, the home insurance
policy also covers against fire, flood, burglary, vandalism and damage by
vehicles, aircraft and other aerial devices.
|
| Q22: |
How
do I know which policy to buy? |
The decision to
buy an insurance policy for your home is similar to buying a life
insurance policy. You have to consider your budget, and your exposure to
risks in your daily activities. If your estate is prone to vandalism,
burglary then you should include these items as contents to insure
against.
|
| Q23: |
What
should I bear in mind when evaluating the various policy options offered
to me? |
It would be useful
to consider the following:
| (a) |
Items covered-Does the
policy cover personal accident and liability, loss or damage to
valuables outside the home premises, in addition to the building,
renovation and home contents? |
| (b) |
First loss or average
clause- Does the policy cover the full or only a percentage of the
loss if you have under- insured your property? |
| (c) |
Definition of
terms-How are the risks defined in the policy? This is because
different insurance companies define risks differently would pay
different amounts in the event of a claim. |
| (d) |
Excess clause- There
is a minimum amount you must bear for yourself for every loss
except in the event of fire. As the amount can be from $50 to $200
for each item, it would be advisable for you clarify with your
insurance agent. |
|
| Q24: |
What
do I need to consider than deciding the amount to insure my home? |
You should use the
potential cost of reconstructing your home as a guideline. The cost of
reconstruction should include the cost for renovations and the home
contents. However, do bear in mind that the less you insure, the less you
can claim if a mishap occurs.
|
| Q25: |
Is
it better for me to over-insure or under-insure? |
Generally, it
would be better to over-insure than under-insure. This is because some
insurance companies penalize owners for under-insuring. Moreover, it makes
sense to over-insure by about 5-20% of the potential costs reconstruction
as one tends to add new the contents to a home.
|
| Q26: |
Do
I have to review my policies once I have bought them? |
Yes. You should
try to review the policies annually to accommodate any changes to the
contents in your home, or renovations to the property.
|
| Q27: |
What
is the Average Clause? |
It is a Clause
that states that owners have to fully declare the total value of the home
contents and building to be paid the full loss in the event of a claim. If
not, only a percentage of the loss would be paid.
|
| Q28: |
What
are First Loss policies? |
They are policies
that owners don’t have to fully declare the total value of the contents
and building but they would be paid for risks such as fire, theft, busting
of pipes etc..
|
| Q29: |
How
do I go about making claims? |
To make a claim,
you have to provide the following documents:
| a) |
as a police report in
the event of a break-in; |
| b) |
receipts if items of a
certain value are lost or damaged, and |
| c) |
invoices of
renovations done on the property |
|
| Q30: |
Why
do I need to get a valuation done before I sell my house? |
In volatile
markets, selling your property based on the lastest transacted prices may
be inaccurate due to the time lag between the actual transaction and the
published transacted prices. Also, most buyers would want to know the
valuation or the bank indication of your property to access their ability
to purchase your home.
|
| Q31: |
What
are the main factors that affect the value of my property? |
The factors are:
 |
Tenure |
|
Location |
|
Quality Proximity to
conveniences and facilities such as MRT, market, bus-stops |
|
Surrounding features
such as a beautiful scenery/landscape |
|
Current demand for the
property |
|
| Q32: |
How
much does it cost to obtain a valuation report? |
Generally, a
valuation exercise costs from 0.5% to 3% of a property’s value.
|
|
|
