A Detailed Guide To Calculating Your Mortgage
Loan In Singapore

Mortgage loans can be terribly scary if you don’t know what you’re doing. Make sure you calculate everything from head to toe before jumping into a deal. 

There’s no way anyone can afford to buy private properties in Singapore without using a mortgage. 

This is true whether you’re buying a new launch condo from a property developer, a resale flat from a private seller, or an HDB flat from HDB.

That’s why it’s so important to know how to calculate your mortgage without making a colossal error that might cost you everything. 

Whatever the property purchase price might be, everyone wants to get the maximum home loan amount with the maximum loan tenure. 

It might sound impossible to many of you, but we assure you it’s possible to find a loan package that fulfils all your financial needs, even in these post-pandemic market conditions. 

But before we get into the nitty gritty details and start doing some serious math, it’s important to take a moment and ask yourself; what is a mortgage?

Well, in all honesty, a mortgage is a type of housing loan you can take from the bank to pay for something you want to buy without spending a lot of cash upfront. 

It falls under the category of instalment loans, along with personal loans and student loans.

Every mortgage is made out of four parts, the loan amount, the downpayment, the interest rate, and the loan tenure. 

The loan amount, as you can figure, is the actual amount that the bank, or HDB, will lend to you.

The maximum loan amount that you can borrow will be somewhere around 80 % or 90 % of the total property purchase price. 

The downpayment is the amount that you are willing to put down upfront when securing the HDB or bank loan.

You can pay this in cash or your CPF funds or use a combination of cash and CPF to meet the downpayment amount. 

The general rule of thumb is that the higher your downpayment, the more relaxed your loan package will be. 

To put it simply, paying a bigger downpayment will not only increase the chances of loan acceptance but also make it easier for you to pay your monthly instalment within the repayment period.

Coming to the interest rates, they can be either at a fixed rate or it can be a flexible rate which changes from period to period. 

Whatever the rate type you are provided, it will definitely make an impact on the total loan that you will have to pay back. 

Finally, the loan tenure is the maximum amount of time you can take to pay back the money which you have borrowed. 

In Singapore, the maximum loan tenure is usually capped at 25 years if you are buying a new property and 30 years if you are refinancing your home. 

Mortgages have always been an approachable way for many Singaporeans to buy their first piece of residential property. 

When applying for a mortgage loan, the bank will take into account your fixed monthly income, any variable earnings such as rental income etc., and calculate that against your outstanding loan (if any).

Based on these factors, the bank will decide whether or not you can afford to make the monthly mortgage repayments within the given loan tenure at the provided loan interest rates. 

In order for your mortgage to be accepted, you have to write a solid loan application with all the correct information, such as how much you want to borrow, what your financial condition is, and how you plan on paying it back. 

If the bank calculates that it won’t be possible for you to repay the loan within the particular loan period, they might go ahead and reject your application. 

But worry not, there will be many other banks where you can try your luck. 

In fact, a huge chunk of the mortgage game is scouting through different banks and comparing loan rates and loan features provided by these competing banks. 

Due to the plethora of common home loan questions asked around on the internet, we have decided to come up with all the answers regarding mortgages and home loans. 

Mortgage is calculated by taking into consideration your loan amount, loan tenure, interest rate, and monthly and variable incomes. 

The objective here is to find out whether or not you can afford to make your monthly repayments without effectively going bankrupt.

In order to prevent that from happening, institutions use the help of the total debt servicing ratio and the mortgage servicing ratio in the case of HDB flats or executive condominiums.

Both these factors dictate the total amount of your income that you can spend on mortgage repayments. 

As of now, the current rate for TDSR is capped at 55 %, and the MSR rate is capped at 30 % in Singapore. 

Coming to the loan tenure, governmental regulations in Singapore dictate that they should not exceed 30 years in case of HBD flats and 35 years in case of private properties, be it residential or commercial properties. 

However, age also has a lot to do with the loan tenure you are handed; for example, if you are already 50 years old, then getting a loan tenure of 30 years will be extremely difficult.

The reason is that you will cross the age limit of 65 years before the loan period runs out, something which institutions consider very risky. 

