Moving into a landed property can mean more space and more privacy, but it also means taking on certain responsibilities. Responsibilities that come at a price. Let’s take a look at them.

Read our take on GCBs part I here.

Read our take on GCBs part II here.

1. Setting up Home Security

With condo developments and ECs, you get a sort of “gated community”, with security guards stationed at the entrance, round-the-clock security, and key card access. 

Landed properties, on the other hand, do not have these benefits. Your best option is to invest in a robust security system for an additional level of peace of mind. 

Since many landed properties are in pretty secluded areas, a regular CCTV system may not be adequate to guard against possible break-ins. You may have to enlist the services of a security company for motion sensors, home automation locks, video-surveillance doorbells, alarms, and more. 

2. Working out Roofing issues

Unlike HDBs and condos, the exterior of your house is your responsibility too. 

Externally, you may experience roof problems such as

• Loose shingles
• Water damage
• Thermal shock from UV rays
• Debris damage
• Roof flashing damage
• Clogged or blocked roof gutters

On the inside, you may face issues like

• Discolouration of the ceiling 
• Peeling plaster
• Weakened and warped ceilings
• Sagging ceiling
• Mould and stains on the ceilings or walls
• Dripping water and leaks

3. Keeping up on Maintenance

Other than maintenance of interiors and exteriors – such as repainting the entire facade after years of wear and tear (which can be quite expensive), you will, at some point, need domestic helper(s). 

Whether it is to clean out the dead leaves from gutters or maintain your lawn (yes, you will need to mow the lawn now and then), it could end up burning your weekend cleaning one floor (if you’re lucky) or just tidying up an area of your home.

That’s why many landed homeowners have live-in helpers that maintain the property on a daily basis. In fact, 1 in 8 families has a foreign domestic helper.

Speaking of maintenance of interiors and exteriors, costs for these repairs may come unexpectedly, especially for older landed properties. 

You may not need to set aside funds for this for years on end – but once roof leaks, termite infestations, or even flooding (or ponding in our case) hits you, repair and service costs may go up to 4 or 5 digits.

4. Flooding (or Ponding) woes

On 17 April this year, 90% of our average rainfall in a month fell within 3 hours. 

With climate change, flooding may become a regular issue for Singaporeans. It is important to know which areas are susceptible to flooding so property buyers can choose wisely and residents can prepare for flooding.

See the list of hotspots and flood-prone areas here

Since 2000, flooding has cost Singaporeans USD$23.8 million and has damaged 550 homes. While HDBs and condos may escape this ill-fate, you will be solely responsible to resolve this. 

Some of these may be major renovations that may require you and your family to move out during the renovation period and incur rental costs, e.g. installing water-resistant floorboards (vinyl, engineered wood, ceramic and porcelain tile…), insulating cracks in the foundation, or removing electrical panels on the ground.

READ: Private property in Singapore: All the costs involved in getting a condo

5. Dealing with Pest nuisance

Landed properties have a high potential for pest infestation. While pests appear in HDBs and condos too, landed properties may have it worse as waste disposal bins tend to be right outside your gate. 

With your lawn just inches away from the bins, and your door just inches away from your lawn, it’s an open invite for pests like centipedes, cockroaches, ants, rodents and more to crawl in and visit for dinner. 

The most common and dangerous pests found within and around landed properties are mosquitoes. Between January and September 2020, dengue cases in landed homes accounted for 25% of all cases. 

Termite infestation is also a massive problem for landed properties in Singapore due to our warm and humid weather. They can cause serious structural damage to your home – tearing through beams and ceilings, gnawing through wirings and cables, and hollowing out grooves. 

The damages are immense and costly – not only can they cause ceilings and floors to collapse, but termite extermination for landed properties in Singapore can also cost up to S$800.

If you have pets, there’s also a higher risk of them getting infected by fleas and ticks.

READ: Private and Landed Property Guide for foreigners 2022

Saving for these unexpected expenses by getting the best home loan packages for your home 

Land property comes with expensive responsibilities, but you can save money for these maintenances and emergencies by getting the cheapest home loan suitable for your financial situation. 

The interest you save monthly can offer you a safety net when unforeseen circumstances strike. This safety net can come in handy when you’re saddled with a hefty bill for corrective repair or have to pay for an expensive maintenance job. 

Rather than scrambling for cash when unexpected expenses arise, having the money readily accessible will reduce the stress on you and your finances. 

Instead of servicing a home loan package of 3% interest, mortgage brokers may be able to get you a lower interest rate of 1.50% – and that is about $360 savings per month. You could save up for a rainy day so that small financial shocks like the above don’t set you back in a big way.

Get in touch with our home financing experts for non-obligatory advice today. Our mortgage services are free-of-charge. As homeowners ourselves, we make it a priority to help you make the best home financing decision. 

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Others will tell you that they’re worth every cent, even if you have to lock up 90% of your payslip to buy one.

While Singapore has one of the highest homeownership rates in the world, buying landed property in Singapore remains out of reach for most Singaporeans – only 5% of our population live in a landed property. And given the exclusivity that comes with owning a landed property — it’s the ultimate sign of prestige and wealth if you’re able to do so. 

In this article, we take a look at the different types of landed properties in Singapore. 

6 types of private and landed properties in Singapore

1. Terrace House

Terrace houses are a type of private residential housing in Singapore. The term was coined by the Urban Redevelopment Authority (URA) in the early 1990s to describe the terrace-style housing built in the 1950s and 1960s.

They consist of at least three houses connected by a common wall, and are typically found in older areas such as Katong, Geylang and Kampong Glam. 

There are 2 types of Terrace Houses:

• Type 1 

Type 1 terrace house is usually bigger, with a minimum plot size of 150 sqm and a plot width of 6m.

If you were to get a Type 1 corner terrace house, the minimum plot size is 200 sqm and plot width of 8m.

• Type 2

Type 2 terrace house has a minimum plot size of 80 sqm and a minimum plot width of 6m. 

Type 2 corner terrace houses have the same minimum plot size as intermediate terraces, although they are wider at 8m.

2. Semi-detached House

Semi-detached houses, or Semi-D, comprise two adjoining units, each of which has its own front door. The units are separated by a wall, which typically has a window. 

