In a competitive housing market like Singapore, it is easy to get lost in the process of finding the perfect property for you and not spend enough time to study and understand your mortgage agreement. Once you find a property that suits your needs and the budget, your real estate agent is likely to rush you to sign the agreement. However, a house mortgage is usually one of the longest financial agreements one commits to in their lives. Therefore, it is always good to take time to fully understand the terms of your mortgage and prepare yourself to what it entails before you sign your mortgage.
Understand the terms of your interest rates
One of the most important factors of mortgage agreements is its interest rates over time. There are two main kinds of interest rates which are applied to long-term financial agreements such as a mortgage; fixed interest rate mortgages and adjustable interest rate mortgages. This is especially important to take note if you pick the latter. They usually give a lower interest rate initially but has the potential of increasing drastically after a period of time. Think about your financial future and determine whether you will be able to settle an increased amount over time before you sign your mortgage. Otherwise, you might find yourself not being able to complete your payments close to the closure of the mortgage even if you perfectly settled it for many years. Make sure to compare mortgage loan rates in Singapore and get the interest rates suitable for your situation.
Penalties for pre-payments
If you think you have the potential to pay off your mortgage before the agreed duration, have a look into whether there are penalties for it. While many people are aware of late payment penalties, they are not usually aware that you sometimes have to pay a fee in order to close the mortgage. If you see such a clause in the agreement, it is always good to take time to negotiate and remove it from the document before you finalise and sign the agreement.
Thoroughly examine the total mortgage rate, terms, and the bottom line
A mortgage is a large sum of money, and therefore you need to thoroughly evaluate your financial situation not only at the present but also in the long-run considering your potential career changes to determine whether you will be able to fully settle it. You need to be honest with yourself to determine how much you can comfortably pay off every month. Do not get sidetracked by attractive properties that demand for more financial commitments. If you were to end up not paying off your installments properly towards the end, it can be easily taken away from you despite the amount you paid.
Give yourself time to thoroughly examine the rates and terms and conditions in your mortgage agreement. Do some research and compare various mortgage loan rates in Singapore. Make you are completely satisfied with them and able to adhere to those terms before signing the contract. Congratulations with your new property!