On the other hand, if you’re just now turning 25, then you can easily achieve the maximum loan tenure of 30-35 years. 

In general, the medium-term loan interest rate package usually falls somewhere around 3.5 %; however, this number changes from bank to bank. 

Finding an affordable mortgage loan with the best interest rate home loan is quite a challenging task and often takes significant amounts of calculations.

Your search for an attractive home loan package will lead to will lead you to research a wide range of banks and thoroughly evaluate the competitive rate to figure out which one is the most suitable for you. 

In all honesty, we daresay it’s as complicated as going through different investment products in the stock market.

But don’t be frightened; we know most of us are terrible at math and are likely to mess up these intricate calculations.

That’s why we have the option of using an online mortgage calculator where you can input all the factors and immediately get a calculated answer that will help you decide upon your mortgage loan.

Let’s start by saying that there is no singular mortgage goal that everyone can aspire for; it really depends from situation to situation.

The kind of property you’re buying might not be the same as the next person; similarly, the factors that affect your mortgage will also be different for the next person. 

However, there are some general priorities that one should have when buying applying for a mortgage loan. 

1. Minimum Interest Rate

Every home buyer will typically look for the lowest interest rate they can find and won’t stop checking out different banks until they do. 

Financial institutions always offer a wide variety of interest rates, whether it be fixed rates or floating rates. 

Finding a good mortgage package in the market with the perfect interest rate can potentially save you a lot of money, even thousands of dollars. 

But you have to be aware that some banks offer low rates at the start of the mortgage, while others work to lower the rate after a considerable time has passed. 

You have to choose which one is better for you, a loan with low interest at the beginning, but one that gradually increases, or a loan that starts off with a big interest rate and eventually cools down.

Another crucial factor, as we mentioned before, is whether you’re dealing with a fixed interest rate loan or a floating interest rate loan.

Most people jump to the conclusion that a good interest rate means securing a package with the lowest number at the time of receiving the loan. 

But a loan with a floating interest will definitely change numbers a couple of years down the line, so make sure to calculate that. 

For example, some variable loans will change according to the conditions of certain market trends like the SIBOR, while some loans could have a board rate that the banks themselves determine.

In reality, most loan plans offer a fixed rate initially, but the conditions of the loan dictate that the interest rate will change to a floating rate later.

So, you might be tempted to take this loan looking at the low initial interest, but that could change very quickly.

Needless to say, you need to poke and prod the current loan contract you are receiving to ensure that it doesn’t come back to bite you later.

When taking a loan, you should be sure of whether or not you’re going to stick with the current home loan package.

For example, suppose you don’t plan on changing your loan package in the future.

In that case, it might make sense to choose a loan with a floating interest rate that doesn’t necessarily have the lowest number at the point of borrowing but will have only a tiny rise in the future.

In this case, by taking a bigger risk at the time of borrowing, you’re ensuring that the risks, later on, will only be kept to a minimum.

On the other hand, if you plan on refinancing your mortgage package in the near future, then it’s probably better to go for the lowest interest rate.

Also, if you plan to refinance regularly, be aware of the various processing fees and legal charges that you have to pay.

So, to conclude, whether you take a fixed rate or a floating rate totally depends on your own needs and preferences.

Either way, you’re going to need extensive knowledge of mortgage loans and meticulously calculate your financial preferences for the next couple of years. 

In general, floating rates are the right decisions if the market is going through a recession, while fixed rates are safer when the economy is prosperous, resulting in a rise in the property market. 

2. Quickly Repaying The Home Loan

While most of us may struggle to manage the loan repayment schedule, others might not have this problem.

Some borrowers have their month-to-month cash flow sorted out and can easily afford the loan repayment without breaking a sweat.

Such borrowers might want to reduce the total expenses during the loan tenure by lowering the amount of interest they have for the remainder of the mortgage. 

People usually look for three things in a mortgage, minimal or no charges for repayment, short loan tenure, and the lowest interest rate

The key is to strike a perfect balance between these factors so that the overall cost of the loan throughout the years is kept at a minimum. 