Semi-detached houses are usually found in older neighbourhoods where land is scarce and space limited.

Semi-detached houses are popular for many reasons:

• Affordable compared with other property types in Singapore
• Maintenance cost is low because there are only two units on one site
• Easily renovated to suit modern tastes and needs
• Good resale value

3. Bungalow

Bungalows are usually detached houses, meaning they have their own private yard and are not attached to other houses on either side or at the front or back. 

They tend to be larger than terrace houses and semi-detached homes, making them more suitable for families with children who need more space and offering residents more privacy and exclusivity.

In Singapore, bungalows also come in different styles such as bungalow court, bungalow flat and maisonette. 

Bungalow courts are row houses where each unit has its own private entrance but shares a common driveway. Maisonettes are similar, but bigger than bungalows because they have two floors instead of one.

Bungalows outside of GCB zones have a minimum plot size of 400 sqm and maximum site coverage of 50%, whereas bungalows inside GCB zones have a minimum plot size of 1,400 sq m and maximum site coverage of 40%.

4. Good Class Bungalow (GCB)

Good Class Bungalows (GCBs) have been around for decades and are one of the most sought-after residential categories. They are large properties with a minimum land area of 1,000 sqm and a maximum built-up area of 4,500 sq.

The GCB designation was introduced in 1997 to ensure that certain areas of Singapore remain exclusive to residents who have the means to afford them. 

To preserve their exclusivity, prestige and character, GCBs can only be built in 39 gazetted areas in Singapore – such as Cluny Road near the Orchard Road shopping belt, Leedon Park near Holland Road, King Albert Park off Bukit Timah Road, and more

In addition, only homes built before 1 September 1994 can be classified as GCBs.

Read more about our take on GCB here.

5. Shophouse

A shophouse is a type of building that has shops on the ground floor and residential accommodation above. They were first built in Singapore during the 1840s to accommodate European traders who needed a place to live and work near their business premises.

Now, they are protected by URA due to their heritage and historical value. Generally, two or three storeys high, these heritage buildings are terraced homes with a long and narrow interior space and a five-foot frontage.

In recent years, many shophouses have become alternative office spaces and homes. They can usually be found in older locations such as Tanjong Pagar, Chinatown, Telok Ayer, and Amoy Street. 

6. Cluster House

Cluster house is a hybrid landed property that comes with strata titles. These houses typically have condo-like amenities, such as a gym, swimming pool, jacuzzi, playground, and can be built in GCB estates. 

Property with strata titles differ in many ways:

Are you eligible to buy these landed houses in Singapore?

All Singaporeans are eligible to buy and own a landed house in Singapore. Foreigners, including Singapore PRs, cannot buy landed properties in Singapore.

But, landed properties are not completely off-limits to foreigners. They can seek approval from the Singapore Land Authority (SLA) under the Residential Property Act. 

Each applicant is assessed on a case-by-case basis, taking into consideration, including but not limited to, the following factors:

• You must be a permanent resident of Singapore for at least 5 years; and
• You must make an exceptional economic contribution to Singapore. This is assessed taking into consideration factors such as your employment income assessable for tax in Singapore.

READ: Private and Landed Property Guide in Singapore 2022: Buying property as a foreigner

Get the cheapest home loan rate in Singapore 

Buying and financing a property in Singapore doesn’t have to be difficult!

Our home loan advisors have the local knowledge and experience in mortgages that can help make applying for a home loan in Singapore much easier for you. 

What’s even better? Mortgage services are free of charge! Speak to one of our home loan experts today and get free, non-obligatory advice on your home loan today.

The post Private and Landed Property Guide in Singapore: 6 types of private and landed properties appeared first on FinanceGuru.

Singapore is one of the most successful countries in the world and one of the most desirable places on earth to live. The country boasts some of the highest standards of living, health care, and education in Asia. 

But what are the challenges of buying a property in Singapore as a foreigner? This guide has answers to your questions and more. Read on. 

Who is considered a foreigner in Singapore?

In Singapore, everyone who is not a Singapore citizen, a Singapore company, a Singapore limited liability partnership or a Singapore society is considered a ‘foreigner’. In this sense, even Singapore Permanent Residents (SPR) are considered foreigners.

Is it tough to buy a property in Singapore as a foreigner?

Many of you may think that it would be, but that’s far from the fact. While options for expats are limited, you can purchase both public and private housing under the Residential Property Act. But of course, there are restrictions on what you can and cannot buy.

As a non-Singapore Permanent Resident (PR), you can buy:

​​✓ Private Condominiums
Foreign persons can purchase a condominium unit without approval.

​​✓ Privatised Executive Condominiums (ECs)
You can only buy an EC that is more than 10 years old. This is because ECs are privatised from the 11th year onwards.

✓ Landed properties in Sentosa Cove (subject to Singapore Land Authority (SLA) approval)

✓ Strata landed properties (subject to SLA approval)

As a foreigner who has been granted permanent residence status  (Singapore Permanent Resident (SPR)), you can buy:

✓ Resale HDB flats (with another SPR or Singaporean, after 3 years of obtaining your PR)

✓ Resale ECs that have reached their 5-year Minimum Occupation Period (MOP)

✓ Privatised ECs

✓ Private Condominiums

✓ Strata-landed homes (subject to SLA approval)

✓ Landed properties in Sentosa Cove (subject to SLA approval)

✓ Landed properties (with special permission from Singapore Land Authority)

How to buy a property in Singapore as a foreigner

Step 1: Check your affordability

The first step to buying a property – whether you’re a foreigner or a Singapore Citizen – is to check your affordability. Not just what a bank says you can afford, but what you are comfortable with. Check what you earn and what you spend.

You may have a high income, and therefore be able to afford a large monthly mortgage payment, but if it leaves you feeling uneasy about your finances, it may not be worth the stress.

There are many affordability calculators available online that can help you estimate your maximum home loan amount and the property purchase price you can afford based on your income, age and existing loan commitments.

Step 2: Check for stamp duties you need to pay

 Buying property in Singapore can be a costly affair, especially if you are a foreigner. The government imposes several taxes that you can expect to pay as a new homeowner here.

First, you’ll have to pay the Buyer’s Stamp Duty (BSD) when you buy or acquire property in Singapore, regardless of your nationality.

