When trying to apply for any type of loans in Singapore, the first thing that comes to mind is to find out how to get best loan rates from loan providers. Whether a home loan or a personal loan, here are a few financial tips to consider in getting the lowest possible loan rates available in the financial market of Singapore.
First, you need to decide whether to purchase a property or to simply refinance an existing loan. If you are purchasing a property, you need to know that the loan-to-value ratio of properties is 80% of the price. So in order to get a good loan rate, it would be best to limit the loan-to-value ratio of your loan to about 60% to bring down the loan’s interest rate.
Second, if you are refinancing an existing loan to bring down the current interest rate, make sure that you are no longer locked-in to the original loan. The pre-termination fees for locked-in loans are very expensive so you may end up paying more for your existing loan.
Third, you need to select between fixed rate and floating/variable rate packages. Fixed rate loan packages carry a higher interest rate, but the guarantee is that they will not fluctuate during the time that the loan is in a locked-in period. Floating rates fluctuate based on the current market conditions.
Fourth, you need to decide whether to lock-in your loan or not. Locked in loan usually, carry better loan rates so most people choose this option. However, if you intend to dispose of your property early, it would be wise to not opt for a locked-in loan.
Fifth, some types of bank loan also allow an interest-offset loan package. Here the remaining balance of your loan that is still deposited in the bank is earning interest and this interest can be applied in paying off part of the loan amortization.
Sixth, there is also the interest-only loan package where the monthly repayments will only cover the interest portion of the financial assistance while the principal amount is only repaid at the end of the loan term.
Finally, when searching for the best Loan Company, compare the cumulative interest on the loan that they are offering. Cumulative interest is the total amount of interest paid for the duration of the loan. The lower the sum the lesser the interest rate would be.