Are you finally decided to apply for HSBC Home Loan? It’s best to know the top valuable facts before proceeding with your application.
With investments, they say never to put your money on things you don’t understand.
The same goes with the home loan and purchasing your first flat. Buying a house is not simple. No matter how the agents or banks make it sound, there will be a long process. Also, months of waiting and a couple of decisions are inevitable. If you feel that an HSBC home loan is your best choice, read on.
HSBC is a loan that helps you purchase private residential properties, HBD flats and commercial flats in Singapore. If you already have a house loan but have some financial difficulty, you can also use this loan for refinancing.
With HSBC, you can also choose between lock-in and no lock-in packages. Lock-in packages give you lower interest rates for one to three years. Are you not sure if you will stay on the property for more than a couple of years? Then, you can choose the no lock-in. It means that you can sell the property after some time. Plus, it has no incurring penalty.
Also, you can choose among three interest rate packages. The SIBOR-pegged interest rates are on the Singapore Interbank Offered Rate. After some time, it will adjust the interest rate. Therefore, it can go higher or lower as it is unpredictable.
With Fixed interest rates, you can have the same interest rate for the first years of your home loan. It gives you the freedom to create a budget way ahead. SmartMortgage helps you save up. So your home loan will be linked to your current account. Plus, this optionallowss you pay less.
If you are a foreigner, you must present your passport and E-pass.
With Singaporeans and Permanent Residents, you have to provide your CPF contribution history, especially if you want to use it for your home financing. Also, you have to secure an Option to Purchase (OTP) or Sale and Purchase Agreement (SPA). It is a must-have if you are making a new purchase.
Those who want to refinance an existing home loan have to provide a loan account statement for the previous 12 months.
Moreover, you will get a maximum loan amount of up to 80% of the property’s purchase price. The 5% has to be paid upfront. Meanwhile, the rest of the downpayment will be paid by CPF.
Freehold property is essentially a “property free from hold” of anybody else aside from the owner. Ownership is absolute, but you can transfer it through a sale deed.
A leasehold property is ownership of the property for a specified time. It can be as short as 40 years or as long as 99 years.
Nevertheless, decide which property you want. Or base it on which one you can afford.
The length of time varies on the property you want to buy. For example, if you purchase a private property, you have to complete the standard sale and purchase within 12 weeks upon the date on OTP.
Meanwhile, HBD properties have a shorter process. It usually takes 6 to 8 weeks to complete your Completion Appointment.
Should you look for a home first? Or find a loan before hunting for a flat?
Before you commit to purchasing any property, it is better to first get a bank’s approval in principle. It is due to the OTP’s two weeks validity period. If you fail to exercise the OTP in 14 days, you will forfeit your option fee.
Is this the first time you are purchasing an HBD property? First, you must be prepared to borrow up to 80% of the property’s purchase price or valuation. But before you can even have a loan approved, you need to pay an option fee of 1% of the property’s purchase price. Then, pay a further 5 to 10% to exercise the options.
As for the downpayment, it is 20%. But you have the option to pay the 5% of the property’s valuation and have the CPF pay the 15% in cash or funds.
If you have an existing loan in another property, you have to borrow 50% of the property’s valuation or purchase price. With the 50% downpayment, you have to pay the 25% in cash and have the CPF pay the other 25%.
Pay the difference between the purchase price and the market value in cash. It may make your payment upfront higher than you have expected.
Buying a home is a major decision. It will generally affect your lifestyle. While you are confident that a loan will significantly help, you must remember that a huge chunk of cash will leave your savings. Therefore, take some time to research and shop for other home loans. Figure out which can best fit your needs and wants. Aside from the facts mentioned above, there are also various factors to consider.