Being the owner of a house of their dreams is always in the back of the mind of many adults, especially those who are focused on settling in a beloved space of their own with their family. However, not having adequate funds to purchase a house and being irrationally scared to get a home loan due to misconceptions about mortgages and loans keep most of them from not going for it.
Statistically, you are likely to save a significant amount of money over a period of time by getting your own home rather than paying a rent for where you stay all lifelong. Therefore, let us debunk some misconceptions about home loan rates and other myths that circulate about home loans in particular.
You should always go for the shortest possible repayment plan
Making long-term financial commitments may seem risky at first. However, especially when it comes to large sums of money such as home loans and mortgages, going for a longer repayment term means a lower equated monthly installment (EMI). You might argue that in Singapore where interest rates can fluctuate with time, getting a shorter repayment plan is the way to go. It is logical if you already have savings to cover your future payments, but if not, go for a lower EMI with a longer term and make sure you invest the money you save to keep yourself risk-free for the future.
You should look for the lowest interest rate home loans
Your mortgage is likely the longest financial commitment you make with an institution. Therefore, while keeping your eye on the best housing loan rate, make sure that you look at the customer service of the bank of the financial institution, research their processing fees and the time that they take for all the proceedings. Compare home loan rates in Singapore and go for the best option that covers not only a good rate but also a good service as well.
Fixed rates are always better than variable rate loans
A fixed rate home loan in Singapore means that your initial interest amount will be fixed for the first few years. A variable rate loan may go up or down according to the fluctuations of the market. While a fixed rate plan may seem like the obvious best option, variable rate plans often offer much lower interest rates at first, while fixed-rate loans are always significantly higher from the very beginning. Both plans have their own benefits and compare the home loan rates in Singapore can be used to your advantage after a close study of the market. You have to carefully and decide which option is more feasible for you.
A home loan is undoubtedly an extremely important financial commitment. Therefore, always make sure that you do your own research on the subject rather than simply believing another’s take on it. If you have a steady source of income and a good credit score, the chances are that getting a home loan and owning your own house will surely benefit you in the long term.