Here are the current BSD rates:

In addition, you’re also required to pay the Additional Buyers Stamp Duty (ABSD) of 30% when buying any residential property. ABSD is only applicable to foreigners buying residential properties.

READ: Explainer guide to property stamp duty in Singapore

Step 3: Look for your desired property

After you have sorted out your tax duties, it’s time to narrow down and shortlist your dream home! As a general guide, consider proximity to nearby amenities, MRT stations, parks, economic drivers and ease of commuting to work as part of your selection criteria.

You can engage a property agent to help you shortlist based on your given requirements, or choose to do it yourself.

The agent can help you scout for the best deals, do your financial calculations, and settle your paperwork and other nitty-gritty details.

Step 4: Apply for a bank loan

As a foreigner, you’re only eligible for a bank loan in Singapore. You’ll need to approach a bank or a private financial institution, and the maximum loan amount you can borrow varies depending on your financial standing and Loan-to-Value (LTV) limit.

LTV refers to the maximum loan amount you can borrow for your home loan. 

*Applicable only if loan tenure exceeds 30 years, or the loan period extends beyond the borrower’s age of 65 years.

Step 5: Secure your dream home

Before you sign the Option to Purchase (OTP) to secure your home, make sure you have your bank’s In-Principle Approval (IPA). 

An IPA is essentially a pledge from the bank that they will extend you the home loan amount you require for your property purchase. Validity varies from 2 weeks or up to 1 month.

Signing your OTP without the IPA can be a costly mistake if the bank doesn’t extend the full amount you need.

Need more advice on getting your home loan and property in Singapore?

Buying and financing a property in Singapore may be unfamiliar to you, but it doesn’t have to be difficult!

FinaceGuru’s home loan advisors have the local knowledge and experience in mortgages that can help make applying for a home loan in Singapore much easier for you. Best of all – all services are free! Stay on top of trends and ever-evolving interest rates! 

Over here at FinanceGuru, we can’t wait to start walking through your life’s major milestones with you. 

Contact us for a non-obligatory loan assessment today.

The post Private and Landed Property Guide in Singapore 2022: Buying property as a foreigner appeared first on FinanceGuru.

In essence, credit history is a record of your payment behaviour, reflecting your ability to repay a loan. It’s one of the key factors used in credit scoring and one of the qualifiers many financial institutions rely on when reviewing new loan applications.

In Singapore, most lenders will check your credit file to assess your creditworthiness before approving or rejecting your loan, regardless of whether it’s for a personal loan, home loan, or business loan.

If you have a good credit repayment history, it will be easier for you to qualify for major purchases, such as a mortgage, a wedding, or a car loan. 

READ: Guide to negotiating for a lower home loan interest rate in Singapore

How do you get your credit history?

The most straightforward way to a detailed look at your credit history is to get a credit report from Credit Bureau Singapore (CBS). 

It costs $6.42 and can be paid by Visa, MasterCard, or eNETS.

Most CBS members (aka the majority of the bank providers) also offer it free if you apply for a credit card or loan facility with them. Your bank will send you a letter containing instructions on how to obtain a free credit report from CBS within 30 days. 

What if you don’t have a credit history?

If you don’t have a credit history, it’s harder to establish a good credit rating. A credit history essentially reflects your financial health. 

If you’re in this situation, you should start applying for a credit card and building your credit. Make sure to make your payments on time and you’ll be on track to achieving good credit.

In some cases, prospective employers may check your credit history when running employment checks, especially those companies complying with MAS’s Fit and Proper Guidelines (particularly the finance industry). 

If you have a bad credit record, this might affect your chances of being hired and some employers will turn down applicants with bad credit.

Is having a credit score that important in Singapore? 

Absolutely! Most loans above $500 will require a credit check. Banks use your credit score to determine how likely you are to repay your debts, determine your loan quantum, or how much they are willing to lend you.

You need to ensure that your credit score is good if you plan to borrow money from the bank.

In fact, the same applies if you choose to borrow HDB loans. HDB may take a look at your credit report if you’re not a full-time employee who makes regular CPF contributions. Before they issue you an HDB loan eligibility letter (HLE), they will need to assess your ability to service the loan. 

Read more about how credit score affects your home loan in Singapore

How to improve your credit history to better your eligibility for a home loan in Singapore

The good news is – your credit reports reflect your credit history for the past 12 months. This means that you are able to improve your credit score by adopting the following 3 tips for the next 12 months. 

1. Stay within your credit limit on your existing credit cards

2. Make your credit card payments promptly
Missed repayments can affect your credit score, so aim to pay your credit card balance in full each month.

3. Avoid applying for multiple credits within a short time period

Applying for multiple credit cards or loans from different lenders can make you look like an aggressive applicant and lenders may be inclined to reject your applications.

Unsure if your credit history will affect your home loan journey?

Speak to our Home Financing Experts for a financial health check and learn how you can better plan your finances for your home.

Apart from free, non-obligatory consultations, our mortgage services are totally free of charge. Leave it to us to get you the best home loan rates in Singapore! Contact us for a chat today.

The post Does credit history matter when you apply for a home loan in Singapore? appeared first on FinanceGuru.

In this article, we’ll cover what credit score is, how it affects your home loan application in Singapore and how to avoid hurting your credit score.

Read more about home financing advice for first-time homeowners here

What is a Credit Score?

Your credit score is based on information from your credit report. It is a four-digit number
that indicates how likely you are to repay your debts and make payments on time.

In Singapore, the 2 major consumer reporting agencies (CRAs) are Credit Bureau Singapore (CBS) and Experian Credit Services Singapore (ECSS).  

Lenders typically use your credit score to determine whether or not they should give you a loan or mortgage. They will also sometimes use it as a factor in determining the interest rate they offer you.

READ: Guide to negotiating for a lower home loan interest rate in Singapore

Why is Credit Score important for a Home Loan in Singapore?

So, how does your credit score affect your home loan eligibility? 

Well, if you’re buying a new home or renovating, you most probably will need help financing them. Having a high credit rating will increase your chances of getting a Home Loan approval.

The credit score is often seen as an indication of how reliable you are as a borrower. The higher your credit score, the more likely lenders are to approve your application as you’re deemed less likely to default on your loan. 

