In today’s time, there are a number of mortgage packages available across the market. Banks in Singapore offer a wide variety of packages and features, and there are a significant number which combine different features, such as Capital and Interest Mortgage, Cash Back Mortgage, Combo/Hybrid Mortgage, Interest-offset Mortgage, etc.
Capital and Interest Mortgage is usually the standard mortgage package, and equal monthly payments are made towards the payment of the interest as well as the principal. The principal payment amount grows on a gradual basis over the loan-term period, and the debt is completely paid at the commencement of the loan term. In a cash back loan, the lender returns a portion of the loan to the borrower in the form of cash. This usually entails that the borrower is tied to the loan for a lock-in period. A Combo/Hybrid Mortgage enables one to divide their total loan into different parts, and utilise a different loan package for each. Banks also provide Interest-offset Mortgage loans in Singapore, which enable one to receive the same interest rate on part deposits, which can be used to pay for your loan. The usual ratio is two-thirds of your deposit, and the remaining portion will have a reduced interest rate.
These loans are increasingly getting more popular, and there are a number of mortgage calculators available online, which can help determine the most suitable form of mortgage loan quantum to be taken up. However, these are merely figures which may not always be a correct indicator of your current situation. In order to get a more reliable commitment from a lender, it is preferable to get the lender’s approval in principle in written format. This helps one conclude what properties are affordable, and thus helps save valuable time. In addition, this also helps give a clear idea of the size of the down payment that has to be paid, and thus plan for liquidating your assets accordingly.