So, if you’re planning on sticking with your current loan package, it is crucial for you to choose an interest rate that will become lower in the future, as opposed to being low now but significantly increasing in the future. 

On the other hand, if you plan on changing your package, you might want to pick an interest rate that is lower in the immediate future. 

Another way to keep the interest at a low point is to reduce the number of instalments you have to pay across the loan.

Paying larger amounts for each instalment will help reduce the loan tenure and get done with the loan faster.

Naturally, the less time you spend on your loan means that you’re spending less on your interest payments and more on paying off your actual loan amount. 

The only downside to this is that you will potentially have to pay vast amounts during those monthly instalments, which is financially impossible for most people.

Alternatively, instead of sticking with the usual monthly mortgage repayment amount, some people decide to pay off a huge chunk of the loan principal outstanding in lump sums whenever they have the cash ready with them.

Doing so can significantly reduce the total loan tenure and minimise the total amount you spend on paying back the loan. 

If you are financially capable of doing this, then make sure to look for a mortgage that comes with no pre-payment charges.

Some banks will charge you a penalty for pre-payment, which could drain any savings you might have, so avoid these packages if pre-payment is part of your strategy.

As you might be aware by now, finding the right mortgage with factors that suit your specific needs will be much more difficult to find.

We suggest you seek the help of financial advisors who are up to date on the latest banking trends and have in-depth knowledge of exclusive home loan rates.

Financial advisors will help you make the calculations according to your specific needs, make a detailed comparison of loan offers and give you the correct loan recommendations.

On the other hand, if you wish to go through this yourself, you can always use online housing loan tools to compare different packages and interest rates. 

3. Lowest Housing Loan Monthly Installments

If you are a young married couple in Singapore, chances are you’re already bogged down by several financial commitments at this point.

Add the harsh reality of the real estate market, and it only brings a recipe for financial trouble into the mix. 

Let’s face it, being a young couple in Singapore means that you often don’t have the means to make vast down payments on your housing loan. 

So, the only way to successfully pay back a big housing loan quantum is to spread out the housing loan instalments over time and decrease the actual amount paid in the monthly instalments.

This usually leads young couples such as yourself to look for the one mortgage package that allows you to pay a lower monthly instalment by increasing your loan tenure. 

A long loan tenure will give you ample time to pay back the outstanding loan balance, allowing you to make smaller instalments. 

This is beneficial in the short run as it will keep you within the TDSR limit and help you to manage your monthly repayments.

But let’s not forget that going for a long loan tenure, also means that you’ll be paying a higher interest amount over the years. 

Also, be aware that your age and monthly income play a huge role in the loan tenure that you are allotted. 

Simply put, a younger person will be able to get a longer loan tenure, while an older person will get a shorter tenure.

Banks tend to reduce your loan-to-value ratio if the loan tenure you want lasts beyond the time when you will become 55 years old. 

You might try to bring in a younger co-borrower to mitigate this factor, but it’s only a plus point if the co-borrower is earning the right monthly income, provided that they are already a homeowner. 

To conclude, we really recommend consulting a real estate financial advisor to get the best loans suited for you. 

A reputed and knowledgeable firm such as CKS Property Consultants Pte Ltd can give you the right research and present the best home loan options suited for your financial needs.

When it comes to buying HDB flats, you are typically allowed to borrow 75 % of the total property price if you are using a loan from DBS bank. 

Alternatively, you can try to be eligible for a concessionary loan, which would give you better loan facilities.

A concessionary housing loan which gives your more favourable terms than the typical loan conditions might allow you to borrow up to 85 %. 

The loan amount that you can borrow is primarily determined by the total downpayment you are paying. 

In a typical scenario, the higher the downpayment, the more loan amount you can borrow.

But of course, it isn’t as simple as that; in reality, there are a lot of factors which determine the total loan amount and the tenure that you receive.

Plus, all these factors are correlated with each other and affect the functioning of the entire loan. 

For example, opting for the minimum loan size with a low borrowing amount will typically reduce your loan tenure. 

Obviously, paying back a small loan amount will typically give you the option to pay more on your monthly instalments and reduce the loan tenure.