Here’s the credit score table and the risk grade you fall in depending on your credit score:

How is your credit score assessed?

Banks look at your average income and expenditure when assessing your eligibility and ability to service a loan.

Similarly, factors that determine your credit scores include:

• The amount of credit you use
  The more debt you take on, the lower your score.
  

• Your applications for new credit
  You could lower your credit score if you take up new credit facilities within a short period of time. This is because you’re taking on more debt and financial institutions and banks may think that you are not being prudent with your finances.
  
• Late payments on loans
  Being late on your loan repayments is regarded as a negative trait and will drag down your credit score.
  
• Length of your credit history
  In general, lenders prefer borrowers with a longer credit history than those with a short history or no credit history. Having a history of prompt payments supports your credit score and credibility as a borrower.

A good credit score helps banks and financial institutions understand if you’re able to manage your finances well.

3 mistakes to avoid hurting your credit score

1. Do not apply for too many credit cards

Having too many credit cards to your name can be a hassle. While you could use this card for discounts at this restaurant and that card for promotions at that movie theatre – you could also accidentally miss your payments and end up getting penalised on your credit score. 

Moreover, you might be tempted to spend frivolously if you have that many credit cards.

Instead of keeping so many, cancel those that you rarely use and put purchases on the older credit cards with the largest credit limits and pay off your debt monthly. 

This way, you can put up a history of timely credit payments and improve your credit score. It can also help keep your debt-to-credit ratio in your favour.

2. Try not to miss your credit card payments

The biggest mistake you can make is to miss your credit card payments and let your bill roll over to the next month. 

If you do that frequently, your credit history will be littered with late payments. Kind of like receiving the red letter for the bill you forgot to pay – not that pleasant to look at.

Frequent late payments will affect your home loan eligibility.

3. Don’t think that you don’t need a credit card

Many think that credit cards are an added financial burden – a non-tangible form of payment that may make one feel risky. 

However, credit cards are essential for building your credit history. Without credit cards, you won’t have a credit history – and when you want to get a loan – you don’t have any receipts to pull up.

Get started with tailored home financing advice at no cost!

Ready to start with your home buying journey? Speak to our Home Financing Experts today for a financial health check and learn how you can better plan your finances for your home.

Need help choosing a home loan that suits your financial situation and lifestyle? Speak to one of FinanceGuru’s friendly and professional home loan advisors. Apart from free, non-obligatory consultations, our mortgage services are totally free of charge.

Leave it to us to get you the best home loan rates in Singapore! Contact us for a chat today.

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After all, why would you? HDB home loans offer plenty of benefits. 

Your downpayment could be more manageable since you can borrow up to 85% of the property value. You can settle everything at one go with HDB. And rather than seeing cash getting deducted from your bank accounts, paying through CPF seems to be the more convenient choice.

Out of sight, out of mind, right? It’s easy to slip into a rut and get comfortable, especially since you don’t see your bank account debited for repayments.

But why pay more interest when you can pay less? As it stands, the HDB home loan interest rate of 2.6% is significantly higher than the 1.4% to 1.8% that the banks are currently offering.

While this small percentage may not seem like much monthly, it’s a substantial amount if you look at it as a whole – about S$600 a month in interest savings and not to forget, a reduction in the monthly instalments thus leaving you with more disposable cash!

In this article, we cover how you can refinance your Singapore HDB home loan to a suitable bank loan and enjoy greater interest savings. As interest rates are set to gradually increase over the next few years, exercising financial prudence and securing low mortgage rates is key.

How does refinancing work?

Refinancing is basically replacing your existing home loan with a new one that offers more favourable terms.

For example, the home loan you took out from Bank A 5 years ago is pegged at a 1.8% 3-year fixed rate. Since the 3-year period is over, your interest rates have gone up to over 2%. You still have S$300,000 of home loan to clear with Bank A.

You find Bank B offering interest rates of 1.5% at a 3-year fixed rate, and decide to apply to refinance to Bank B.

Bank B will pay Bank A the S$300,000 you owe if your refinancing application is approved. In the new loan, you will not owe Bank A any money; instead, you will owe Bank B S$300,000. The loan is essentially ‘transferred’ to Bank B.

READ: Now is the best time to refinance to a fixed-rate home loan in Singapore

3 steps to refinancing your HDB home loan to a bank loan

1. Compare mortgage packages available in the market

While you can compare interest rates offered by different banks and check out the various perks and incentives they offer when you refinance, it’s unlikely you will get the best deal as most banks don’t state their best rates upfront.

This may be a good time to reach out to a home financing advisor at FinanceGuru for a free mortgage service.

Mortgage advisors can assist you in understanding the different loan terms, rates, and fees. Moreover, experienced mortgage advisors are in the know about exclusive and preferential rates that are not advertised.

This can give you a better chance at striking a good home loan package suitable for your financial needs.

Read more about why you should speak to a mortgage broker instead of going directly to a bank for your home loan here.

2. Prepare the necessary documents

After you have narrowed in on a bank and its offered packages, you will need a list of documents on hand to complete your application process for a bank loan:

• NRIC 
• HDB flat details
• HDB financial information
• Latest outstanding loan statement
• Latest CPF Property Withdrawal Statement
• Latest Notice of Assessment from IRAS
• 12 months-worth of CPF transaction history
• Payslips from the last 3 months
• Employment contract (if you have less than 3 months of employment)
• Tenancy Agreement and Stamp Certificate (if you have rental income)

That’s a lot of paperwork. You probably wouldn’t want to waste your weekends slaving away at your desk preparing them.

With a home loan advisor by your side – not only can you get the best home loan rates, but we will help prepare your documents, pick out the crucial details and help sift through and pick out any red flags that may cause delays or rejections in your loan application process.

3. Get your home valued

Before your refinancing application is approved, the bank will need to assess the value of your home.

They will send a qualified valuer down and ascertain the market value of your home based on factors such as location, age, size and condition of your home.

READ: Guide to HDB Valuation: How much is the HDB flat worth

4. Engage a law firm to do the complex tasks

Refinancing involves A LOT of legal work.

