Buying a property in Singapore – Part II

After the mad rush of papers, contacting people left and right (while sourcing around for best acne treatment), we got some very good news!

Our housing loan has been approved – thank you God – despite the fact that I’m only starting work in May and am without a payslip for now. The bank has kindly used my employment contract instead and one of the requirements for the loan is that Nil and myself refurbish them with an payslip for April (him) and May (myself). But otherwise, everything is ready to go, monetarily, that is.

The housing loans here do not work on a fixed interest rate but instead the bank we picked use what is called a SIBOR or interbank interest rate whereby the interest fluctuates or better know in common terms as a floating rate. For now and in Singapore, according to the banker, floating rates are better for the current housing market as they are about 25% lower than fixed interest rates. This may differ hugely from France and Malaysia whereby floating interest rates are steep compared to fixed ones. One thing good about our loan package is that it is not locked. This is to say that if we feel that the current SIBOR rates are not compatible, we can change to a fixed interest rate package and vice-versa again. There are no penalties and no hidden charges.

The bank we picked also has a reducing interest rate on top of the SIBOR which is quite different from other banks. This is a good thing, especially now when the SIBOR rates are around 0.6%. Based on the banker’s rough calculations (sans a financial calculator at hand), we’re looking at a mortgage of $1.6K per month which is just perfect for us as it’s still within our budget. Of course we’ll be paying back Nil’s dad and my parents for some part of the down payment but it’s still quite affordable.

Now that the loan has been settled, it’s off to the lawyer’s office to prepare the other necessaries. My next concern will be facilitating the payment of the 7% of the purchase price (3% stamp duty – to the goverment – and 4% to the seller via the lawyer). Hopefully, it’ll be ready come middle of next week! *keeps finger crossed*

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  1. Congrats! We are also hoping to get our place very soon… with my pending employment also. We are also going for the floating/variable rate cuz it’s a lot lower than the fixed rate here in Canada. Nonetheless, interest rates are still historically low right now but it;s been on the rise this year. My parents are also lending us money for the down payment…. good luck to us both!

  2. Feels great to have one’s own place, congrats!
    Anyway, remember to get a Mortgage-Reducing Term Assurance (MRTA, low-cost term insurance to cover the home loan). I know it’s “touch wood”, yet got to protect the family’s finances, especially with a baby around. Bank loan is no joke in Singapore, missed a few payments and that’s it: they’d sell your house. MRTA is compulsory for HDB loans, not private bank loans. Hope this helps. 🙂

  3. Congratulations!! Its great going back to your own home at the end of a work day. Have fun decorating and making it your won 🙂

  4. Congrats Mei! Nothing like having your own home. We chose the floating rate too, as we intend to pay off the mortgage in 7 years time. But now, gotta suffer with the high installment rates. Am just hoping that the rates remain low for at least 5 years or so *touch wood*

    Dunno how the banks in Singapore work, but in Italy, gotta ask for things like cheaper checking account charges (in Msia, they GIVE you incentives to open up an account with them, they entice you with Credit card rebates etc, in Italy its terbalik. They CHARGE for all those facilities *$!! *£&)

    Kinda curious, are there any penalties you have to pay if you, say, decide to pay the mortgage off earlier than stipulated in the contract?

    Mabel Reply:

    We can’t pay off the full amount earlier – there must be around 100K left to the loan if we decide to pay off. I can’t remember the actual details – need to check the contract. But I don’t think we’ll be paying it off any time soon. Real estate is SG is just crazy.

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