On the other hand, borrowing a huge amount will definitely increase your loan tenure by a lot, depending on how much you can afford to pay back each month.

On a general scale, young people tend to receive the longest loan tenures when compared to older borrowers. 

In any case, the maximum loan tenure you can get for private properties is 35 years and 30 years for HBD flats.

We wouldn’t be surprised if your maximum loan amount is reduced to 55 % of the property value if you are buying an HBD flat with a loan tenure longer than 25 years.

Similarly, private property loans with a tenure of more than 30 years also tend to reduce the maximum loan amount you can borrow. 

Either way, the total debt servicing ratio (TDSR), which greatly determines your loan amount, is always capped at 55 % of your monthly income. 

This means that you can’t spend more than 55 % of your monthly income on loan repayments.

This is calculated considering all your debt obligations, such as debts from credit cards.

So, the more of your monthly income you spend on the instalments, the shorter your loan tenure will be.

On the other hand, paying a small amount for the monthly instalments means that the loan tenure will be effectively longer. 

So, we can say that the effects of these factors trickle down on each other, starting from the downpayment for the loan.

A big downpayment increases your TDSR and loan-to-value ratio, giving you the opportunity to borrow the amount you want.

Then it depends on your monthly income capabilities, meaning how much you can spend each month for the loan.

Ultimately, it trickles down to how long it will take for you to repay the loan, which will ultimately determine the loan tenure. 

Another factor to watch out for if you are buying an HBD flat is the mortgage servicing ratio which is limited to 30 % of your monthly income amount.

Lastly, it is also important to note that any borrower’s potential home loan costs will highly depend on the interest rate. 

Unlike the other factors mentioned above, interest is a sneaky element that can haunt you if you calculate it incorrectly.

For example, you might think that going for the cheapest loan type with the lowest interest is the best option, but it might cost you more in the long run.

When dealing with interest rates, it’s important to consider the loan tenure and the whether the interest is fixed or floating.

Also, keep in mind any loan conversions you might be planning for in the near future, in which case you will need to plan out the costs considering the fluctuations in the interest rate after the initial loan lock-in period. 

You’ll be glad to know that Singapore also offers you the chance to get a loan after retirement for a 10-year tenure.

So, just because you’ve reached a certain age doesn’t mean you’ve run out of eligible loans; there’s always another option around the corner. 

For a better insight on mortgages and loans, we recommend you check out the Consumer Home Loan Guide available online. 

You can get this information for free, as there are no Consumer Home Loan Guide Download Fees and processing charges applied.

The interest rates offered by banks are subject to ever-changing market trends and the overall state of the economy.

The rates offered from bank to bank greatly differ depending on these factors, as well as the overall policy of the bank. 

On top of that, certain interest types work differently from one another and result in a different financial experience for each borrower.

For example, a typical bridging loan will have different interest rates than HSBC SORA-pegged home loans. 

Similarly, the interest provided in an equity loan will differ from the rates and computations of renovation loans.

Let us look at some of the loans provided by banks across Singapore, make a detailed comparison of the interest rates(fixed and floating), and figure out the loan liability of each package.

To keep things short, we will be looking at the loan packages that come with the lowest interest rates, for the loan amount of $ 100,000 and a loan tenure of 30 years. 

1. Standard Chartered Bank

This loan package offers a 3M SORA interest rate of 1.83 % for the first year, with a 1 year lock-in period. 

As a borrower, you would have to pay $ 361 per month for the first year. (3M SORA+0.650%=1.83%)

Year two would require you to pay the same amount of $ 361 per month, determined by the compounding rate. (3M SORA+0.650%=1.83%)

Year three will follow a similar pattern and result in $ 361 per month.

However, from year four, you will see an increase to $ 394 per month. (3M SORA+1.350%=2.53%)

This trend will be followed until year 6, and on and on. 

Now, let us calculate the amount you would have to spend on monthly instalments for these six years.

$ 4332 (year 1)+ $ 4332 (year 2) + $ 4332 (year 3) + $ 4728 (year 4) + $ 4728 (year 5) + $ 4728 (year6) = $ 27,180

2. CIMB Bank

Now, let’s compare the above rates with the loan package provided by CIMB Bank at a board interest rate of 1.90 % for the first year, with a 2-year lock-in period.