Things like sending notice of loan redemption to your existing bank, receiving preliminary loan redemption statements, and lodging transactions, among many other paperwork and contracts. A lot goes on behind the scenes.

You’ll need to sign some documents from time to time and that’s where getting a conveyancing lawyer to help you with these complex tasks comes in.

Banks usually have a panel of pre-approved law firms they work with. You can select your conveyancing lawyer from that panel and minimise the hassle involved. Legal fees for mortgage conveyancing can start from S$1,500 or more.

Should you refinance your HDB home loan?

While some may appreciate the stability that HDB home loan offers, 2.6% is considered steep compared to most bank loans with interest rate packages under 2%.

Though the difference may seem small, it adds up over the years as shared earlier. It’s all about the significant savings. For example, a bank interest rate of 1.3% on a S$400,000 home loan, that’s an approximate S$5,200 savings per year.

In addition, some banks offer incentives and subsidies on top of low-interest rates. To help customers minimise the cost of refinancing, some banks cover fees incurred, such as valuation and legal fees.

For instance, with valuation and legal fees calculated at around S$1,800, your bank might provide $2,000 in subsidies and the cost of your refinancing is thus waived.

We can help guide you through the next steps of refinancing your home loan in Singapore

Before you decide on your next steps, make sure that refinancing is indeed the best financial decision for you right now and in the years to come.

As homeowners ourselves, we make it a priority to help you make the best home loan refinancing decision.

We’re well aware of the whirlwind of details involved when it comes to home loans, and we’d love to hold your hand and share our own experiences so you can make a decision that works well for you.

Contact us for a chat today.

The post How to refinance your Singapore HDB home loan to bank loan in 2022 appeared first on FinanceGuru.

Today, let’s take a look at some reasons why you should consider refinancing your home loan.

1. You’re probably paying a higher home loan interest rate than what’s being offered in the current mortgage market

HDB home loan package in Singapore

If you’re on an HDB home loan, the current 2.6% interest rate is certainly higher than what banks and financial intuitions are offering. 

Many HDB homeowners have refinanced into bank loans in the past few years – reducing their interest rates from 2.6% to an average of just 1.3%. Interest savings of 1.3% per S$100,000 translate to having S$1,300 in the pocket instead of a housing loan payment.

To help you compare your home loan savings, we’ve provided the most recent refinance housing rates:

Updated as of 4th April 2022

That’s about half your current HDB home loan interest rates! Enquire here to lock in these rates

Bank home loan package in Singapore

If you’re on a bank loan, your package would probably be one you took up 3 to 5 years ago. It’s likely long past your lock-in and/or promotion rate if any – this means that you’re possibly paying more than the current mortgage rates in the market.

To help you visualise, here are the SIBOR and SORA rates from 5 years ago, 3 years ago, versus what it is today:

Source: https://housingloansg.com/hl/charts/sibor-sor-historical-chart

Refinancing your current home loan is one way to lower your interest rate. By refinancing, you’re replacing your existing loan with one that offers more favourable interest rates or terms.

2. You can better adjust your loan tenure to suit your current financial needs

For some homeowners, the problem isn’t the overall cost of the loan, but the monthly repayments.

You can further lower your repayments by extending your loan tenure when you refinance.

Take for example you chose a loan package with a 25-year tenure. 5 years down the road, you quit your job to pursue your passion. Your financial situation has now changed, and you may wish to have lower monthly repayments to service. 

By refinancing your home loan package to one with a longer loan tenure instead, you can decrease your monthly repayments and ease your cash flow.

While this makes monthly repayments more manageable, note that it increases your overall interest costs as you’re repaying your loan for a longer period. 

READ: Should I opt for a longer or shorter loan tenure?

3. You can lower your monthly repayments even more

As shared in point 1, refinancing can help you lower your monthly repayment amount by securing a more attractive interest rate. 

Let’s say you took out an HDB home loan for a 4-room resale flat at S$600,000. Taking into account the HDB interest of 2.6% versus a bank loan interest of 1.5%, the difference in repayments will be S$274 monthly.

Is it worth refinancing?

Usually, sticking with the same package can cost more than refinancing. That’s because you’ll be stuck paying a higher interest rate than what the market offers.

Refinancing can bring several potential benefits like significant savings, and better cash flow management. 

But of course, it is not guaranteed for the entire duration of your home loan. You must refinance regularly to keep interest costs down. That’s where home financing advisors can come in to help you track your interest rates and advise you when the time is right to refinance. 

As we age, our priorities shift – from financial freedom for leisure, to starting a family and building a nest. Whether it’s worth it to refinance depends solely on your financial needs and lifestyle. Though, many homeowners in Singapore save up to S$700 monthly by refinancing. 

If you’re unsure of whether to refinance or which refinancing plan suits you best, connect with one of our FinanceGuru home loan advisors here.

Apart from free, non-obligatory consultations, our services are free of charge. So leave it to us to get you the best housing loan rates in Singapore!

Contact us for a chat today.

The post Is it worth refinancing?: 3 reasons why you should refinance your home loan appeared first on FinanceGuru.

In either case, you are unlikely to get the best deal. Why? Because most banks do not state their best rates upfront. 

And with the home loan market being so competitive, it can be tough to distinguish between the loans offered – especially since there aren’t many differences between packages other than the interest rate. 

In this article, we look at some ways you can potentially get the best deal in the market.

1. Apply for a mortgage together with your family members

Is any of your family members looking to refinance or apply for a new mortgage? 

If yes, you might be able to secure a very beneficial package when you apply for your mortgage with the same bank. Think of it as a referral/bundle sort of deal.

Family members getting mortgages from the same bank increases the likelihood that more products – i.e. insurance, investments, credit cards, etc – may be taken up by the members of the same family, increasing loyalty to the bank. 

2. Upgrade yourself to a priority client

If you have some money lying around, it’s time to put it to good use. Open an account with the bank and obtain that priority client status!

Having priority banking status with a bank may allow you to obtain a lower mortgage rate than what is publicly available.

To qualify for priority banking, there are a few requirements. In general, you’ll need to have:

• cash deposits ranging from S$200,000 to S$250,000
• an annual income exceeding S$120,000 
• investment products exceeding S$150,000

However, criteria may differ from bank to bank.

As a priority client, you may qualify for some discount on your home loan rate. 

