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Singapore is home to some of the highest homeownership rates in the world. Even though property prices are more expensive in nations with land scarcity, the Singapore government has tried its best to make housing affordable for everyone.
However, most people apply for loans to buy houses due to their hefty price. With so much jargon in the mortgage documents and so much cash at stake, one must understand the fundamental requirements of getting a home loan in Singapore.
If you are looking for loan requirements in Singapore, you may want to contact Lendela because they will find the best loan opportunities for you. Now, let’s take a look at the requirements of getting a loan:
The first and foremost requirement to get your loan approved is to meet the eligibility requirements. The financial institution will look after the eligibility requirements like age, credit score, annual income, etc.
Checking your financial position is mandatory for any loan approval proceeding because it will ensure the chance of borrowing default on the loan is low.
Even the Singapore Government has exclusive eligibility criteria called the Total Debt Servicing Ratio. It means your monthly debt amount must not exceed 60% of your monthly income. It prevents borrowers from overleveraging.
Related: How Do Secured Personal Loans Work?
Once you become eligible for the loan, you must find out how much money you can borrow from the bank. In this context, the bank will also check your monthly income and credit score to guarantee you a certain amount of money.
When the minimum income requirement is fulfilled, an individual may borrow four times the money he earns every month. However, if your annual income is less than $30,000, you would be eligible to borrow twice your income every month.
You may require a loan eight or ten times your financial earnings every month. However, larger loans are given to people in higher income brackets.
Did you know that the bank may charge you for early repayment? Yes, it’s true, and no matter how ridiculous it sounds, just because you are returning the money before the due date doesn’t put you in a morally higher position.
If you pay the loan early, the lender will lose his anticipated amount of profit. Therefore, the financial institution that gave you the loan will try to recover some of that profit as the early repayment fee.
An early repayment fee is usually calculated as a certain percentage of your outstanding loan amount or a flat dollar value. Hence, if you think you will pay the loan early, find out the early repayment rate.
While applying for a loan, it is evident that you will come across two of the most common terms; applied rate and effective interest rate.
The applied rate states that the loan amount is constant for the entire tenure. Therefore, the lender will not consider that each early repayment reduces the principal amount.
On the other hand, the effective interest rate dictates the actual interest rate on the borrowed money provided you repay the loan on time.
Therefore, once you calculate the loan amount gradually after every early repayment, compare both amounts, and choose the one that suits you.
There are some other charges that you must take into account if you are planning to take a loan. For example, some banks may charge you an additional fixed amount of money on top of the interest you pay every year, so find out how much that annual fee is.
If you miss the installments or pay less than promised by the due date, you would be obligated to submit a late fee. Make sure that you find out this charge because lenders are usually strict regarding late payment.
For example, you have agreed on a loan repayment tenure of 2 years, but somehow the monthly installments become a burden for you after a few months. In that case, some banks may offer you to extend your repayment period with a certain amount of money, so find that out too.
If you have read all the 5 requirements we have mentioned here, you must know how you will get a personal loan in Singapore. If any of these requirements strike a confusion in you, let us know in the comment section. We will try to get back to you ASAP.
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