At first glance, it might seem like a 1.90 % interest rate is considerably higher than the previous option; most people will consider this a no-brainer and opt for Standard Chartered Bank.

However, if we take a look at the calculation, you’ll notice something interesting with the monthly instalments amounts as the years progress.

The first year will require you to make monthly instalments of $ 365 at a flat rate of 1.90%.

This rate will increase to 2.000 % for the second and third years, making you pay $ 369 per month.

The fourth, fifth and sixth years will see the rate increase to 2.250 %, costing you $ 381 per month on instalments. 

Now, let us calculate the amount you would have to spend on monthly instalments for these six years. 

$ 4380 (year 1) + $ 4428 (year 2)+ $ 4428 (year 3)+ $ 4572 (year 4) + $ 4572 (year 5)+ $ 4572 (year 6)= $ 26,952.

Now, if we compare this amount with the loan package standard chartered bank, the difference is clear. 

Despite offering a lower interest rate of 1.83 %, you would have to pay a total amount of $ 27,180 for the first six years. 

Meanwhile, the CIMB Bank loan package offers a higher rate figure of 1.90 %, yet, at the end of the first six years, you have to pay a lower amount of $ 26,952.

How on earth is this possible?

Well, it has to do with the rate type and the increasing valuation of interest per year, which ultimately reflects the amount you have to pay. 

While the loan offered by Standard chartered starts off at a lower interest rate, you can see that the rate at which it increases is considerably higher than the package offered by CIMB Bank. 

So, always keep in mind that the starting loan interest rate doesn’t always mean that it is the best option for you. 

Another thing to notice is the trend of the monthly instalment amount. 

As you can see, while Standard chartered starts off at $ 361 per year, it gradually increases to $ 394 per year, which is a huge leap.

Meanwhile, CIMB Bank starts off with a comparatively higher amount of $ 365 per year, then increases to $ 369, and then goes to $ 381 per year.

So, while the starting amount is considerably higher, the overall increase in the amount is paced at a slower rate. 

We aren’t saying that getting loan approval for number 2 is better than loan approval 1. 

We are simply saying that you should know what’s ahead on the schedule no matter what loan you have chosen. 

You’ll be glad to know that certain banks also offer bonuses and promos that might be beneficial for you. 

For example, a UOB Home Loan of $ 450,000 on completed properties will get you a sign-up bonus of $ 2,200 cash. 

On the other hand, opting for a UOB HDB home loan might qualify you to receive a $ 2000 cash rebate. 

The type of property you choose to buy also affects the limitations and benefits of your loan package. 

For instance, buying energy-efficient properties in Singapore may very well qualify you to receive a lower interest rate or a tax remission.

Whatever you choose, be aware of the various legal fees on loan conveyancing matters, processing fees and property tax involved. 

Following are a few more banks with loan packages that might strike your interest; be sure to read the fine print before signing anything. 

3. Maybank

This package offers a 1.98 % 3 M SORA interest rate for the first year, with a 1 year lock-in period. 

Monthly payments for the first two years will be $ 369 compounded at 1.98% (3M SORA+0.800%)

From year three to year six, the monthly instalment will increase to $ 403, compounded at 2.68 % (3 M SORA+ 1.500 %)

4. Bank of China

This loan package offers a 1.98 % 3 M SORA interest rate for the first year, with a 2-year lock-in period. 

Monthly instalments for the first year will amount to $ 369 compounded at a 1.98 % interest rate (3M SORA + 0.800%)

The second year will require you to pay $ 374 per month on instalments compounded at 2.08 % ( 3M SORA+0.900 %)

Similarly, year three will also have a monthly instalment charge of $ 374, compounded at 2.08 % ( 3M SORA+0.900 %)

Year four will see an increase in monthly instalments to $ 402 compounded at 2.68 % (3M SORA+ 1.500 %)

Similarly, years five and six will also have monthly instalments of $ 402 compounded at 2.68 % (3M SORA+ 1.500 %

5. HSBC Bank

This loan package offers a 2.03 % 3 M SORA interest rate for the first year, with 2 year lock-in period. 