For example, a 0.10% discount in annual interest savings on a 1 million-dollar loan is equivalent to roughly S$1,000, with a loan tenure of 30 years, you will have saved close to S$30,000 in your pocket instead of the bank.

3. Prove that you are a reliable borrower

When it comes to home loans, it’s rather risky for banks to disburse millions of dollars. As such, the higher the amount, the stricter the governance and auditing requirements become, in order to secure low-risk customers. 

By proving that you are a reliable borrower, you are likely to get the required loan quantum. 

During the loan application, the bank will review your credit report, which shows the bank your credit card and loan repayments records – if any. In general, show your credibility as a responsible borrower and establish trust with the bank you want to borrow from.

4. Consult a home financing advisor for the best mortgage rates in Singapore

If you’re looking for the best home loan rates, you may want to consider getting the help of a mortgage specialist.

Many have the misconception that these advisors’ expertise comes at a price, however, this is hardly the case. 

In fact, home loan advisors, or mortgage brokers, at FinanceGuru do not charge any fees. And in comparison to an average home loan borrower, our home loan specialists can drive a harder bargain with the banks. 

Besides knowing the bankers, we also provide dozens of home loan applications to the banks, so we have more leverage to negotiate the best interest rates for you.

Here are some areas where a mortgage broker might have an edge over, say you getting your own home loan:

• Our level of experience and knowledge
  We have the knowledge, and the level of advisory we can provide can be easily validated through our customer reviews.
  
  Most of the time, dealing directly with a bank means you will have a mortgage banker assigned at random, and you have no way of knowing their level of professionalism or mortgage expertise
  
  READ: Why you should speak to a mortgage broker instead of going directly to a bank for your home loan
  
  At FinanceGuru, we will take you step-by-step through your home buying journey – and that doesn’t just end with you getting your home loan approved and disbursed. 
  
  We will continue monitoring and tracking the interest rate market, and offer you the best advice according to the economic situation and your financial needs. 

• We have a stronger relationship with banks
  Banks typically have a closer relationship with mortgage brokers than the general public. 
  
  Some of our mortgage specialists are also former bankers and loans specialists with years of experience in the industry.
  
  So as providers and consumers – with experience working both sides of the coin – we understand the pain points and concerns when it comes to making financial decisions.

• We have a high volume of business with banks to strike favourable deals
  In general, mortgage brokers are sometimes able to request preferential rates that are not advertised by banks in Singapore due to the volume of business that they have already generated for the bank.

• We are in the know
  You probably don’t know this – but banks are often competing to offer the most attractive interest rates on a monthly or quarterly basis to gain market share. 
  
  An experienced mortgage broker knows when these exclusive rates are offered and by which banks. Partnering with the major banks and financial institutions in Singapore, we can compare home loan rates across the board to ensure you get the right deal.

Read more about how mortgage broker works here 

Apart from free, non-obligatory consultations, our mortgage services are totally free of charge. You don’t have to pay for our services – so leave it to us to get you the best housing loan rates in Singapore!

Contact us for a chat today.

The post Guide to negotiating for a lower home loan rate in Singapore appeared first on FinanceGuru.

But for all the excitement of becoming homeowners, many things can cause stress if not planned properly. 

To help make things easier for you, here are tips for buying your first home as a couple in Singapore and lessons to learn from couples who have already gone through this process!

1. Work together, plan together

Buying a home is the biggest investment most couples will make together. Before you get started, it’s important to have a game plan to help you move through the home buying process smoothly. Consider these:

• Understand your own finances
  The most important step for couples buying your first home is to understand your own financial capacity. 
  
  Take into account factors such as your income, savings, and personal expenditures. How much can you afford to set aside each month for a mortgage payment?
  
  This is known as your affordability, and no matter if you’re buying an HDB flat or private property in Singapore, this will always be the first question a Home Financing Advisor will ask.

• Understand the Manner of Holding
  Manner of Holding refers to how your ownership of a property is registered on title. 
  
  If both of you are paying equally for the property, it makes sense to have both names on the title deed.
  
  However, if only one of you is making full payment for the property, how would you work out the ownership? Will it be 50-50, or will it be based on how much each of you contributes towards the purchase?

Read more about Manner of Holding here

• Choosing the right location to buy your first home in Singapore
  
  There are many factors to consider, including whether you want to stay close to your family, or live closer to your workplace to cut down on commute time.
  
  With fast-paced living today, both of you will need to consider your lifestyles and preferences when choosing a home location that works for you as a couple.

2. Be on the same page about getting your home loan from banks or HDB

When it comes to choosing between a bank loan and an HDB loan, some couples might have vastly different preferences (or even prejudices) against certain types of lenders. 

In such cases, both parties must be able to see the bigger picture and make an informed decision together instead of insisting on their own way.

Here’s a quick table on the two types of loan available to help you weigh your options:

Source: cpf.gov.sg/member/infohub/educational-resources/3-differences-between-hdb-loan-and-bank-loan

Find out more about HDB loan vs bank loan in this article

3. Be realistic about what you both can afford when buying a home in Singapore

It’s exciting and momentous to buy a home, so it’s sometimes difficult to focus on the practicalities. 

But one of the most important things you can do is to be realistic about what you can afford. This can be tricky when you’re buying with a partner. Both of you likely have different spending habits and different outlooks on money in general.

A good way to start is by having a conversation about your financial situation and discussing with your partner about financial commitments like loans and credit card debts.

You may also want to consider getting In-Principle Approval (IPA), so you know exactly how much you qualify for before making an offer on a house.

The next step is determining your homeownership goals, and then figuring out how long it will take to reach those goals together. While some couples are happy living in their starter home for years, others would rather upgrade and move up into a larger home sooner rather than later. 

READ: 4 financial mistakes to avoid when upgrading from an HDB to a condo in Singapore

4. Be aware of the schemes and grants available

As first-time applicants, you and your significant other are eligible for the Family Grant, which provides up to S$50,000 if both of you are Singapore Citizens. 

In addition, you may also be eligible for grants like Proximity Housing Grant, which offers up to S$30,000 if you choose to live with/close to your parents.

You both need to be aware of what government grants, subsidies and financial assistance schemes are available to you as a married couple, as they could provide a huge chunk of support and help you plan ahead financially. 

