You cherish the project to buy a property, but the world of mortgages gives you hives? You do not understand anything about these stories of term, down payment, depreciation, interest, insurance? Do not panic. Here’s something to help demystify mortgages and empower you to choose an informed loan.
The down payment
To buy a property, you must pay a portion of the price of your pocket. This amount, called cash down, must represent at least 5% of the selling price. For example, to purchase a $ 300,000 condo, expect to pay a minimum of $ 15,000 in down payments. A good mortgage broker in singapore is the best person in this case now.
Where to find this money? It is of course better to save before buying! But you can also take out a bank loan to get a down payment, or access the Home Buyers’ Plan (HBP).
Even if you have a generous down payment, your mortgage capacity may not be high. To be clear, it is important to make an appointment with an agent or a mortgage broker. Together, you will calculate your borrowing capacity, taking into account several factors, your gross annual salary, your other annual income, the amount of your existing debts, the expenses related to your current home, etc.
Always with the assistance of your agent or your real estate broker, it is advisable to obtain a mortgage pre-approval from a financial institution before you even begin your search. Why? First, you will have a definitive idea of your purchasing power. Also, a mortgage pre-approval will give you greater bargaining power with sellers. In the vast majority of cases, getting a mortgage pre-approval is free and without obligation. From the most trusted money lender in singapore you will be having the perfect deals now.
The amortization period
The most common amortization period is 25 years – 25 years also represents the maximum duration of a mortgage, imposed by the federal government in 2012. No mortgages amortized over 30, 40 or even 50 years. You will have the choice of amortizing your mortgage over a shorter period: 20, 15, 10 or even 5 years. The amortization period will, of course, affect the amount of your monthly payments, the longer it takes, the less it is expensive.
Indeed, the longer the amortization period, the more interest you pay. You risk paying double the original amount borrowed, and even more.
If you can afford it, choose to pay off your mortgage on the shortest possible time. You will save tens of thousands of dollars in interest.
Any mortgage is allotted interest. When you take out your mortgage, you can choose between a fixed interest rate and a variable interest rate.The fixed interest rate is determined according to the offers in force and cannot be changed for the duration of the term. It offers peace of mind and allows you to budget your payments without risk of surprises. On the other hand, it is often higher than the variable interest rate options, and you will not take advantage of market interest losses.