Monthly instalments for year 1 will amount to $ 371 compounded at 2.03 % (3M SORA+ 0.850 %)

Monthly instalments for year 2 will amount to $ 371 at 2.03 % (3M SORA+ 0.850 %)

Monthly instalments for year 3 will increase to $ 376 at 2.13 % (3M SORA+ 0.950%)

Years four, five and six will all see an increase in monthly instalments to $ 392, compounded at 2.48 % (3 M SORA+1.300 %)

6. DBS Bank

The loan package offers a 2.05 % FHR6(DBS) interest rate for the first year with a lock-in period of 2 years. 

The monthly instalment amounts will stay fixed at $ 372 for the first six years, compounded at 2.05 % ( FHR6 DBS+ 1.300%)

7. OCDC Bank

The loan package offered here comes at a 2.08 % 3M SORA interest rate for the first year, with a 2 years lock-in period. 

The monthly instalment amount for the first year will be $ 374, compounded at an interest rate of 2.08 % (3M SORA+ 0.900%)

The monthly instalment for year two will be $ 374, compounded at an interest rate of 2.08 % (3 M SORA + 0.900 %)

Year three monthly instalments will amount to $ 379, compounded at a 2.18 % interest rate ( 3 M SORA + 1.000 %)

Year four monthly instalments will amount to $ 379 compounded at a 2.18 % interest rate ( 3 M SORA + 1.000 %)

Similarly, year three monthly instalments will also amount to $ 379 compounded at a 2.18 % interest rate ( 3 M SORA + 1.000 %)

CPF is technically a measure introduced by the government to ensure that there are sufficient retirement funds for every Singapore citizen. 

While it its technically ok to use your CPF funds to pay the monthly instalments on your mortgage, you have to realise that it could potentially sap you of all your retirement funds. 

That being said, part of the CPF fund is dedicated to financing your home purchase, so as long as you don’t overburden your CPF OA, you should be in the clear. 

Be advised that having your funds deducted from your CPF account every month would mean that you’d be missing out on certain opportunities. 

There could be particular CPF schemes that you could participate in with your account, but it won’t matter if you don’t have the funds to do so. 

In any case, draining your CPF account will obviously mean that you will lower the amount of savings you have overall. 

One workaround for this is to divert funds from your CPF Ordinary account to your Special account instead. 

Your Special account can only be used to pay for retirement-related schemes and investment products, so that’s a limitation unless you have reached old age.

On the other hand, your special account has the benefit of a higher interest, thanks to the Singapore government. 

Another thing to watch out for while you’re using your CPF is the withdrawal limit. 

Years of making automated payments from your CPF account can lead you to forget just how much money is in there. 

You’ll be in a terrible pickle if you hit the maximum withdrawal limit for your CPF account without having any backup funds to continue for the monthly instalments. 

What’s more, by spending money from your CPF account rather than using cash, you are effectively reducing the value of your money. 

Money kept in your CPF account earns a higher interest rate than it would if kept inside a bank. 

With the current interest rate of your OA being at 2.5 % and the SA interest rate being at 4.0 %, it is seriously foolish not to let your money rest in these accounts. 

Sure, it might seem like paying cash is much more financially straining, but at least you won’t be losing out on the value of your money. 

If you can somehow manage to get through the instalments using cash, you will potentially be saving tons and earning a few extra thousands just by letting your money stay in your CPF account. 

Singapore Mortgage Calculators And Home Loan Tools

As you must know by now, calculating your mortgage requires extensive maths skills and an academically inclined brain. 

But unlike some of the more financially savvy inclined individuals looking for a loan, the rest of us don’t have that option. 

That’s why most average people tend to use a loan calculator to ascertain the costs and long-term effects of taking a particular home loan. 

In addition to that, you can also use a loan affordability calculator to ascertain whether or not the particulars of the loan match your financial capacity. 

You can check out both of these tools online via the property guru website, along with a calculator for refinancing loans and a mortgage comparison tool.