5. Connect with a trusted advisor who will guide you through this potentially life-changing journey

When buying your first home in Singapore, you want to make sure that your experience is at least an enjoyable one. 

You want to find a property that is ideal for your current lifestyle and also has potential for growth and expansion as your life changes, and as you settle down and build a family. You want to find a property that fits all (or at least most) of your needs and wants.

And, most importantly, you want to find a property that is within your budget and financial capabilities. 

This is where the services of a trusted home financing advisor come into play.

There are many people you can turn to for advice: family members, friends, colleagues, even real estate agents. However, if you want to make sure that the home-buying decisions you make are the right ones, then it’s best to rely on someone who has been through this before – a trusted advisor with years of experience in helping couples buy their first homes in Singapore.

If you need guidance on your home financing journey, home loan advisors at FinanceGuru can help. Speak to a home financing advisor today and navigate your home buying journey with ease. We provide objective and transparent advice and recommendations, fully tailored to your financial needs and lifestyle. We know what it takes to get the best home financing deals. 

Get free home loan financing advice from us. Don’t worry – zero charge and no obligations!

The post A Home Financing Advisor’s Guide to Couples Buying their First Home in Singapore appeared first on FinanceGuru.

In this article, we take a look at fixed-rate home loans in Singapore and why you should keep a close eye on them this year. 

What is a fixed-rate home loan?

Fixed-rate home loans are home loan packages that provide borrowers with a fixed interest rate over a specific period – coined as the lock-in period. The lock-in period usually ranges from 2 to 5 years. 

During this fixed period, your monthly repayments remain the same regardless of market interest rate fluctuations.

After the fixed period, your fixed-rate home loan will be automatically pegged to either SIBOR, SORA, or Fixed Deposit Home Rate (FHR) based on your bank’s home loan package.

Learn more about SORA replacing SIBOR here

Why it makes sense to choose fixed-rate home loan in Singapore now

Getting a fixed-rate home loan during an interest rate hike – which is coming very, very soon – can give you the opportunity to minimise future costs.

In general, home loan fixed rates are more beneficial when interest rates are estimated to rise over the next 2 or 3 years as they protect you from higher mortgage payments.

As we anticipate rising interest rates, hopping onto a fixed rate home loan now will be favourable. Check out the different home loan packages that are suitable based on the different interest rate environments: 

Getting a fixed rate home loan is the best solution for homebuyers who are looking to streamline their finances and avoid unexpected changes in interest rates.

Check out the latest home loan rates packages here

Quick facts on fixed-rate home loans in Singapore

1. Fixed-rate home loans will turn into floating rate home loans after your lock-in period

Your fixed-interest home loan will likely revert to a floating-interest home loan after your lock-in period. If you want to continue enjoying fixed rates, the best way to go about it is through refinancing.

Read more about home loan refinance here

2. Banks will not tell you when your fixed-rate home loan is “expiring” 

It’s good to take note that banks will auto-convert your expiring fixed-rate home loan to a floating rate loan without notifying you. 

On the other hand, if you choose to get a home loan through a mortgage broker, our home financing experts will help you track the home loan rates and remind you when your loan is about to expire. We will also advise you on the available financing option based on your current financial situation.

Getting a fixed-rate home loan in 2022

With the rise in unemployment in 2022, the stability of your monthly repayments is a key point to consider. Making sure you have enough savings for a rainy day and protecting yourself from sudden hikes is essential. 

In the fast-moving world of today, the last thing you want to do is fall behind—and that’s especially true when it comes to your home loan in Singapore. When the market is shifting, how do you know if your loan is still doing what it’s supposed to? 

We’re experts on home loans, and we’re here to help you make sure you stay with the times so that your loan doesn’t fall behind. If you want to get ahead of the game and make sure that your loan is working for you — not against you — contact us now!

Our goal at FinanceGuru is to help homeowners find the right home loan to meet their financial needs. Get tips on how to save money and optimise your home loan today.

The post Now is the best time to refinance to a fixed-rate home loan in Singapore appeared first on FinanceGuru.

Deadline approaches for transition to SORA

SIBOR and SOR are being phased out in favour of SORA, which will become the benchmark for bank home loans moving forward. So far, more than S$1 billion in SORA loans have been extended by most major banks as of March 2021. 

As the deadline for the switch to SORA approaches (end of September for SOR and 2024 for SIBOR), it’s best to be prepared. 

Here are a few dates to keep in mind: 

• 31 March 2022 – 6-month SIBOR will be discontinued
• 30 June 2023 – SOR will be discontinued
• 31 December 2024 – 1-month and 3-month SIBOR will be discontinued

Read more about SIBOR, SOR and SORA here

How stable is SORA in comparison to other pegged rates?

SORA vs SIBOR

When comparing the way SORA calculates interest rates compared to SIBOR, SORA takes past transactions into account, while SIBOR takes future transactions into account. 

Unlike SIBOR, which takes 20 banks into account, SORA operates by calculating the interest rate on all interbank loans. As a result, it’s a lot simpler and more transparent. 

SORA lets you know what to expect and is easier to analyse and predict. By contrast, SIBOR is more volatile, as banks can decide to increase or decrease interest rates at any time. With SORA, you’re unlikely to be surprised by unexpected rate hikes.

SORA vs SOR

Compared with single-day readings of SOR, the averaging effect from compounded SORA will provide significantly more stable rates for borrowers. Rates for SOR are frequently subject to market factors, such as quarterly or year-end volatility.

SORA conducts transactions in SGD. Thus, the constantly fluctuating exchange rates are not an issue, unlike SOR.

Here’s what you need to know about SORA and why it is replacing SIBOR

How attractive are SORA-pegged rates now?

Despite its increase, current SORA rates remain quite attractive:

Benefits of switching to SORA-pegged rates

Accuracy

Based on the average rate of unsecured overnight SGD interbank transactions in Singapore, SORA serves as a robust interest rate benchmark that accurately reflects the daily conditions in the Singaporean money markets.

Stability

Because SORA does not take into account foreign exchange rates, the interest rates for Singapore borrowers are more stable.

Availability of Data

Since SORA has been published by MAS since 1 July 2005, participants can analyse and use past model trends for risk management and asset-liability pricing more easily.

Forward-looking

Since SORA is calculated and administered by MAS, it is more predictable and more stable than SIBOR, which is forward-looking (i.e. SIBOR fluctuates more because banks can increase interest rates without warning). 

Compounded SORA rates, on the other hand, account for interbank sales trends that have already occurred in the past so that future forecasts are made.

Fewer complications

Having an SORA-based interest rate in SGD will eliminate market fragmentation and promote transparency – as it’s easy to calculate based on the rates published daily on MAS website – enabling consumers to compare loan prices more easily.

Find out more FAQs of SORA here

Switching to SORA-pegged home loans in Singapore

The Steering Committee for SOR & SIBOR Transition to SORA (SC-STS) was recently formed by MAS to ease the transition and move industry participants like commercial and retail customers toward SORA gradually. 

If you currently have an SOR-pegged loan, your bank will likely contact you by the end of October 2022 regarding the options for converting your loan. 

Meanwhile, take this time to compare different home loan packages available in the market. Who knows – you might find an even better package that suits your current financial commitments. 

If you don’t want the hassle of searching and comparing, talk to our Home Loan Advisors for free advice today. Our home loan advisors are experts in helping you prepare your finances and optimise your home loan. 

The post More on SORA for home loan interest rates appeared first on FinanceGuru.

Taking a look at Budget 2022, these are the two of the key areas that will have an immediate impact on the property market: 1) Increased tax rates on residential properties, and 2) Increases in GST. 

Other areas discussed like the plans for more electric vehicle charging points in residential areas, an increase in utility costs, and adjustments to foreign work policies are also worth noting as they could change the property market. 

Let’s look at what Budget 2022 has in-store for Singapore’s property market and the possible impact.

Increased Property Tax rates for residential properties

Based on the Annual Value (AV), property tax will be revised based on the Annual Value (AV) of the property, affecting both owner-occupied and non-owner-occupied residential properties. 

AV is based on the estimated annual rental income determined by the Inland Revenue Authority of Singapore (IRAS). While the majority of HDB homes in Singapore will not reach an AV of S$30,000 (with most averaging below S$10,000), we would see a more significant impact on properties at the high end. 

Owner-occupied residential property

Homes with annual values of less than S$30,000, such as HDB flats and condos, as well as landed properties in the suburbs, are not affected by the hike in property taxes.

Property taxes will, however, be revised for the portion of annual value over S$30,000. 

The following table shows the revised tax rate for owner-occupied residential property: 

Non-owner occupied residential property

In general, all non-owner-occupied residential properties, including investment properties, will face higher taxes of 12% to 36%, up from 10% to 20% currently. The increase will be most pronounced for properties at the top end of the market.

From 2023 onwards, non-owner occupied property tax rates will also be reduced to the following 3 tiers:

GST Hike

Goods and Services Tax (GST) will also be increasing from 7% to 9% in incremental stages:

• Increase to 8% on 1 January 2023
• Increase to 9% on 1 January 2024

As for the property front, residential properties sold or leased are exempt from GST, while non-residential properties are subject to GST if owned by a GST registered entity. In the case of properties consisting both of residential and non-residential parts, the non-residential portion is liable for GST.

Additionally, GST applies to movable furniture and fixtures. So buyers and renters can expect a hike in prices for furnished properties due to the increased GST charges.

Similarly, commissions paid to property agents are subject to GST so long as the property is located in Singapore and the estate agent is GST-registered.

Increase in utility costs

In order to achieve net-zero emissions by 2050, carbon tax will increase, which translates into higher utility costs, such as electricity bills, power, water, waste disposal etc. 

Adjustments to Foreign Worker Policies

To reduce the reliance on foreign workers in construction and process sectors, and improve productivity, the government will tighten foreign workforce quotas.

From September 2022, the minimum qualifying salary for incoming foreign workers are as follows:

• Employment Pass (EP) holders will be raised from S$4,500 to S$5,000, with those in the financial sector raising from S$5,000 to S$5,500.
• S-Pass holders will be raised from S$2,500 to S$3,000, with those in the financial sector raising to S$3,500.

The salaries for these qualifying positions will be reviewed and increased in September 2023 and 2024. Tier 1 levies will also be gradually increased from the current S$330 to S$650 by 2025.

Work Permit workers, especially in the construction and process sectors, are going to be able to benefit from a new Levy Framework effective January 2024 to encourage companies to support more offsite work and employ highly skilled workers.

How does Budget 2022 affect the property market, homeowners, investors, landlords and renters?

A potential uptick in rental rates 

Rising property taxes, along with interest rate hikes affecting mortgage rates, there will likely be an uptick in rental rates.

Moreover, with GST applicable to movable furniture and fixtures, you can expect a hike in prices for furnished properties, either purchased or rented. 

Ms Christine Sun, Senior VP of Research and Analytics at Orangetee & Tie said: “It may be possible that landlords try to pass on the costs to tenants for the centrally located condos and landed properties, as the increase in property tax is quite significant for this segment.”

Decrease pool of potential foreign tenants

Having the new adjustments to foreign work policies mean that foreign tenants will have to earn a greater qualifying salary to keep their work permits and work passes. 

In the event that their employers do not increase their salaries to meet the revised quota, they may lose their right to stay in Singapore. 

As a landlord, this may inadvertently reduce your pool of foreign tenants.

New features for future homes

As well as increasing carbon tax, Singapore’s aim to phase out internal combustion engines (ICE) and switch to Electric Vehicles (EV) by 2040 will also lead to more charging stations being built closer to residential areas, which is expected to speed up the adoption of EVs.

The future will see charging points become an essential part of households or an attractive selling point for properties. Investors and landlords might want to look into buying homes near charging points or install one to appeal to potential homeowners and renters in the future.

What are your next steps?

With the increased taxes and impending interest rate hikes, it’d be best to be prudent and consider what you are paying for.

Learn how to be prepared for rising interest rates in 2022/2023 here

Contact us for a free, no-obligation consulting session and let’s discuss how you can restructure your finances and property plans in light of the new changes.

The post Budget 2022: Property Tax and GST Hikes – Impact on the property market in Singapore appeared first on FinanceGuru.