All you have to do is input the loan amount into the mortgage repayment calculator, which will take you to the main calculation page.

Let us take the example of your mortgage repayment for a loan amount of $ 100,000, at an interest of 3.5 % for a 10-year loan tenure. 

Your estimated monthly repayment amount will be $ 989, which will allow you to dedicate $ 269 to the interest, and $ 720 to the principal amount.

So, assuming that you are buying a completed private property, your repayment schedule for the 10 years will be as follows. 

Your Mortgage Breakdown

Before taking on a mortgage, it is important to understand how the mortgage will be broken down in the coming years. 

This will make you realise exactly how much you have to pay each month, how much of those payments are going to the principal amount, and how much to the interest repayment. 

So, let’s assume that the value of the property you want to buy is $ 800,000. 

Let’s say that your loan tenure is 25 years, your interstate is at 2.4 %, and the loan amount you want is 60 % of the property price. 

So, that means you will have to put a downpayment of 40 % on the property price, that is, $ 320,000, which leaves your loan amount to $ 480,000.

According to the mortgage calculator, you will have to make monthly instalments of $ 2,129. 

Out of this amount, $ 1,169 will contribute to paying back your principal amount, and $ 960 will go into paying the interest. 

Putting in a big downpayment will significantly reduce the amount you have to borrow, thereby reducing the amount you have to pay back. 

While putting the minimum downpayment you can possibly afford will only result in you having to borrow big and pay back an even more significant amount for a prolonged period of time. 

Easy Steps

If you’re still on the lookout for a great mortgage loan, you’ll be glad to know that Citibank offers shopping vouchers worth up to $ 1000 with their home loans. 

All you have to do is head over to their website and start your mortgage calculation with the online tools provided by them. 

Another great news is that they offer an interest adjustment if you choose to maintain a deposit with their bank. 

So, a loan of $ 900,000 with a 30-year loan tenure would start off at a SORA compounded interest rate of 1.31 % on the first year. 

However, the interest rate would drop to 1.17 % if you maintain a deposit of $ 190,000 with Citibank. 

After that, it’s just a matter of inputting your details such as your name, monthly income, any previous outstanding loan repayments etc. 

After you get into the approval process, you will be contacted by their mortgage specialist in just 1 to 2 business days. 

Then, it’s just a matter of looking for the right property!

Compute Monthly Instalment Amount

Calculating your monthly instalment is one of the most important steps while securing a home loan. 

The monthly instalment amount is the exact amount of money you have to dedicate each month in order to pay back your loan and interest. 

This amount will depend on your loan amount, interest, loan repayment period, or loan tenor. 

Luckily, you can calculate the monthly instalment amount easily using the online mortgage calculator provided on the Singapore governmental website. 

All you have to do is visit the website and put the loan amount in the calculator along with the interest rate and the loan tenure. 

For example, let’s say your loan amount is $ 500,000, at an interest rate of 2.5 %, and your loan tenure is 25 years. 

According to the calculator, your monthly instalments will be $ 2,243, and the total instalments paid for the year will be $ 26,916.

Alternatively, if your loan amount is $ 950,000, at an interest rate of 1.8 % and a loan tenure of 20 years, your monthly instalments, in that case, will be $ 4,716, and the total instalment paid for the year will amount to $ 56,592.

Mortgage repayment refers to the monthly instalments you need to make in order to fully pay back the loan amount which you have borrowed. 

When taking any kind of home loan or mortgage, it is always necessary for the borrower to pay back the loan on a monthly basis. 

What’s more, these repayments should be made for an agreed period of time until you, the borrower, are able to pay back the accrued interest and the principal loan amount in full. 

When you take a loan of, say, $ 500,000, your mortgage balance will reflect exactly that amount. 

But when you start paying back the money via those monthly instalments, the balance in your mortgage will keep decreasing, depending on how much you have paid. 

The goal here is to reduce your mortgage balance to $ 0 by the end of the agreed-upon loan tenure. 

This loan tenure is usually limited to 30 years for HDB flats and 35 years for private properties. 

So, to conclude, the objective of the game is to pay back your mortgage as quickly as possible within the allotted loan tenure.